Cipla: Responsible Supply Chains

Cipla, a multinational pharmaceutical company, has been providing access to high quality and affordable healthcare for over eight decades. In FY22, the company reported standalone revenue from operations of Rs 13,091.79 crore and standalone profit after tax amounting to Rs 2,957.93 crore.

Environmental footprint

Cipla’s sites in India are assessed on water-stress risk in line with guidance from the Central Ground Water Authority (CGWA) and on Science Based Targets initiative (SBTi) model for greenhouse gas (GHG) emissions reduction goals. Three sites (Baddi, Goa, and Sikkim) utilise groundwater, of which two are in the safe zone as per CGWA block assessment 2020. 

Various water reduction initiatives have been implemented during the reporting year. The analysis is used to plan for investments to achieve carbon and water neutrality targets. The total water that was recycled or reused was 42 per cent and three zero-liquid discharge plants in formulation sites were commissioned.

The company has conducted Environmental Impact Assessment (EIA) for all Active Pharmaceutical Ingredient (API) sites and no major impact on water was found based on the operations.

Solvent elimination and continuous improvement initiatives are being used to get cost-effective and environment-friendly manufacturing processes. The company is aiming to convert the entire organic solvent base system to aqueous base system across all sites globally and has eliminated seven undesirable solvents and substituted three with safer alternatives.

Waste management

Notably, 96 per cent of liquid waste and 83 per cent of solid waste have been channelised for recycling and co-processing, and 84 per cent of hazardous waste has been sent for recycling and co-processing, 6 per cent to secured landfills, and the remaining 10 per cent for incineration. 97 per cent of non-hazardous waste was sent for recycling and 3 per cent to secured landfill.

Responsible supply chains

India accounts for around 80 per cent of Cipla’s global procurement spend. The company conducts site audits for manufacturing organisations that are on contract and for principal- to-principal contract vendors and ensures timely closure of audit observations along with monitoring the closure of ‘corrective action preventive action.’ The company uses the ratings to conduct a root cause analysis of suppliers with low scores and help them improve their scores. Over 1,000 suppliers are evaluated annually and as part of strategic relationship management the company works closely with top 25 critical vendors.

During the year, the company organised the first virtual ESG workshop for suppliers, comprising representatives from 48 vendors and internal teams. The deployment of a module to capture Scope 3 emissions is underway.

Cipla follows an Alternate Vendor Development (AVD) strategy for sourcing APIs, which provides significant cost-reduction opportunities and also promotes local manufacturing. The company also aims to eliminate risks via proper screening. Additionally, a 360-degree review is conducted with geographical and climatic parameters to assess vendor performance and potential, catering to varying levels of demand. The company takes a proactive approach in identifying bottlenecks to resolve logistical challenges in the supply chain; AVD strategy ensures uninterrupted supply of raw materials.