Healthcare Case Study: Dr. Reddy's LaboratoriesHealthcare

Dr. Reddy's Stays Ready with Flexible Supply Chain

Meet: Dr. Reddy's Laboratories

As one of the largest pharmaceutical companies in India, Dr. Reddy's Laboratories averages 200 orders a day alone for its U.S. generic pharmaceutical and over-the-counter products. A triple-digit percentage revenue increase in the past year demonstrates the agility of the company's move into the generic marketplace. Getting to market first following U.S. Food and Drug Administration (FDA) approval is a key with generics.

Dr. Reddy's needed a streamlined supply chain and flexibility to position its new products against the large number of prescription drugs due to come off patent protection. Since it manufactures in India, Dr. Reddy's must plan for additional lead times to get product to the U.S.

Market Position Gained From Rapid Response

When drugs move from branded to generic, pharmaceutical companies face a host of regulatory and supply chain challenges to get products to clinicians and retail pharmacies. Since the FDA approves the sale of branded drugs as generic as late as the day of patent expiration, acting quickly and efficiently means being first out of the gate, sometimes even getting products to the drug wholesalers or store distribution centers the next day. That drives critical planning for the right warehousing and distribution solutions linked with transportation. Further complicating the process, the FDA also may require label and outsert changes to some medicines prior to approval for generic sales.

With its previous solution, Dr. Reddy's lacked such a reliable rapid dispatch of its dosage-form generics. The company also was expanding from generic prescription drugs to over-the-counter products with formulas packaged under private labels for chain drugstores and mass merchandisers. With a promising pipeline of drug applications on file, there was no shortage of new product launch plans along with ongoing order fulfillment and service. Time delay following FDA approval for generic sales could mean lost opportunity and positioning.

Speed Combined with Effective Order Fulfillment

In 2007, Dr. Reddy's turned to UPS to design and implement a new solution for more flexibility and efficiency. Today, UPS handles all of its domestic prescription and over-the-counter drug distribution using a combination of UPS package and UPS Freight LTL services. Dr. Reddy's utilizes approximately 15,000 square feet of distribution space in UPS's Healthcare Logistics Center in Louisville, Kentucky. There, more than 800,000 sq. ft. of dedicated space is FDA registered and compliant to meet storage, information management, temperature control with applicable regulations and security requirements.

The distribution process begins when UPS receives EDI orders from Dr. Reddy's customers into its order management system. UPS then picks, packs and ships products and sends shipment confirmation to Dr. Reddy's. UPS also provides special services such as inserting product information. Expedited shipments can be processed to leverage the strategic logistics campus location near UPS Worldport®, the company's international package express and air freight hub nearby.

"Our customers expect a fulfillment blitz the moment of launch approval," says Jeannie Dunk, vice president for North American sales operations, based in Charlotte.

Managing new product launches is a key component of the UPS solution for Dr. Reddy's. Before products are ready for market release, UPS quarantines them at its facility, where they can be stored in the controlled environment. As soon as FDA approval is secured, UPS can begin shipping with products arriving on customer shelves much faster than before.

Customer Satisfaction Drives Results

Since turning to UPS, Dr. Reddy's has significantly improved speed to market, including being the first to market with the launch of several generic products in 2007. Perhaps most significant are the improvements in service that Dr. Reddy's can provide to its customers. Order processing that used to take two to three days has been streamlined to same-day fulfillment.

"UPS has been a true partner in supporting our business and raising our service levels to our customers," Dunk adds. "Their people are extremely passionate about service, and the process has been seamless." She cites a recent example where UPS could flex its workforce and quickly assemble 300 people for a product launch with only a two-hour notice.

UPS also has helped Dr. Reddy's strengthen its relationships with retailers and pharmacies by making generic drugs, that were previously sold only as branded drugs, immediately available to customers.

In addition to improvements in customer service, Dr. Reddy's has seen cost benefits since switching to UPS for its supply chain solution. The company achieved a 20 percent cost savings for transportation and distribution-related expenses over its previous operations, even while significantly growing its capacity to launch new products. Dunk attributes much of this accomplishment to efficiencies gained from using UPS Freight as well as UPS warehousing resources.

"UPS has been a lot more flexible than we thought they would, given their large size," Dunk noted. "Their support for our new product launches has been phenomenal."

Dr. Reddy's started out as a small company in 1984 and has experienced significant growth over the past eight years. Always focused on the future, Dr. Reddy's currently is working with UPS on pedigree solutions for its expanding product line. It's a company that is ready to capture new market opportunity.

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"UPS has been a true partner in supporting our business and raising our service levels to our customers. Their people are extremely passionate about service, and the process has been seamless."


--Jeannie Dunk
Vice President
North American sales operations
Charlotte, North Carolina

Challenge:

Dr. Reddy's Laboratories needed 3PL know-how for U.S. warehousing and regulatory compliance linked with outbound transportation for ready response to generic drug approvals.

Solution:

UPS staged quarantined product in its healthcare logistics facilities, ready for rapid order fulfillment upon FDA approval; handled information inserts; and provided small package and freight transportation, all with visibility to inventory status and movement.

Result:

FDA afternoon approval letter triggered staffing for same-day order drop; reliable UPS air express package. UPS Ground and UPS Freight® LTL delivery services supported successful generic product launches. Dr. Reddy's also introduced a new over-the-counter private label generics business for chain drugstores and mass merchandisers.