Overcoming challenges in pharma and life sciences procurement

The Pharmaceutical and Life Sciences industry is one of the UK’s most important industry sectors. However, whilst pharma and life sciences organisations have been on the cutting edge of scientific innovation for decades, sourcing and procurement methods can still be a challenge. In recent times, we’ve seen more clearly than ever the challenges faced by those working in procurement in the pharma and life sciences sector: for example, the COVID-19 pandemic highlighted supply challenges, especially a shortage of components to develop much-needed drugs and medications.

In order to overcome these challenges – and prepare in advance for any future disruptions- the pharma and life sciences sector needs to reassess their current procurement processes in order to shine a light on areas for improvement and harness any beneficial innovations.

Current challenges in pharma and life sciences procurement

Firstly, let’s look in more detail at the challenges currently being faced by procurement professionals within the pharma and life sciences sector.

Fluctuations in demand are common in the pharma and life sciences sector, and one method to prepare for this is to manufacture and store excess supply. However, storing excess stock is risky from a business point of view, as it costs money to store and maintain product in anticipation of sales and profit. Therefore, businesses may instead operate on a just-in-time model by manufacturing the product when it is needed in order to keep costs down.

The issue with the just-in-time model is that it is dependent on the availability of the raw materials required to create the drug. Often, there are multiple manufacturers for a drug, but there may be only one producer of the raw material. 

Here, we explore the ways in which procurement can be key to overcoming these challenges.

1. Monitoring spend and enhancing transparency

Procurement professionals across every sector understand the importance of being able to respond quickly to disruptions in global supply chain, and the pharmaceutical and life sciences industries are no different. Operating with transparency, speed, and control are all vital to business success.

Keeping a close eye on outgoing spend is essential. Not only can this result in cost savings, but it will also provide a wealth of data that will allow procurement teams to predict future demand and scale up spending to meet needs.

2. Prioritising supplier diversity

We have previously discussed supplier diversity and the positive impact this brings for businesses. Supplier diversity is about forming supplier partnerships with minority-owned, women-owned, veteran-owned, LGBT-owned, and disabled-owned organisations.

Whilst supplier diversity is often approached by organisations as “the right thing to do” in terms of equality and inclusion, its numerous commercial benefits should never be underestimated. 

As more companies take steps to increase diversity on executive teams, it’s becoming clear that there is a relationship between diversity and improved financial performance. Research by McKinsey said benchmarking data showed most organisations claim savings annually between 3-7%, however a survey of 163 procurement leaders at US corporations found those with corporate partnerships with MWBE’s increased savings to 8.5% on an annual basis.

For the pharma and life sciences sector, partnering with a diverse supplier base can promote innovation through the introduction of new products. It can also contribute to supply chain flexibility by increasing the number of channels from which goods and services can be procured. Supplier diversity also drives competition, encouraging vendors to up their game when it comes to offering new solutions to problems, better efficiency, and better products.

In order to harness the potential of supplier diversity, you can find out how to start and grow a supplier diversity programme here.

3. Overseeing indirect spending

Monitoring spend should not just be a priority across the procurement function, but across the business as a whole.

It can be a challenge to manage, but by allowing the procurement team to take the lead in indirect spending, businesses in the pharma and life sciences sector can identify new opportunities for savings and reduce the risk of rogue spending.

Procurement teams within the pharma and life science sector often retain visibility over their direct spending via technology, and this same technology should be used to gain full visibility into indirect spending. Be aware that this change within your organisation may mean that change management is required. However, this innovation is well worth trialling as a way to make savings and drive ROI.

How Accelerate can support with procurement for the pharma and life sciences sector

At Accelerate, we are a team of experienced, entrepreneurial procurement leaders who have led and transformed global procurement functions and service provider organisations.

Our team has a background in Pharmaceutical and Life Sciences, both as a buyer of and provider into. We are experienced in leading from client side and supplier advisory, through to delivery management on a range of projects, and have a proven track record in helping our clients in the pharma and life sciences sector overcome procurement challenges.

We can help with:

  • A full Procurement spend review*
  • Internal capability uplift
  • Transformation of Procurement & Logistics function
  • Support on front, middle, and back office activities
  • Obtaining clear line of site to external spend
  • Rationalising supply base
  • Consolidating spend across key categories
  • Gaining economies of scale in key spend areas identified
  • Tracking program savings
  • Selection, contracting and programme management
  • Vendor reviews and negotiations
  • Contract drafting and schedule creation

If you feel like we could be of help to your organisation, please contact our team today for a chat.

If you’re ready to take your business to the next level, get in touch with Accelerate today for a friendly chat.