Chapter 12

Technological Development in the Production Processes of Small and Medium Enterprises , in the Pharmaceutical Sector in Bogota Colombia
Bibiana M. Vallejo and Clara E. Plazas

Abstract This chapter describes the state of technological development in the production processes of small and medium enterprises (SMEs) in the pharmaceuti , Colombia. The evaluation focuses on the use of indicators cal industry in Bogota like the relationships between producer companies and their suppliers, the incorporation of each into the operations chain, the management of quality systems and the implementation of green production principles. It deals with strategies that enabled the proposal of some useful indicators in the evaluation of technological development in the eld, justifying the indicators selection and the criteria used to obtain surveys for each dened indicator. When these indicators were applied to in cosmetics, phytotherapeutics, medicines and cleaning good producers, companies positive results were given. Finally, the level of technological development in the pharmaceutical sector is evaluated on the basis of the indicators proposed using as a tool a survey designed to assess and study the material transformation processes in each of the industrys subsectors.

12.1

Introduction

Colombias pharmaceutical sector is composed of organizations that produce, import and commercialize pharmaceutical products, dened by Colombias health legislation (National Health Ministry 1995) as products used by humans or animals as medicines, cosmetics, foods with therapeutic value, pharmaceutical products made with natural resources, products generated by biotechnology, biological products, homeopathic products and other related goods, such as medical devices and cleaning products.

B.M. Vallejo (*) C.E. Plazas , Colombia Universidad Nacional de Colombia, Carrera 30 No. 45-03, Bogota e-mail: bmvallejod@unal.edu.co a and N. Velasco (eds.), Production Systems and Supply Chain G. Mej Management in Emerging Countries: Best Practices, DOI 10.1007/978-3-642-26004-9_12, # Springer-Verlag Berlin Heidelberg 2012 225

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were authorized to produce pharmaceutical In 2010, 292 organizations in Bogota products by the countrys ofcial regulatory agency, the Instituto Nacional de Vigilancia de Medicamentos y Alimentos (INVIMA), the organization that establishes, veries and checks for compliance with the quality assurance parameters in the pharmaceutical industry. Of those organizations, 93 were drug producers, 135 were cosmetics producers, 13 were phytotherapeutics producers and 51 manufactured cleaning products (INVIMA 2010). These 292 companies made up the majority of Colombias pharmaceutical companies. Reasons that could explain include: why the majority of Colombias pharmaceutical companies were in Bogota Easier supply of raw materials and distribution of nished products, both inside and outside the country. Strong presence of logistic operators for nished-product management. Good and specialized industrial equipment suppliers, providing easy access to consultants and maintenance services. Supply of highly qualied staff in pharmaceutical chemistry and engineering. Broad presence of packaging material producers and suppliers.

12.2

Description of the Pharmaceutical Sector

The most relevant advances in the pharmaceutical industry in Colombia took place in the 1980s, when an outstanding number of large international pharmaceutical companies operated in Colombia, especially compared to the total number of Colombian companies operating at the time. The commercial activities and economic growth of multinational companies involved in the manufacture of medicines, cleaning products and cosmetic products drove an important process of technological transformation in the pharmaceutical sector, easily identiable by the advanced manufacture process and pharmaceutical procedures developed with headquarters technological support. Colombias economic and social situation in the 1990s and the globalization processes that took place worldwide also inuenced this sector, affecting the volume of manufacturing operations and the pharmaceutical market as much as company operations. This contributed to the change in pharmaceutical manufacturing operations in Colombia, as some international companies outsourced production to Colombia, asking Colombian companies to manufacture their products, while other enterprises chose not to produce and focused their activities on marketing their products in Colombian. In the 1990s, medicine producers, looking to improve their operations, began implementing Good Manufacturing Practices (GMP). This improved Colombian companies production standards and manufacture processes, as well as the quality of the products they produced, especially compared to those of other Latin American countries. In the process of certifying Good Manufacturing Practices, INVIMA focused its protocols and inspection documents on the ve components of a quality system that companies were required to carefully control to ensure the manufacture of products

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Definition of population, moment and place

Searching population on data bases

Tool for information survey

Data management program design

Verfication of pertinence and contacts

Challenge of the instrument

Population data base

Final survey

Instruments application

Tabulation and data analysis

Definition of projects

Fig. 12.1 Model for studying pharmaceutical industry SMEs in Bogota

that met established quality specications: raw materials, workforce, facilities, work methods and machinery. The results of studies of this sector (Vallejo et al. 2007; Torres et al. 2005; Plazas and Pardo 2008) have shown the importance of small and medium companies in each of the analyzed subsectors: cosmetics, medicines, phytotherapeutics, health care and cleaning supplies. These studies have revealed that organization size did not constrain access to new markets or affect companies permanence in the market. Since small and medium enterprises make up an important part of the Colombian economy, enhancing their productivity would greatly improve the countrys competitiveness in the international markets. This fact inspired our interest in studying the typical production processes at these companies to identify the factors that determine the level of technological development in the pharmaceutical sector and, s small and medium pharmaceutical companies. more specically, in Bogota The existing studies of technological development (Zerda 1998) recommend that any such study should rst identify the members of each sector and then make a diagnosis based on environment analysis to assess the situation in each sector. To analyze the level of technological development in each of the SME subsectors (medicines, cosmetics, phytotherapeutics and cleaning product manufacturing), transectional descriptive studies were conducted, focusing on the transformation process perspective. The process of this analysis is shown in Fig. 12.1. It considered

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companies and their material suppliers, evaluating information technology management, the use of green production processes, the use of quality assurance procedures and logistics in relation to product management as the fundamental factors in evaluating companies supply chain integrations. In each case, specialized instruments were tailored to collect information on over 3 years. Quota sampling was each aspect. The study was carried out in Bogota employed on enterprises in each subsector, and statistical tests on the results determined their validity. A fundamental part of the research was to obtain survey models for the study of each aspect in several companies and to analyze and make conclusions about the effect of the material transformation process on the sectors technological development.

12.3

Material Transformation Processes in the Pharmaceutical-Industrial Sector

Production processes in the pharmaceutical-industrial sector entail the transformation of materials from a logical sequence of operations, during which the inputs acquire added value (Vallejo and Torres 2007). The transformation processes, shown in Fig. 12.2, require technological elements related to raw materials, packaging materials, equipment, facilities, procedures, human resources and information feedback. The assessment of organizations technological development allowed for the identication of the skills required to build up technological capacities. How producer companies carry out their production processes is one way to study their attained degree of development (Vallejo and Torres 2007). The knowledge associated with the pharmaceutical processes involved in the transformation of raw materials to nished products, have been used to describe the pharmaceutical sector in terms on technological development (Vallejo and Torres 2007). Reliable indicators useful to evaluate manufacturing capacity, a concept established by the World Trade Organization, have been identied. The term manufacturing capacity has being adapted to dene the way countries with minimal technological resources can manufacture pharmaceutical products. That requires using the specications related to the production processes established in the WHOs Good Manufacturing Practices guidelines, which demand that all manufacturing processes be clearly dened, systematically reviewed by experienced professional staff and able to consistently manufacture pharmaceutical products of the required quality (Gallo et al. 2010). Research conducted by Carvajal and Bolivar (2005) and Duarte (2005) showed that, not taking organization size into account, and independently of the pharmaceutical subsectors (medicines, cosmetics, phytotherapeutics and cleaning products) small and medium pharmaceutical product manufacturing enterprises

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Operations managemant

Environment (Facilities)

Supplies
System of critical support Equipment Materials Wokforce

Products

Transformation Conversion Process

Goods or Services

Information
External Information

Feedback information for the control of supplies to the process and technologey

Fig. 12.2 The transformation process of materials for the pharmaceutical-industrial production sector Table 12.1 Main problems reported by SMEs of the pharmaceutical sector related to the handling of materials Problem Medicines Cosmetics Raw materials and materials 57% Most frequent problems Equipment 23% Human resources 12% Suppliers 63% Raw materials and materials Process time of Importation 10% Unfulllment 29% Suppliers Quality uctuations 19% Raw material and material analysis Technique adaptation 35%

experience problems associated with material management, so relevance was given to this aspect in the design of the diagnosis tool. Moreover, as shown in Table 12.1, this sector is remarkably technologically dependent on suppliers, a fact that has signicantly affected the transformation processes. The relationship between the supplier and the producer was found to be an important factor in the functioning of the production chain, since it is essential to a et al. moving products through the transformation process and to the market (Garc 2009). The most important aspects related to the transformation process are provider selection, raw material quality control, suppliers production process control,

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suppliers documentation system assessment, administrative system assessment, diversity of materials available and suppliers quality policies (Shah 2004). Taking pharmaceutical sector supplier characteristics into consideration, we found that it is possible to rank organizations levels of vertical integration and efciency in supplier selection and procurement by evaluating the real integration of all components in the supply chain (Olaya et al. 2006). By managing these aspects it is possible to improve the production processes. The main factors affecting local supplier performance were found to be: Dependence on importing raw materials (pharmaceutical or cosmetic active components, technological ingredients and functional ingredients). Finished product imports exceeding nished product exports. Focusing activity on semi-elaborated products, thus decreasing the possibility of adding value to the local nished product. Since pharmaceutical products have a great impact on health and well-being, the sector is strictly regulated. Through management of the transformation processes and the implementation of quality assurance systems, it is possible to increase local products access to foreign markets. In the case of the manufacturing industry, the quality of a product depends on its physical, chemical, and biological characteristics. In the case of a service industry, quality depend on the ability to offer an advantageous service. Besides, this concept deals with companies capacities to decrease product prices and remain nancially stable. Additionally, the input offered by the implementation of quality systems contributes to establishing solid elements that lead companies toward a culture of improvement and excellence in production, which guide company management to adopt other quality systems or international standards. Since quality is fundamental to increasing Colombian SMEs competitive development, the implementation of quality systems and certication in accordance with international standards like the ISO 9000:2000 would guarantee greater success through more and better commercial agreements. It is thus necessary to identify the quality system or systems that would guarantee better control over organizations administrative, technical and human activities. Colombian medicine production companies, regardless of size, are required to use GMP, which is certied by INVIMA based on the achievement of product specications regarding sterility, the pharmaceutical characteristics of the processed active pharmaceutical ingredients and the technical aspects of the pharmaceutical form produced, classied by physical state: liquid, gas, solid or semisolid (Gallo 2010). GMP certication is not yet mandatory for the cosmetics industry. Cosmetics n companies usually apply for a certication called Capacidad de Fabricacio (Production Capacity), which certies good practices in their industry though some have applied for and received GMP certication. On the other hand, green production is a characteristic that allows for indirectly determining aspects related to the technological development of the processes used. The main production processes SMEs carry out to transform medicines, cosmetics

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and phytotherapeutics are related to the solid, liquid and semi-solid manufacture, and each production process generates environmental impacts. For example, solid forms are characterized by a production that involve low amounts of water. Their main environmental impact is related to particulate material generated, which must not enter the atmosphere. To be kept within enclosed facilities, this material is caught by retention lters. In this group are included products such as tablets, capsules, dusts and granular material. Liquid forms include soluble materials and chemicals in solvents or in cosolvent systems, such as syrups. In this group, water consumption is a noteworthy factor that has impacts on the environment, mainly in relation to the efuents produced and the pollutants that can be generated. Semi-solid forms are two-state systems with one state dispersed in the other. This group includes creams, gels, ointments and lotions that use tensioactive agents, generally. The impacts of the semi-solid transformation processes are attributed to the grease and oil used in the formulation and to tensoactives. Each transformation process has impacts on the environment that must be characterized. Through the assessment of these environmental effects, with the goal of minimizing them, and involving the concept of green production, a strategy for long-lasting industry improvement was proposed. Next, we present and discuss the results obtained from the different topics , Colombia. studied in pharmaceutical SMEs in Bogota

12.4

Relationships Between SMEs and Consumable Suppliers

An instrument for collecting information was designed to evaluate determinant functions related to material management, including the processes of production, storage, quality control and purchasing. The proposed questions are oriented to each one of the functions, emphasizing the relationship between these factors and the production processes. In the construction of this indicator, it was necessary to establish cause-andeffect relationships as tools for determining the interactions between supplier and producer SMEs. See Fig. 12.3. Most enterprises were found to face delays in the processes associated with supplies. (See Fig. 12.4.) Generally speaking, containers and packaging materials are the most frequent causes for these delays, which can last up to 8 days in length. The lead time in delivering orders on the part of the suppliers also causes delays. All delays, no matter their reasons, affect planning, production and delivering of nished products. The most common providers for such organizations are companies representing international manufacturers of raw materials, and the most common problem they create is a lack of the requested input. Companies were observed to have difculty evaluating the quality of raw materials used in the production processes, especially those used to make supplies

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Fig. 12.3 Cause-and-effect diagram of the procurement of consumables for the pharmaceutical sector

Fig. 12.4 Detected causes of delays in the transformation processes, generally because of consumable suppliers

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such as extracts, aromas, essences and some active ingredients. Additionally, suppliers do not always have the competence to advise their clients about the supplied material. To accomplish the study, a questionnaire was used to survey companies at which supplier evaluations have been used to make decisions about the continuity of procurement contracts. Additionally, the fullling technique specications to use raw materials in the production process and its impact in the effective achievement of manufacturing planning were established in some cases, to be a critical factor to continue the agreements. In supplier lead time, the minimum elapsed time identied from the moment a supplier receives an order to the moment the order arrives at the producers facilities was between zero and 2 days, and the maximum elapsed time was 60 days. However, it was not possible to identify a standard raw material suppliers model for procurement. The studies also showed that not all suppliers make an accompaniment periodically to the buying management and they cant keep the same quality ever, besides there are no indicators dened for this function. Thus, a large number of enterprises have problems because they cannot count on efcient stock and logistics, which in turn has a strong impact on the availability of materials, their quantity, quality and arrival on time for transformation process In small and medium enterprises that offer outsourcing services, the capacity to decide about procurement programming was observed to be controlled by contractors as a function of batch production scheduling, which makes SMEs different from other organizations.

12.5

Integration with Primary Supply Chain

The instrument designed for this indicator assessment was meant to measure how strong and well established enterprise and provider agreements were, the accomplishment of alliances and the supplies upon which this integration was established. The frequency in the change of suppliers and the reasons for nishing contractual relationships were also analyzed. The results analysis for all the pharmaceutical subsectors revealed some differences between small and medium enterprises, most of them associated with the kinds of products marketed by each of the enterprises. The situation of medicine producers was different from that of the companies that produce cosmetics, phytotherapeutics and cleaning products. This difference was revealed in how organizations dispense of supplies in the manufacturing process. The medicine subsector includes organizations that consider strategic agreements with their suppliers, particularly packaging material providers. Such companies have more stable relationships with suppliers and normally count on alternative providers for the stores of higher demand.

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Enterprises of other subsectors evidenced a small degree of association between providers and producers, which were only identied in a few cases. Enterprises that use natural raw materials for their products, especially, have established agreements with farmers and in the case, of other materials for these organizations, since many enterprises sales volumes are large, they are not interest in small enterprises, and so high levels of delivery time non fulllment, were found. But with other supplies, many enterprises due to the fact that their volume of buying seems not to be so noteworthy, there is not interest on part of big enterprises suppliers in offer a good service and some time were found high levels of nonfulllment in terms of the delivery times. Additionally, some products complex compositions require a great variety of supplies, hindering these organizations buying relationships with exclusive suppliers.

12.6

Use of Technology in Green Production

Though pharmaceutical products contain substances that affect the environment, their impacts have not been fully assessed, and little attention has been paid to the management and disposal of residues, highlighting the need to study the way the materials are transformed and the impact of these actions on the environment. Not enough thought has been given to the implementation of green production in small and medium enterprises. Such action has so far been constrained to the fulllment of required environmental regulation, missing the opportunity to proactively implement green technological advancements in companies production processes. In the performed study, an indicator for surveying this factor was used to identify the characteristic processes for the manufacturing of pharmaceutical products, as well as to characterize the wastes generated in each transformation stage. Such wastes were classied into three categories: emission into the atmosphere, liquid waste and solid waste. To complement the characterization of material transformation processes in companies, it is necessary to establish diagrams that represent unit operation sequences for the most common processes in order to assess their impacts on the environment. Figure 12.5 presents the liquid production diagram. This model represents a guideline for designing similar schemes for the production lines of solids and semi-solids, and in particular for phytotherapeutic companies, for which the diagrams showing the production of natural extracts could be highlighted because of their complexity and environmental effects. The results showed that small and medium enterprises focused their efforts on waste disposal, forgetting the importance of extended producer responsibility as an opportunity to improve their processes. This indicator could be used in the evaluation of the sectors technological development.

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Technological components Active pharmaceutical ingredient Energy

Technological components Active pharmaceutical ingredient Energy

Energy

Packaging containing materials Energy

Closures Energy

Labelling material Energy

Energy

Dispensation

Mixture Solubilization Solution

Filtration

Containing package

Sealing

Labelling

Warehousing

Generation of particles Gases

Vapors Gases

Solid residues Filters

Packaging and labelling residues

Residues of labelling material

Fig. 12.5 Identication of environmental impacts from the production of liquid-form pharmaceutical products

By the assessment of this indicator, it would be possible to use it as a complementary tool in the determination of the degree of technological development in the sector.

12.7

Tools for Ensuring Quality

The nature of a pharmaceutical product demands the fulllment of regulations related to the implementation of quality systems, staff management and, increasingly, environmental management. The accomplishment of such regulations is revealed through quality certications, which signal innovation and management capacity. Some of these certications are required by government institutions, and others are tools for competitiveness and assets to access foreign markets. This last aspect was considered an important element and was used in the design of a survey to assess the interest of producer companies in obtaining quality system certications from national and international government institutions and private organizations. Across subsectors, many enterprises were found to hold at least the certications required by the ofcial regulatory institution, and many medium enterprises have gotten voluntary certications, such as ISO. Such certications, however continue to require complex and difcult processes, which are unmanageable for small companies. See Fig. 12.6. Through deep analysis and the selection of indicators chosen from elements related to the production process and technological support, it was possible to create s small and medium a tool to evaluate the technological development of Bogota

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Fig. 12.6 Certications in the pharmaceutical industry related to company size

pharmaceutical enterprises, as well as opportunities for further improvement in the area. Improved relationships between suppliers and producers, the integration of the production chain and improvements in companies environmental processes are all critical steps for further industry-wide development. Better environmental policies, especially, would give these companies products greater access to new foreign markets. Through detailed understanding of the elements involved in the materials transformation process in the pharmaceutical sector and its subsectors, companies should dene strategies for promoting the development of this industrial sector.
n de Acknowledgments Universidad Nacional de Colombia, Research Department (Direccio n, DIB). Project: Environmental Impact of Materials Logistics of the Productive Investigacio Pharmaceutical and Industrial Sector (PPIS), associated with the technological development of its transformational processes.

References
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