ProcureCon Pharma 2: Why procurement has a critical role to play in the industry’s future

In the first part of this post we saw how the pharmaceutical industry  is grappling with rising failure rates and rising costs. In this article Jonathan Betts, Sales & Marketing Director at Science Warehouse, looks at some of the approaches the industry is taking to address these and the central role that procurement has to play.

Increasing R&D productivity therefore continues to be a major focus in the pharma sector. A significant trend over a number of years has been to blend in-house developed candidates with a pipeline from biotech firms. Companies in the biotech space have a lower legacy cost base and a vaunted innovative culture that sparks new ideas for therapies.

However, pharma companies are also looking to reduce costs by simplifying supply chains. In some cases this is leading them to bring work back in house to drive out cost and increase control.

The pharmaceutical supply chain of the future will therefore comprise a blend of insourced and outsourced capabilities. Those activities requiring local control, that are key drivers of competitive advantage or where offshore costs no longer drive a numerical benefit will be conducted in-house.  Indeed, companies are expected to be increasingly acquisitive this year as they seek to bolster product pipelines and capture exclusivity in strategic areas. On the other hand, those activities that require specialist resources or are non-differentiating will continue to be outsourced.

All of this points to an increasing requirement for dynamic procurement where the procurement department plays three essential roles – as innovator, collaborator and strategist. Some examples of how procurement will create value in each of these areas include:

• Innovator – driving more productive outsource/insource structures to deliver more effective supply chains

• Collaborator – effectively leveraging supplier relationships to capture increased value and drive greater innovation

• Strategist – SRM has always been a core component of the procurement enterprise; recognising and leveraging sources of competitive advantage in these relationships will be a key source of competitive advantage in future.

With its unique position at the nexus of finance, operations and suppliers, procurement is in a key position to recognise and exploit key sources of competitive advantage in pharma.

Science Warehouse is sponsoring ProcureCon Pharma 2012 to be held in Zurich on February 28th and 29th. You can visit our stand at the event where our expert staff will be on hand to answer any questions you may have. To find out more about the event please click here.

We look forward to seeing you there!