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Pharmaceutical procurement is one of the key factors influencing drug availability, safety, and total costs. A comprehensive procurement process should ensure a timely supply of the right pharmaceuticals in the right quantity, meeting approved quality standards. It should effectively manage supplier relationships in an ethical way while also seeking to secure the most favorable purchase price. That said, it is essential that this process was implemented by competent personnel with pharmaceutical, managerial, legal, and financial expertise. Equally important is their access to robust technology and reliable, up-to-date information.
To tick all the boxes on this extensive list of requirements, pharmaceutical companies should clearly understand all challenges and remain aware of current trends to make procurement both efficient and seamless. In this article, the Viseven team aims to explain how pharma procurement works and to cover effective strategies to transform this process at any level, from local campaigns to national health programs.
Pharmaceutical procurement refers to the process of managing supplier relationships to ensure pharma companies receive the correct medicines in the right quantities at reasonable prices while the supplier gets a 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:
Pharma procurement can help navigate the intricacies of managing the global supply chains only when organizations have a complete understanding of the industry’s current landscape and challenges. Let’s have a quick review of pharmaceutical procurement in 2025:
Pharma procurement plays a crucial role in healthcare, providing an uninterrupted flow of important essential supplies that have a direct impact on patient care. This is why it’s so important to understand what key challenges pharma procurement processes can solve and how best to approach them.
There are many balls in the air that pharma brands must keep juggling to deliver effective, safe, and reasonably priced essential pharmacy. Let’s take a closer look at some of them.
The lack of supply chain visibility makes it excruciatingly challenging for pharma companies to plan medicine production, forecast demand, and manage their inventory. Without consistent, standardized data, regulators fail to identify drug supply concerns, policymakers cannot make informed decisions to improve supply chain resilience, and healthcare providers (HCPs) are blindsided by the acute shortage of critical pharmaceuticals. The lack of transparency is positively correlated with improper security as well, as it becomes problematic for buyers to protect medicines they cannot track.
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.
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 that were once the sources of raw materials may be plagued by adverse weather events, hindering production and causing inflated costs.
Procurement methods at any health system level typically comprise the following categories: restricted tender, open tender, direct procurement, competitive negotiation, and international and local shopping.
Suppliers must go through the prequalification process to prove their past supplier performance, manufacturing practices, and financial viability.
Any supplier representative can submit their offer following the terms and conditions outlined in the tender invitation.
Drugs or materials are sourced from a single supplier at the negotiated discount or quoted list price.
The buyer turns to a limited number of suppliers (usually at least three) to negotiate the price or achieve certain service arrangements.
Like competitive negotiation, the company reaches out to three suppliers on average; however, price negotiations are not allowed.
Procurement plays a pivotal role in driving innovation. Here’s how companies can modernize their pharmaceutical procurement operations to achieve more impactful outcomes:
We have already seen what artificial intelligence can do with data. With AI-powered analytics, it’s possible to significantly speed up such processes as analysis, research, and management, making it much easier to make important decisions on the go and detect problems before they occur.
A cloud-based procurement system might be the best solution to many issues regarding the transparency and efficiency of modern pharma procurement methods. Cloud-based procurement allows businesses to better manage their expenses, choose the best suppliers, organize all orders and available supplies, and even create a centralized system for many operations inside an organization.
Complete transparency is always one of the best ways to improve relationships between businesses and suppliers. Many organizations in the pharma domain are just starting to embrace the concept of end-to-end data traceability, where each stage of the supply chain is available for viewing at any moment. This visibility helps achieve maximized efficiency, improved patient safety, and protection against illegitimate products.
With the rising number of sensitive medicines, how can the pharmaceutical logistic cycle keep expenses down while still complying with all safety requirements? Let’s discover the two main approaches to accomplish this.
Cutting-edge drugs, such as stem cell therapy or large molecule biologics, require innovative transportation methods to keep the damage risks close to zero. Technologies allow pharmaceutical companies to collect and analyze a massive amount of data to ensure proper drug safety.
One of the most common use cases is Internet of Things (IoT) sensors placed on containers and packaging to track humidity and temperature in real time. The importance of these solutions becomes all the more striking when one realizes that a staggering $35 billion is lost each year due to inadequate temperature regulation during shipments. Not only do sensors enable companies to comply with quality standards, but they also respond to risks in a timely manner during the actual transportation. For instance, technology makes it possible to modify a vehicle’s route or recharge the batteries in a temperature-controlled container if necessary.
Expanding the network of suppliers is associated with tangible benefits, such as cost optimization and efficiency. For instance, a global life sciences (LS) company could choose to partner with their suppliers to perform safety tests. Instead of sending these materials to their own laboratory once they receive the packages, they could trust the tests done by the suppliers. By opting for this kind of collaboration, these companies can considerably trim off their transportation costs and speed up time-to-market.
It is no secret that the coronavirus hit the health sector the hardest. The pharmaceutical industry had to quickly find ways to optimize its procurement processes in order to tackle the hurdles the deadly virus brought upon businesses. Data analytics, e-procurement platforms, and blockchain technology emerged as the major trends to prevent procurement disruptions and boost supply chain resilience.
There is a reason data is called the new gold. For example, data analytics tools help businesses make more informed decisions regarding supplier negotiations. To choose the best supplier, businesses can analyze hundreds of options and sort them out into strategically important clusters. This categorization allows them to settle down on the right vendor based on the prices and upcoming purchases.
Artificial intelligence (AI) algorithms also take a lot of legwork from supplier management. Take, for instance, a pharma company that purchases ingredients for its new medicine. It has 200 suppliers in 120 strategically important clusters, with each supplier in numerous clusters. Advanced analytics solutions give the company a bird-eye view of each vendor’s performance in terms of quality, risks, price, and sustainability.
The range of functionalities within e-procurement platforms notably varies. Certain platforms focus on facilitating compliance with regulatory benchmarks, while others, much like well-known sites such as Amazon or eBay, connect users with verified suppliers, distributors, and manufacturers.
Prior to e-procurement, GlaxoSmithKline (GSK), a global pharma brand, used old-school paper cataloging and communications over the phone. This made the procurement process more expensive, time-consuming, and ridden with errors. Soon, they realized they needed to shift to an e-procurement platform to easily manage content in any lab supply firm worldwide. Their solution now allows them to create requisitions, approve, distribute, and make receipts with just a few clicks.
Blockchain remains one of the main tech stories in pharmaceutical procurement. Blockchain refers to a secure database where real-time information is available to all parties. This, in turn, makes it possible to share anything valuable, including drug provenance or current temperature, improving supply chain safety and transparency.
Merck, one of the oldest pharma manufacturers, partners with IBM, Walmart, and accounting leader KPMG to take advantage of blockchain technology. Due to blockchain, pharmacists and healthcare providers (HCPs) can use an application to track the vaccine packages and get the full history of their journey from suppliers to their offices.
There are numerous cases where efficient procurement processes had a much bigger impact on the company than anticipated at first. Here are some potential use cases in the pharma industry:
Problem: A pharmaceutical company struggles with delayed material deliveries, which leads to revenue losses, production halts, and worsened relationships with stakeholders
Solution:
Outcome:
Problem: A pharma company faces increasing production costs for active pharmaceutical ingredients.
Problem: A pharmaceutical company’s manual procurement processes lead to inefficiencies and higher operational costs.
What does the future look like for procurement in the pharmaceutical industry? Here are some ideas:
The past pandemic of COVID-19 has shown us how unprepared the pharmaceutical industry can be in case of a global crisis. When the pandemic hit, the pharmaceutical industry faced raw material shortages, logistical bottlenecks, and delayed production. The pandemic unraveled all the weaknesses and issues of supply chain management worldwide, which hopefully we will resolve in the near future.
In the future, suppliers with ethical practices will dominate the market. Laws will become far more strict, leading to the closure of businesses that fail to comply. However, companies that actively demonstrate their commitment to sustainability—such as responsibly sourcing materials, recycling waste, offering sustainable packaging, and taking other steps to protect our planet—will be preferred by consumers and stakeholders alike.
Will robots ever take over? This is a question that has existed for a long time, and while it’s unlikely that robots will completely replace human work, it’s possible that robotic automation and artificial intelligence will play a crucial role in supply chain management in the future. Thanks to automation, many pharma companies will be able to reduce errors, minimize risks, and speed up such processes as manufacturing, automation, and even research & development.
Even though using data to make decisions is one of the most important strategies in the pharma industry right now, its potential still hasn’t been fully realized. With the help of real-time data analytics and such instruments as AI-powered analysis, it’s possible to get important insights at the moment of their discovery, which helps make the right decision faster.
With rising incidents of counterfeiting, safety concerns, and high production costs, pharma companies absorb a disturbing realization: regulatory compliance alone will not solve all problems in the procurement process. It will require investments in cutting-edge technologies to ensure supply chain visibility, supplier high performance as well as resilience in the face of unanticipated geopolitical shifts.
Viseven, with over 14 years of experience, has consistently delivered innovative digital solutions to pharmaceutical and LS enterprises worldwide. Over this period, we have established long-term partnerships with more than 150 clients, including 50 globally renowned industry leaders. From idea to realization, we can help to build procurement solutions of any complexity.
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