# Evaluation and Optimization of Pharmaceutical Inventory Management in a Tertiary Care Teaching Hospital in Jharkhand, India, Using ABC-VED Analysis

## TL;DR

This study uses ABC-VED analysis to evaluate and improve drug inventory management in a hospital in India, helping prioritize high-cost and critical drugs.

## Contribution

The novel integration of ABC and VED analyses provides a practical framework for optimizing pharmaceutical inventory in resource-limited hospitals.

## Key findings

- Only 2.6% of drugs account for nearly 40% of total expenditure, highlighting the need for focused inventory control.
- High-cost, low-criticality drugs make up a significant portion of spending, suggesting inefficiencies in procurement.
- Digital stock management and proactive procurement are recommended to improve drug availability and reduce waste.

## Abstract

Background

Efficient pharmaceutical inventory management is crucial for ensuring uninterrupted patient care, especially in resource-limited tertiary hospitals. Inappropriate stock control can lead to both financial inefficiencies and drug shortages, affecting clinical outcomes. This study aimed to evaluate the pharmaceutical inventory practices of a tertiary care teaching hospital in Jharkhand, India, using ABC (Always, Better, Control), VED (Vital, Essential, Desirable), and integrated ABC-VED analyses to identify expenditure patterns and critical control priorities.

Methods

A descriptive cross-sectional study was conducted at the central medical store of a tertiary care teaching hospital. Ethical approval was obtained from the Institutional Ethics Committee, vide letter no. 161 dated 05.03.2025. Data pertaining to all pharmaceutical items procured, stored, and dispensed between April 2022 and March 2023 were extracted from the hospital’s electronic inventory and verified with physical ledgers. Non-drug items were excluded. Each item’s annual consumption value (quantity × unit price) was used for ABC classification, while clinical criticality determined VED categorization. The integrated ABC-VED matrix was then developed to identify high-priority drugs requiring stringent control. Data were analyzed descriptively using Microsoft Excel for Mac, Version 16.103.4 (Microsoft Corp., Redmond, WA, USA).

Results

A total of 192 stock-keeping units (SKUs) worth ₹106.75 million were analyzed. ABC analysis revealed that only 2.6% of items (Category A) accounted for 39.97% of total expenditure, whereas 10.4% (Category B) and 86.9% (Category C) contributed 39.64% and 20.39% respectively. VED analysis showed that Vital items comprised 8.3% of SKUs (6.05% of cost), Essential 18.2% (13.82%), and Desirable 73.4% (80.13%). Integration of both methods identified that a small subset of high-cost, high-priority drugs (Category AV) requires continuous monitoring, while a substantial portion of expenditure is directed toward costly but low-criticality drugs (AD and BD). Operational reviews highlighted deficiencies in stock tracking and reactive procurement practices, contributing to mismatched stock levels.

Conclusion

The ABC-VED matrix proved to be a valuable tool for optimizing inventory control by linking financial significance with clinical importance. Strengthening digital stock management, enforcing strict monitoring of Category I (high-value, Vital) items, and adopting proactive procurement strategies can enhance efficiency and ensure uninterrupted drug availability in tertiary care hospitals.