The proposed Goods and Services Tax (GST) will remove a layer of Clearing and Forwarding Agents (C&FAs) from the supply chain of the pharmaceutical and medical devices sectors in the country. This would not just create a seamless efficient environment but spur profitability for pharma companies from a logistics viewpoint, said Anil Syal, CEO & director, Flywheel Logistics.
With the implementation of GST that is expected to pass through during the coming monsoon session of Parliament, Syal stated that from a logistics sector viewpoint, those providing multi-state warehousing or 3PL (third party logistics) provider services to pharma companies would lose out. These companies or firms must reinvent to find relevance in the post-GST era.
“In fact it is also time to dispense the channel-partner which has served its purpose and is deemed to become an impediment very soon,” he noted.
Flywheel is the new face of transportation in India. Its dependable fleet of 350 vehicles, ISO certified containers of varying capacities and 7 strategically located yards operate on a proprietary technology platform manned by dedicated teams to sectors including pharmaceuticals and medical devices. The company’s technology enabled platform allows transparent booking, shipping, tracking of all consignments and final delivery. The company has been serving the top pharma manufacturers and sees that dependence on logistics is not expected to increase for the sector.
Providing a peek into GST benefits that is viewed to transform the tax levy landscape, Syal told Pharmabiz, “One important change that GST would bring is to integrate the nation as one marketplace. Like many sectors, pharma and healthcare too has had to manage their logistics in a federal structure by way of layering the supply chain.”
“While CST (central sales tax) saving is the driving agenda behind logistics structure and its planning, GST would help eliminate a C&FA model where near-to-customer is not a necessity,” he added.
If a pharmaceutical company can geographically locate their regional warehouses? in a manner that lead-times to deliver down-stream in the supply chain is within 2 or 3 days, they would have a better chance of eliminating 20 of the 28 warehouses that are being maintained now, said Syal.
“Needless to say, pharma is a different sector than most others. A couple of issues give the sector complete distinctiveness. For reasons of compliance, batch management and expiry dates it is necessary to have more inventory turns than other sectors, for example FMCG,” he said.
Removing a layer of Clearing and Forwarding Agents from the supply chain would be efficient and profitable for a pharma company from the logistics viewpoint. From a non-logistics angle, but hugely relevant one, visibility to down-stream supply chain would improve with elimination of a layer, said the Flywheel Logistics chief.