Feature Stories



Establishment of Technology-Based Health Procurement and Supply Chain Management System, and Capacity Development in Tamil Nadu Medical Services Corporation



{This article is an abridged version of the submission on “Procurement Reforms and Capacity Development Activities at Tamil Nadu Medical Services Corporation Limited” made by Ms. Selvi Apoorva, Managing Director, TNMSC, Tamil Nadu, India, for the South Asia Procurement Innovation Awards.}


Tamil Nadu Medical Services Corporation Limited (TNMSC), a Tamil Nadu Government undertaking in India, is successfully implementing healthcare-related schemes throughout the State having a population of 77.88 million. The Corporation has put in place a transparent procurement process to make available for free Generic Drugs in Government health facilities, greatly reducing the Out-of-Pocket Expenditure of people of the State on drugs. TNMSC is also actively managing the Supply Chain of drugs in the State and ensures continuous availability of drugs at all Government health facilities. Further, it is effectively facilitating Public-Private Partnership in the Healthcare services in coordination with multiple stakeholders.


TNMSC was established in 1994-95 to procure drugs, medical equipment and other healthcare-related products, and distribute them to public health facilities throughout the State. Through an innovative ICT-based automation of demand forecasting, procurement, distribution, warehousing, and stock management, the Corporation facilitates a Rational Drug Distribution system, adhering to applicable laws of the land and other regulatory requirements pertaining to drugs and medicines.

From its inception, in the last two decades, TNMSC has rendered valuable services for effective implementation of all Healthcare-Related Schemes in the State, and to achieve the Goals and Targets of the Health Department. The Corporation has also established a continually improving Quality Management system and is certified with ISO recognition (ISO 9001:2008). Based on the success of the model, TNMSC has rendered Consultancy services to various State Governments in India, like Rajasthan, Andhra Pradesh, Odisha, Uttar Pradesh, Karnataka, Madhya Pradesh, and Kerala. It has also delivered training courses on Drug Logistics and Warehousing for personnel from Karnataka, Assam, Sri Lanka, Myanmar, and Nepal.

Challenges Addressed

Following were the challenges faced in Drugs Procurement in the State of Tamil Nadu prior to establishment of TNMSC Limited:

  1. Acute shortage of drugs and medicines at Government facilities.
  2. More than 1,000 drugs were procured, some of them even branded. There was no concept of essential drugs.
  3. Drugs procured in bulk packing – unhygienic storage and distribution
  4. Post-delivery quality assurance was non-existent and pre-shipment inspection was perfunctory.
  5. Poor quantification led to excess procurement and wastage.
  6. Delays in procurement process also led to shortage.
The above challenges led to lack of faith in Government health services, resulting in a decline of public participation in the healthcare delivery system.
Innovations in the Solution

The TNMSC initiative led to consolidation of hitherto dispersed activities of demand estimation, localized indenting, procurement of the same items with standardized specifications, and improved distribution, stock, and expiry Establishment of Technology-Based Health Procurement and Supply Chain Management System, and Capacity 41 Development in Tamil Nadu Medical Services Corporation management. Innovation was brought in at every point and the significant ones included:

  1. Rationalization of Drug Procurement for the Government Health facilities, eliminating shortage and excess.
  2. Introducing packaging standards with measures to prevent pilferage.
  3. Totally transparent process throughout the procurement cycle with a simple and clear standard bidding document.
  4. Elimination of quantification with tenders based on past consumption, and purchase orders based on actual monthly consumption – a genuine pull system.
  5. Effective implementation of Information and Communication Technologies (ICT) in the Drugs Supply Chain Management system. The system generates online information on inventory at district warehouses, enabling the management to prevent stockouts and excesses.
  6. An innovative passbook system, something like a debit card to health facilities, to enable lifting of the required goods from district warehouses. This has simplified the supply chain up to the facilities.
  7. Scientifically developed Quality Assurance procedures to ensure the Quality of Drugs.

Impact Generated

The technology-driven model followed by TNMSC has had a lasting impact on health services delivery not only in the State, but across the country. Its innovative approach has become the norm for all progressive States and at the national level for health sector procurement and supply chain management. Some of the significant and visible impacts are:


  1. Based on a detailed survey in 2015 by the National Sample Survey Organization, the Out-of-Pocket expenditure on drugs was lowest in Tamil Nadu among the major states, Rs. 145 per capita as against Rs. 2,284 for the country.
  2. The Corporation’s transparent procurement process has become a model for other States in India. This has also been much appreciated by international organizations, such as the World Bank and WHO.
  3. Upgrading skills of service providers in Drug distribution services, Human resource development, Efficient distribution through decentralization at district-level drug warehouses, Simplified indenting system (Including Online Indent), Usage of ICT system for monitoring of warehouse inventories, and Training and sensitization of all stakeholders towards effective implementation of the Free Drugs Policy of Tamil Nadu are some of the reasons for its success.

Scalability and Sustainability

TNMSC is a pioneering organization functioning for more than two decades, with a well-noted innovation in transparent Public Procurement System and other Diagnostic services at Healthcare facilities. The model of TNMSC has already been replicated in other states of India, such as Kerala, Rajasthan, Chhattisgarh, Haryana, Karnataka, Andhra Pradesh, Jharkhand, Bihar, Madhya Pradesh, and Odisha. The Central Government too has set up a similar agency for procurement of essential drugs. TNMSC is steadily visited by various Governments, including from abroad, for Training and Institutional Building purposes on various occasions from its inception, which shows the keen interest in replication of the TNMSC Model.


Lessons Learned

The Corporation has learned to manage the supply chain effectively even when there was failure of all modes of transportation due to natural calamities and various strikes. Tamil Nadu faced unpredicted rainfall during the North East Monsoon in the month of November and December 2015, and most parts of the North Tamil Nadu were inundated. To eradicate infectious diseases due to bacterial and viral proliferation, TNMSC procured and supplied chemicals, such as Bleaching Powder for use in the wet soil to control bacterial growth, Chlorine tablets to control the spread of diseases by contaminated water, Lysol to clean the floors and control bacteria, and Sodium Hypochlorite solution to control the spread of bacterial diseases due to stagnated water. These chemicals were procured by TNMSC on war footing basis for immediate requirements of Corporations of Tamil Nadu and Municipalities and Panchayat Unions to control infectious diseases.

In addition, the Health and Family Welfare department of Tamil Nadu organized mobile dispensaries in flood-affected areas. It carried out door-to-door diagnostic services, provided medical assistance to flood-affected patients, and catered to the need of medicines, such as diagnostic kits, antibiotics, intravenous fluids, analgesics etc., required for mobile medical camps. These were arranged by TNMSC on war footing basis from suppliers and nearby warehouses. The Corporation warehouses were working on round-the-clock basis for catering to the need of hospitals and patients. Thereby, contagious and infectious diseases were totally controlled by the Health Department effectively and in a timebound manner. TNMSC also played a vital role in mobilizing quality drugs in time and assisting mobile medical camps. TNMSC is thus capable of adapting to the dynamic changes in Public Procurement.