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    Blog Image

    Getting the Most from Your Pharmaceutical Procurement Strategy

    • Pharmaceutical procurement involves selecting suppliers, ensuring timely delivery of quality medicines, and managing relationships to control costs.
    • Key challenges are lack of transparency, poor supplier performance, and geographic factors disrupting supply chains.
    • Digital solutions like analytics, e-procurement, and blockchain can address these pharmaceutical procurement issues.

    December 13, 2023 | Procurement Software

    Pharmaceutical procurement is arguably the key factor influencing drug availability, safety and total costs.

    A comprehensive procurement process should ensure a timely supply of the right pharmaceutical in the right quantity, meeting approved quality standards. It should effectively manage supplier relationships while also seeking to secure the most favorable purchase price.

    Efficient pharmaceutical procurement ensures drug manufacturers receive the correct ingredients in the right quantities at reasonable prices while the supplier gets transparent and timely payment. The procurement cycle presupposes all decisions related to selecting suppliers and monitoring drug delivery and distribution. It typically falls into the following steps:

    • Reviewing drug selections
    • Determining drug quantities
    • Aligning needs with the budget
    • Selecting a procurement method
    • Choosing suppliers
    • Outlining contract terms
    • Tracking order status
    • Receiving and checking drugs
    • Paying for an order
    • Distributing pharmacy
    • Gathering consumption information

    Also Read: A 5-Point Plan for Reinventing the Pharma Supply Chain

    Key Pharmaceutical Procurement Challenges

    Lack of Supply Chain Transparency:

    The lack of visibility makes it challenging for pharma companies to plan medicine production, forecast demand, and manage their inventory. Without consistent and standardized data, regulators fail to identify drug supply concerns, policymakers cannot make informed decisions to improve supply chain resilience, and healthcare providers are blindsided by the acute shortage of critical pharmaceuticals. The lack of transparency is correlated with improper security as well, as it becomes problematic for buyers to protect medicines they cannot track.

    Poor Supplier Performance:

    Poor supplier performance generally results in unanticipated expenses. For example, a pharmaceutical brand can face increased acquisition costs if a supplier has not delivered on time. It also bears extra replacement expenses when drugs are discarded due to improper packaging.

    Hidden expenses can pile up, spiraling out of control due to many reasons related to supplier performance: the lack of appropriate documentation, storage, wrong dosage forms, and the list goes on. Any of these performance incidents may create a serious disruption at any level of the supply chain. If inadequately managed, poor supplier performance may impact drug safety and availability.

    Unexpected Geographic Factors

    Many pharmaceutical companies relying on global markets for drug materials are particularly vulnerable to shifting geopolitical situations. For instance, depending on sources in tariff-affected countries can substantially increase a pharma company’s operational expenses.

    Climate change is another factor, potentially disrupting supplies and contributing to hefty price tags. Regions which were once the sources of raw materials may be plagued by adverse weather events, hindering production and causing inflated costs.

    Digital Transformation in Pharmaceutical Procurement

    Leveraging data and technology is key in navigating pharmaceutical procurement challenges.

    Advanced Analytics Enables Better Decisions

    Sophisticated data analytics delivers actionable insights for sourcing decisions and logistics planning. Leveraging AI and machine learning algorithms, pharmaceutical manufacturers can accurately forecast demand, evaluate suppliers on multiple performance dimensions, and model optimal distribution networks.

    E-Procurement Reduces Manual Workflows

    AI-first procurement software reduces manual paperwork and phone communications through digital catalogs, approvals, and transaction records. Platforms like that even enforce regulatory compliance and provide verified supplier vetting. This cuts errors while enabling a strategic overview of spend.

    Blockchain Establishes Supply Chain Transparency

    Blockchain establishes supply chain transparency and provenance tracking through its immutable shared ledger. Smart contracts automate actions when conditions are breached, like temperature fluctuations during transport. This ensures drug integrity and quality while preventing counterfeiting, which still impacts thousands of pharmaceutical shipments annually.

    The Value of Pharmaceutical Procurement Experts

    Pharmaceutical procurement companies add significant value by leveraging economies of scale and industry expertise. Their global access and supplier relationships allow procurement of a wider range of products at optimal pricing to meet unique client needs.

    These companies also handle complex supplier negotiations, achieving more favorable contract terms compared to those lacking insights into pharma deal dynamics.

    Further, their end-to-end quality assurance and regulatory compliance capabilities provide risk mitigation - areas with steep learning curves for newcomers. By relying on partners, procurement organizations reduce costs, save time, and gain peace of mind while focusing internal efforts on core competencies. For customized products, smart negotiations and reliable quality, pharmaceutical procurement partners are a strategic choice over going it alone.

    Conclusion

    Efficient pharmaceutical procurement is an essential function, yet one facing major hurdles such as supply chain opacity and unreliable vendors.

    However, recent digital advances are helping combat these longstanding issues through enhanced demand forecasting, automated compliance enforcement, and end-to-end shipment tracking.

    For tailored supplier contracting negotiations plus comprehensive quality assurance oversight across global drug sources, partnering with dedicated pharmaceutical procurement experts can pay huge dividends in terms of greater spend optimization, supply risk reduction, and delivery dependability.

    By leveraging specialized industry relationships, economies of scale, and regulatory insights, these services empower organizations to focus internal efforts on core competencies rather than supply procurement complexities.

    Optimize your pharmaceutical procurement with GEP.

     

    Tags: PHARMACEUTICAL PROCUREMENT , Procurement Software

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