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The Potential of Pharma Procurement

Posted on November 2017

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​​It is no secret that the pharma industry faces a myriad of challenges. From aggressive competition on generics pricing and expensive clinical trials, to slow drug approval processes and growing expectations of patients, it is clear that life sciences and pharmaceutical companies have to allocate their resources strategically.

For many of these companies, efforts are focused on areas such as R&D, sales and marketing. It makes sense - these are the functions that support their wider corporate strategy and secure new revenue streams. However, procurement can also play a strategic role in business growth. So are pharma companies missing this trick?

Untapped Value Potential

Procurement is often simply seen as a way companies can cut costs – but smart businesses are realizing it delivers much more. Innovative pharmaceutical procurement provides a fast-track to sustainable efficiency, greater competitive advantage, and can help nurture and protect a business’s strategic vision.

However, according to a study by Accenture, procurement consistently fails to get the attention it deserves.[1] Technology (or a lack of it), for example, can prevent procurement’s development. A recent ProcureCon Pharma report revealed 70% of respondents felt supplier recommendations from internal peers were more reliable and credible than recommendations from other sources.[2] As procurement professionals gather and synthesize information from numerous sources the average supplier discovery time can take weeks.

The procurement issue also has much wider implications. A joint study by the Pew Charitable Trust and the International Society for Pharmaceutical Engineers discovered that pharmaceutical companies’ failure to mitigate supply risk through procurement is costing the healthcare industry around £230 million.[3] The findings revealed that drug shortages could be avoided through improved supply chain management and more diverse procurement.

Greater Alignment

In a survey conducted at this year’s ProcureCon Pharma event, participants cited goal alignment as the biggest barrier to positively impacting business strategy.[4] Procurement organization and senior leadership were also flagged up as challenges that needed to be addressed.

Procurement managers have an important role to play within any organization because their work controls the suppliers which other areas of the business need. Compared to other business functions, procurement is the closest to the market, continually monitors supplier trends, and makes purchasing decisions that can benefit the business as a whole.

This means failing to consult procurement professionals at the right time during a product launch campaign, for example, can lead to a string of missed opportunities: marketing teams are unable to form lasting relationships with top suppliers, struggle to get value for money, and miss out on critical performance measures – all because procurement specialists were consulted at the end of the process, rather than at the start.

Gaining a Seat at the Top Table

Pharmaceutical and life sciences companies are recognizing the benefits of aligning procurement with a business’s long-term strategy. The more procurement professionals are given a seat at the top table in pharma companies, the sooner those businesses can reap the rewards of next-generation procurement and supply management.

Giving procurement a strategic mandate allows procurement teams to bring valuable insights and data to the table, act as trusted advisors to the business, and make a valid case for change. Overcoming organizational silos takes time, but forming collaborative partnerships between procurement and the rest of the business enables smarter purchasing decisions and delivers significant additional gains.

The Winds of Change

Procurement may have been overlooked for years, but change is on the horizon. We are seeing pharmaceutical procurement graduating from a back-room silo to a strategic boardroom partner.

Procurement teams are increasingly being seen as value creators, contributing to innovation and collaboration and taking center stage in strategic planning and management. The technology that has delayed processes such as supplier discovery is being accelerated and improved.

Pharma companies are joining other businesses and turning to procurement transformation to assess where gaps lie, and developing plans to fill those gaps. There are a number of ways organizations are transforming procurement such as aligning procurement objectives with wider business areas enables growth and cost reduction, building operating models around specific skills to give greater focus, establishing a preferred supplier program integrates suppliers and value proposition, and leveraging digital technologies facilitates better decision making.

By engaging with top-down transformational procurement, business leaders are able to demonstrate the value they can bring to the table.

Closing the Skills Gap

According to the findings of a CPO survey conducted by Deloitte, almost nine out of 10 respondents believe that talent is the single greatest factor in driving procurement performance.[5] However, the same survey also revealed a significant skills gap in this area. 62% of respondents noted a large to moderate skills gap across analytical abilities, while more than 60% of CPOs felt a lack of skills within their teams was preventing them from delivering more strategic procurement.

If you are ready to give procurement a more strategic role in your life sciences organization, DSJ Global can help. We specialize in sourcing mid to senior level procurement professionals for niche areas, including marketing procurement. To learn more get in touch with the DSJ Global team.







DSJ Global is a leading specialist recruitment agency for procurement and supply chain professionals. We know that procurement and supply chain is the critical business driver in any business. We exist to take care of one of the market’s most significant challenges: talent acquisition. Today, we provide contingency, retained search and project-based contract recruitment from our global hubs in London, Berlin, Switzerland, New York and Chicago.

We pride ourselves in keeping our professional network up-to-date with any changes that will shape the future of work or affect the hiring process. Visit our website to discover more invaluable insights, including exclusive research, salary guides and market trends.

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