Productivity: The Pharma Perspective

The general concept of input-to-output ratio that is related to the term “productivity” is often not directly applicable to the Pharma industry.  it is well known that Pharma development can be a long-drawn process that can stretch into years.  The rewards of course can be phenomenal and hence risk capital gets drawn towards promising projects.  The understanding of various facets of productivity for such providers of capital is critical to achieve a conceptual justification.  Traditional methods of evaluation of investments will not work here, usually.

The prime elements of Cost of Pharma development is the impact of holding capacity of facilities in reserve till approvals are obtained for products being developed.  This process may stretch anything from 6 months to 3 years or even more.  This is normal in this business and must be accepted as a risk to provide for in the investment model.  The management of legal challenges of IP and Process Related issues is unavoidable in most cases as the magnitude of success of a product launch is majorly influenced by the robustness of the legal sanctity of the product and process IP.  These two elements often constitute a bulk of the investment. 

Considering the above factors, it is important to realize that a very different model of productivity works in the Pharma product development business.  Without a suitable risk-mitigation model on hand, a Pharma investor will be stepping into slippery ground.  SUINGORA is here to help prospective investors in chartering such terrains.

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About the Author: Indrajit Banerjee

Expert in business transformation of companies with growth potential or in financial stress situations through financial restructuring, improved business processes, cost optimisation and profit improvement programs. Experience covers leading large multinational and India-promoted companies to significant value creations.

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