relies on good system design and good management.”
Tyson Popp, Vice President and Chief Procurement
Officer of Mallinckrodt Pharmaceuticals said, “Every
procurement leader wonders how its organisation stands
in relation to others in the industry. Today’s procurement
organisation is tasked not only with achieving cost
reductions or cost avoidance, but is also charged with
advancing ways to deliver value to its company. The
study examined how and to what extent procurement
organisations in the pharmaceutical industry are
meeting this goal.”
According to the study of Drug, Chemical & Associated
Technologies Association (DCAT) on ‘Value Creation in
Pharmaceutical Procurement’, more than three-fourths
(76%) of respondent companies described the operating
model used by their procurement organisations as
highly evolved, classifying their
procurement organisations as a
value generator (41%) or as advanced
(35%). Procurement takes an active
role with executive management
and internal stakeholders to
define, set, and execute business
strategy and evaluate performance.
Supplier relationship management
is highly evolved with procurement
organisations actively involved in
supplier development and supplier-
led innovation.
‘Advanced’ procurement
organisations manage all spend
through category management
and strategic sourcing through a
competitive sourcing process with
clear and fully adhered decision rights
for procurement with formal supplier
relationship management in place.
Supplier relationship management (SRM) is one in
which SRM is an integral part of overall corporate strategy
with a full focus on value creation. The procurement
organisation’s company is seen as a ‘customer of choice’
for a select number of suppliers and is fully integrated
with select suppliers.
Ritesh Kapadia, Purchase Manager, Torrent
Pharmaceuticals Ltd said, “Pharmacy procurement is
in charge of facilitating the procurement of medicines
that meet prescribed safety and health standards at a
cost-effective price. A pharmacy procurement officer
develops relationships with suppliers and distributors of
medicines, and negotiates for suitable prices.”
Speaking about quality check, Kishorkumar Katkar,
Manager-Purchase at Abbott Healthcare P Ltd said,
“Pharmacy procurement works closely with pharmacists,
clinical officers and other colleagues in a pharmacy
to ensure patients receive optimum care from their
services. Procurement receives reports and complaints
on efficiency of drugs, and deal with drug recalls.”
“Various rules and regulations are in place with
regards to procurement of drugs in a pharmacy. For
example, procurement must be well informed about
legislations such as the Food and Drugs Act etc.,” Katkar
said.
Overall, pharmaceutical procurement organisations
traditionally outperform other industries in the area of
direct spend control (raw materials and production),
but only a few pharma companies achieve top results in
controlling the much bigger indirect spending categories,
such as information technology (IT), maintenance and
repair operations, facilities management, office supplies,
travel, marketing and research and development.
Compared to other industries, pharmaceuticalprocurement organisations are also facing significant
challenges in supplier relationship management,
technology harmonisation and workforce management,
since their main focus is on ensuring regulatory
compliance and creating global supply chain
transparency.
However, it’s not all bad news, as the Accenture
study reveals that procurement is starting to play
an increasingly important role in efforts to achieve
efficiency. Procurement ‘masters’ are distinguishing
themselves from the rest by ensuring spend control and
collaborating effectively across divisions and functions
with their supplier networks and internal stakeholders.
In this way, companies on a journey to high performance
not only create more innovation, but they also achieve
up to two per cent to three per cent higher savings. This
translates into US $20 to US $30 million per year per US
$1 billion of spend. Procurement managers should ensure availability of relevant, effective, and
payable drugs at the time of need and their rapid diffusion at affordable
prices
In developing countries, patients’ out of pocket for drugs are around 65
per cent thereby seriously restricting their ability to pay for useful drugs
In most developing countries, pharmaceutical purchases represent the
single largest health expenditure after personnel costs
According to the study of Drug,
Chemical & Associated Technologies
Association (DCAT) on ‘Value Creation
in Pharmaceutical Procurement’,
more than three-fourths (76%) of
respondent companies described
the operating model used by their
procurement organisations as highly
evolved, classifying their procurement
organisations as a value generator
(41%) or as advanced (35%).http://www.biospectrumindia.com | May 2017 | BioSpectrum COVERStory^25