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What is an ERP System in the Pharmaceutical industry?

The flow of processes and operations in a pharmaceutical company is extremely complex and labor-intensive, owing to stringent production regulations and competitive market demands. What is ERP for pharma?

An ERP system enables automation, management, and optimization of key business processes. Although the applications of ERP in the pharmaceutical industry are similar to the uses of ERP software in life sciences, additional features and functionalities are often required. To learn more about SAP software in the life sciences, click here. 

Pharmaceutical companies can be broadly segregated into two major domains - manufacturing and marketing. ERP software solutions are available in the market to meet the specific needs of each of these types of companies. One such ERP software is provided by SAP SE, the global leader in ERP software development and distribution. 

As stated above, the complexity of business operations in pharmaceutical companies requires ERP software to meet unique requirements. In this article, we will look at what ERP software systems offer to the pharmaceutical industry. 

Why Does A Pharmaceutical Company Need ERP Software?

There are various business challenges pharmaceutical manufacturers and distributors face on a day-to-day basis that require special attention. The most crucial among these challenges is the complex supply chains that involve restricted substances, robust and rapid inventory management due to perishable materials, and extensive compliance requirements. An ERP software that is specifically designed for pharmaceutical companies helps mitigate these challenges to ensure smooth manufacturing, marketing, and distribution of products. 

Features Of An ERP Software For The Pharmaceutical Industry 

The pharmaceutical industry requires an ERP software that is tailor-made to meet the industry’s norms and regulations. The most important specifications of an ERP for a pharmaceutical company are as follows. 

Formulation And Pre-Formulation Management 

The manufacturing processes in pharmaceutical companies involve adherence to strict formulation protocols that require constant monitoring of raw material and finished product quality to produce a batch. The pre-formulation stage includes designing elaborate production protocols for drugs, stages, quantities, manufacturing conditions, etc. Therefore, an ERP software solution for pharmaceutical companies allows storage, analysis, and automation of these formulation protocols reducing the need to continuously monitor production and the potential for the introduction of manual errors. 

Recipe and Formula Management 

As an extension of formulation management, this feature allows the standardization of units for automated recipe formulation. A robust recipe management module can effectively re-calculate ingredient quantities based on what is available in the inventory so that a shortage of ingredients does not slow down production while making sure that the product meets the pre-defined specifications. 

Lot And Serial Number Tracking 

Most ERP software solutions for pharmaceutical companies allow bi-directional material traceability by providing precise lot and serial number tracking. This is also accompanied by a product recall functionality in case there is a non-compliance incident. 

Advanced Inventory Management 

This feature allows the usage of raw materials in an efficient and organized manner. It employs the “first expiration, first out” rule to reduce non-compliance risk and enhance cost-effective production. 

Ensuring Regulatory Compliance 

The pharmaceutical industry is one of the most heavily regulated industries in the world. The FDA can audit pharmaceutical manufacturers at any time to check compliance with Good Manufacturing Practices. Failure to comply may result in criminal charges filed against the company. As a result, ensuring compliance with industry regulations becomes an essential feature of ERP software designed for pharmaceutical companies. Some of the compliance requirements that an ERP should check for include Good Laboratory Practice regulations, bar code label requirements, contract manufacturing arrangements for drugs, and drug master files, among others. 

Quality Control 

The adoption of ERP software systems allows pharmaceutical companies to improve their production standards and manufacture high-quality products. It facilitates the conduct of automated inspections throughout the procurement and production process. Through the use of different features, it automatically quarantines suspicious or substandard items for further inspection or disposal. In addition, most ERP systems include regular quality control tests, results tracking, and implementation of corrective actions. 

Sales And Marketing 

ERP systems help the sales and marketing teams streamline sales orders, and contract management. Since it integrates data from all the departments in the organization in one place, it allows monitoring, analysis, and optimization of sales and marketing campaigns to drive revenue and growth. 


ERP software systems enable pharmaceutical companies to streamline processes and improve efficiency while complying with strict regulations. ERP systems can simplify workflows at every point from manufacturing to delivery. Pharmaceutical manufacturers can utilize ERP systems to track raw materials, maintain inventory, and improve formulation protocols. At the same time, other departments can use these systems to increase operational visibility and boost overall profitability. Relying on old technology or manual processes is not only time-consuming, but it also leaves room for human error, resulting in potential compliance issues. For a pharmaceutical company, these errors can pose serious threats to patient health and safety. Thus, having an ERP for pharma system in place to optimize key operations and processes is crucial.

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