One of the most challenging tasks you will face as an entrepreneur, irrespective of the type of business you plan to venture into is the problem of deciding the best site for your business, plant or factory. Whether a business thrives or flounders is greatly dependent on the location. It is advisable that you do an in-depth research on all the factors that might hinder the success of your decisions before making a long term financial commitments and investing your time, energy and resources into any location.
This post is geared towards helping you make the right decision, quickly and effectively, and execute those decisions consistently as regards locating your pharmaceutical plant and businesses.
- 1 Why you should make the right choice of pharmaceutical plant location
- 2 Factors you need to consider in making the choice of your pharmaceutical plant location
- 2.1 1. Availability of raw materials
- 2.2 2. Nearness to the market
- 2.3 3. Constant Power supply
- 2.4 4. Supply of Labour
- 2.5 5. Transportation Networks
- 2.6 6. Communication
- 2.7 7. Water supply
- 2.8 8. Suitability of land and climate
- 2.9 9. Integration with other group of companies
- 2.10 10. Availability of housing, other amenities and services
- 2.11 11. Local building and planning regulation
- 2.12 12. Environmental impact, waste disposal and Safety requirements
Why you should make the right choice of pharmaceutical plant location
Your ability to select appropriate location is important as it
- partially determines your company’s level of operating and capital costs,
- determines the nature of investment costs to be incurred,
- fixes some of the physical factors of the overall plant designs for instance heating and ventilation requirements, storage capacity of raw material taking into consideration their local availability, transportation need for raw materials and finished goods, power needs ,cost of labours, taxes, land construction, fuel, etc.
Factors you need to consider in making the choice of your pharmaceutical plant location
1. Availability of raw materials
An ideal location for your pharmaceutical company is one where the raw materials used in the manufacturing processes are readily available. This ensures constant supply of raw material and reduction in the operational cost.
2. Nearness to the market
Reduction in your company’s overhead expenses and transportation cost can be achieved if your company is located near the target market. Also, important information about your company’s market can be easily obtained and analyzed by the management specifically for the generation of strategies, confident decision-making and formulation of production policies with regards to market opportunity, market development and market penetration strategy.
3. Constant Power supply
Constant power supply is a pre-requisite for the localization of pharmaceutical industries as the need for cheap, continuous, and adequate supply of electricity are of paramount importance. The cost of running a company using generators is usually high and this increases your company’s overhead cost and you might find it difficult paying your workers.
4. Supply of Labour
Since labour is one of the most important inputs required to transform raw materials into consumer goods, it is necessary that you locate your company where both skilled and unskilled labour are readily available at cheaper rate.
5. Transportation Networks
Efficient transportation service is very important for marketing and distribution of finished products, bringing raw materials and supplies, as well as allowing your customers to reach you without difficulty. Good road networks, railways, water and air transport systems are considered to be appropriate for the location of your company. Also the cost of the available means of transportation should be put into consideration.
Good communication facilities, such as, internet, postal and telecommunication links are of great importance towards the success of a business. It is very important that you open communication channels between you and your customers. Areas with good communication system should be given priority when it comes to making choice of a pharmaceutical plant location.
7. Water supply
The availability of constant water supply is another important requirement for pharmaceutical industries. Even when you drill a borehole, it is advisable to check if the water in that area is good for manufacturing.
8. Suitability of land and climate
Most industries need flat expanses of cheap land on which they build their factories. The soil type of a proposed location should be able to support the load likely to be placed on it. Climate on the other hand affects the choice of a pharmaceutical plant location. Extremely hot, humid, dry or cold climate are not much suitable for the establishment of pharmaceutical plants.
9. Integration with other group of companies
It is advisable to locate your pharmaceutical industries in an area where other factories are already in existence. Liabilities like repairing of roads, buying of transformer etc., can be shared among the companies whenever the need arises. Thereby reducing the amount your company would have spent in fixing such problem assuming it was to be located in an isolated area.
10. Availability of housing, other amenities and services
Setting up your pharmaceutical plant in an area where there is good housing facility, schools, hospitals, banking facilities, restaurants, local transport facilities, shopping malls water supply, drainage, disposal of waste, churches/mosque, etc., can easily attract good staff especially the skilled ones.
11. Local building and planning regulation
In some cases, there is already a plan either from the local government or from the state government that an area has been mapped out for some projects. Proposed location should not infringe local regulations and bye-laws. To avoid losing what you have worked for, a discussion with survey department of the local authority is most desirable. Laws for the construction of buildings, local taxes etc. should be taken into consideration before you finally decide where to locate your company.
12. Environmental impact, waste disposal and Safety requirements
Full considerations should be given to the difficulty and cost of disposal of all waste products generated during production processes. The safety of your workers and the populace is very important and should be put into consideration especially if your industry is likely to cause pollution or process explosion. Such industries should be located far away from residential areas. Workers who are allergic to some substances (e.g., lactams) should not be exposed to such.
It is worth noting that these factors explained above influence your choice of pharmaceutical plant location at different degrees. The extent to which they affect your choice of pharmaceutical plant location is greatly dependent on the nature and size of the proposed business or company.
- Signore A. A and Jacobs T. (2005). Good Design Practices for GMP Pharmaceutical Facilities. CRC Press.
The title of this post is Factors to Consider When Choosing a Pharmaceutical Plant Location