Procurement is long overdue for a major upgrade in many pharmaceutical companies. The Covid-19 pandemic extends a unique opportunity and poses an urgent need of ensuring that the procurement process in the pharma industry can optimize risks and maximize costs more efficiently.
Companies need an effectively sustained and self-funded transformation technique to achieve step-up changes in their procurement. This precisely implies that pharmaceutical companies can examine how procurement processes can use new technologies to solve current challenges.
Evidence has shown that gaining better visibility in spending lays a foundation for improving the management of suppliers and categories. In addition, better visibility in spending lays a solid foundation to optimize indirect expenditures. This is precisely what pharma businesses are doing to stay relevant.
A New Dawn for A Procurement Paradigm
Procurement functions are playing an integral role in getting pharma companies through the Covid-19 crisis. The pandemic has led to unprecedented supply chain shocks, disrupted manufacturing lines, and complicated forecasting. The problems linked to supplier management and supply continuity are likely to persist soon given the trajectory of the pandemic in most nations — and depending on new supply regulations.
These challenges topple over other issues the pharma sector has been facing. For time immemorial, the pharma sector has groped with pressing issues such as intense regulatory scrutiny, faster product launch cycles, and cost pressures. At the same time, the Covid-19 pandemic has opened a window of opportunity to reduce spending — and to rethink the role of tech operations in pharma procurement.
So, what signals this new procurement paradigm? Well, already most pharmaceutical companies are adopting procurement capabilities that support tech operations (TechOps). For a variety of reasons, the pharma sector has been reluctant to upgrade its procurement functions. So, due to changing policies around healthcare and growing consumer awareness, pharmaceutical companies are rapidly adopting developments they deem fit for their supply and sourcing activities.
Let’s look at the future of the procurement process in the pharma industry, with a closer look at trends shaping the sector.
Procurement Trends Shaping The Pharma Industry
1. Appreciation of direct material procurement
At the corporate level, direct material procurement is an enabler of more than just controlling costs. Miscues in supply chains and procurement functions have cost companies more dearly. With this effect on the supply chain has come an increased recognition that as supply chains become complex and global, so is the need to do procurement well to sustain businesses.
2. Procurement as a strategic function
Market and globalization pressures have driven procurement to be more of a strategic function in contemporary settings. Technology has driven down the cost of buying and paying — and improved sourcing systems in bid and contract processes.
Technology has led to resource gains in transactional work, thus freeing staff to focus on other crucial tasks like supplier management and building market knowledge. Transitioning from a human-driven approach to a technology-powered procurement planning and management is what makes a good organization great.
3. Digital transformation of procurement planning and management
The current state of the big pharma supply chain is highly complex, inefficient, under-utilized, and ill-equipped to respond to the evolving nature of the drug pipeline. As this industry grows, new drug category products have shorter life cycles. Thus, payers and buyers are emphasizing more on strict environmental controls, aggregating purchases and outcomes – and value for patient data. So, this article predicts that the future of the pharma industry will lean more on protecting patient privacy information with digital tools and capabilities.
4. Pricing pressures
The Covid-19 pandemic has slowed the implementation of healthcare initiatives across Europe. This reduced implementation is due to a shift of focus on the management of the covid-19 pandemic. However, as nations emerge from the pandemic, the pricing crisis on pharmaceutical products and drugs will hinder growth. In addition, the adoption of the Health Technology Assessment following increased emphasis on real-world evidence will exert pressure on the margins of pharmaceutical firms.
5. Implementation of digital health solutions
Before the pandemic, there was significant progress in telemedicine, remote patient monitoring, and virtual clinics. Even so, the adoption of these digital technologies was limited to smaller cohorts and too few patient populations. Gladly, the pandemic has changed this landscape, with most nations rushing to implement digital health solutions. This adoption has been done to manage epidemiological conditions under strict lockdown conditions. This continued uptake of telehealth is not likely to change anytime soon even as nations improve mitigations against the pandemic.
6. Transformations in TechOps procurement
Companies are adopting positive changes in their tech ops procurement by adopting specific developments: supplier management, spending visibility, and category management. In addition, product lifecycle cost overview and indirect spending optimization. It is, however, important that companies take a rigorous step to sequencing the roll-out of transformation to ensure long-term scalability and sustainability.
As procurement continues to change with changing developments in the pharma sector, companies must look into the enablers of successful procurement. These enablers include;
- People – Staff and internal procurement stakeholders must agree on the incentives that support this transformation for value realization.
- Systems – A company has to upgrade its enterprise resource planning ERP system to enable effective spending management. A smart ERP system provides visibility of all spending and offers visualization of expenditures by supplier and category.
- Digital analytics – This component is the best enabler for getting the best from systems and people. To empower its employees and to achieve a real-time data system, a company needs highly interactive and intuitive interfaces.
Futuristic Procurement Trends
Therefore, as pharmaceutical companies undertake new transformations in their procurement functions, it’s only wise to step up. The future of the big pharma industry points in an uncertain direction. Therefore, you have to remain prepared to respond to these futuristic procurement trends.
ProcurePort helps you do just that.
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