December 2010

Pharma gives SAP a Thumbs-up

Project

dIgitalhealth

SAP implementation for Panera

Biotech

Cost

dIgitalhealth

Project Cost: `40 lakhs

Miscellaneous Cost: `10 lakhs

Timeframe

Three months

Key People

R Babu, Founder and CEO, Enteg;

Sanjeev Pant, Chief Information Officer, Panacea

Technology

Platform: SAP ERP 4.7 version

OS: Windows Server 2007

Modules

  • Materials Management (MM)
  • Production Planning (PP)
  • QA & QC
  • Plant Maintenance (PM)
  • Sales & Distribution (SD)
  • Customer Service (CS)
  • Human Resources (HR)
  • Financials & Controlling (FICO)
  • Product Life Cycle
  • Management (PLM)

Benefits

  • Fully integrated system
  • Capture cost and compute profitability
  • Improving production cycle
  • Streamlining business processes.

SAP implementation at Panera Biotec provided a fully integrated system with access to readily available information at any time

By Divya Chawl

The Indian pharmaceutical industry, exhibiting dynamic growth patterns, is on a constant lookout for new technologies and intelligent business strategies. IT solutions that improve business efficiency, enhance knowledge integration and meet all regulatory standards are currently creating much excitement in this market. Following the current trend, Panacea Biotec, one of the leading pharmaceutical and life sciences organisations in India used Enteg’s SAP solution for its affiliate company – 000Panera Biotec.

Client Background

Panacea Biotec is a leading vendor of vaccines and pharma products in the Indian market. Providing a brief background of the company, Sanjeev Pant, said “Some of the vaccines, manufactured by us include polio vaccine, hexagonal and pentagonal vaccines, and so on. Recently, Panacea has also launched swine flu vaccine in India. In the pharma sector, the company is all over India and with an established presence in the international market, as well. The company has five R&D units and five plants in India. Certain very famous products in the pharma sector, such as Nimesulide, have been developed by Panacea. The organisation also has a presence in oncology, diabetology, cardiac areas, nephrology and kidney transplant areas. In vaccines, the company produces around 17 different products and around 70-75% of the revenues in this sector are coming from the international market. In pharma, around 25% revenue is coming from the international market. In the pharma sector, as you know, a product can only be exported to a particular country if it is approved by the pharma regulatory authority of that country. So the process of getting approvals takes somewhere around two and a half years. Therefore, the revenue from international market in this sector is limited.”

“Panera, an affiliate company of Panacea, is into bulk drug manufacturing. Panera will be supplying these products to Panacea as well as the Indian market. As of now, Panera is only supplying products to Panacea, fulfilling around 60 percent of the need of the company and a very few products are being exported, as of now”, he added.

Rajagopalan Babu
Founder and CEO,
Enteg
Sanjiv Pant
Chief Information Officer,
Panacea Biotec

Project Outline

The implementation, which took only about three months to get completed, is now providing immense benefit to Panera, which mainly carries out bulk drug manufacturing. Panacea’s instant decision to implement SAP in the current fiscal year left the organisation with only over three months to complete the entire process, starting from vendor selection to end-user training. “Earlier we had decided to roll out the SAP implementation project for Panera in the fiscal year 2010-11. However, due to certain reasons, we decided to roll it out this year and by the time the decision was taken, there were only 3 and a half months left for us to complete the project”, said Sanjeev Pant, CEO, Panacea Biotech.

After the decision to implement SAP was finalised, Panacea started with the vendor selection process. The organisation based its decision on various criteria, which mainly included the expertise of vendor in the pharmaceutical sector, their commitment towards the set timeframe, their comfort level while working on such projects and mutual cost consent. “Panacea had a requirement of implementing SAP in their new plant, because of which we approached them.

“There was an uation process, during which we demonstrated our application, post which we were selected. One of the major advantages we had was our expertise in the healthcare domain as we have worked with and a few other companies in this domain”, shares R Babu from Enteg. “We took around 15 days for selecting the most suitable vendor, after which considering all criteria we shortlisted Enteg for the implementation”, adds Sanjeev Pant.

The Technology

The technology chosen for implementation was SAP ERP, version 4.7. The technology was already implemented in Panacea’s Corporate Office and the company wanted to replicate the implementation in their Panacea plant also. Panacea’s main objective for implementing SAP was to streamline the production plan and HR activities of Panera. Talking about the change in scenario after SAP implementation, Sanjeev said, “We saw a major improvement in the production cycle such as the logs are now maintained properly and actual costs can be calculated. This helped in streamlining the business processes and getting the right costs and investment.” Bringing forth his point of view, Babu said that, “Before SAP implementation, all business information – be it production, quality management, profitability, was scattered and rested with different departments and sources. Because of this, it was not possible for Panera to get live updates. After SAP implementation, you can get the complete visibility of an organisation at any point in time. All information is fully integrated and readily available. It helps the company to increase its market. An integrated system is what they have got after implementing SAP.”

Working through Challenges

Although, the implementation process got completed within the set timeframe, yet there were certain initial hiccups. Talking about the challenges faced by Enteg, Babu said that, “Panacea is into the business of vaccination, while Panera manufactures these vaccines. The main challenge was that for a given batch or product, the material had to be collected from various vendors. So we had to effectively compute and arrange the cost of the correct product so that the right profitability can be acquired. In large organisations that have multiple sources of raw material from different places, especially different vendors, the raw material costs will vary dynamically. Hence the costs need to be allocated appropriately to different batches. Modelling was another challenge. We had an initial interaction with the end-users to get a better understanding of the work. We also went to the factory and studied the actual manufacturing process. After the actual manufacturing process, we started capturing the cost. This manufacturing process is put into the SAP system.”

The roadblocks however, did not affect the benefit quotient for Panera. Sharing his perspective on Panera’s benefits, Babu said that,”Panera had never had a single system that was fully integrated. For a manufacturing unit, capturing the cost is the most important thing. The ability to capture this cost and compute the profitability is actually an immediate process. However, looking at an RoI perspective, it might take a longer period of time to realise actual benefits. As far as the basic benefits are concerned, Panera will start realising them immediately. The major benefit of an ERP system is the availability of an integrated system.”

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