For a long time the pharma industry has delivered high profit margins banking on patented and innovative products. However, times have changed now since generic drugs have started entering the market and emerging markets have started gaining prominence. R&D continue to eat most of the investment, coupled with government compliances and expiring patents, there is an enormous opportunity for companies in pharma industry to optimize the procurement process. We have seen companies accrue sustainable business performance improvement by addressing few of such areas.
The procurement department has started gaining much more attention as companies look at more and more avenues for cost reduction & increasing efficiencies. This focus has been attained due to the fact that procurement accounts for about 50-60% of the total cost to pharmaceutical companies.
The National Association of Purchasing Management (Tempe, AZ) claims that the use of e-procurement can slash the average cost associated with generating a purchase order from $150 to $30; thus, a company with 10,000 purchase orders per year can expect to save $1.2 million in processing costs alone. In addition, the technology may speed up the buying process, eliminate maverick buying, help negotiate bulk discounts, and improve employee productivity.