PHARMA DIRECT COST DOWN PROGRAM

 

 

CONTACT

Lorenzo Formiconi

Managing Partner

Expert Pharma Sourcing & Operations

Phone: +41 78 652 52 98

Email: pharmadirectcostdown@execon-partners.com

 

 

Why execon’s Pharma Direct Cost Down Program ?

Direct materials represent the biggest portion of external spend, yet the savings generated in this area by pharma companies – as opposed as in other industries – are usually low: high regulatory barriers, limited transparency about suppliers´costs, and a general attitude to work in functional silos are making it difficult for pharma sourcing teams to extract much value out of it . The increasing pressure on margins and a renewed attention on costs as a source of competitive advantage are, however, spotting a new light on direct materials sourcing.

 

What is Pharma Direct Cost Down Program?

execon’s Pharma Direct Cost Down Program is a hands-on approach tailored for pharmaceutical companies to drive costs down in their active ingredients, excipients, packaging, and contract & third party manufacturing spend areas. Depending upon the type of company, the spend base, and the maturity level of the sourcing practices, it  has historically delivered between 5-9% of savings.

 

 

 

Saving range from pharma direct spend (% of spend)

 

 

 

How does the Pharma Direct Cost Down Program work?

 

The program is  typically organized in two phases:

 

  • Map of opportunities & quick win realization, where we identify and monetize selected opportunities and create momentum towards
  • Get fit for the future, where we fundamentally reconfigure the spend from a total cost of ownership perspective, with a highly crossfunctional approach (sourcing + marketing + regulatory + finance). In this phase we typically rethink the supply strategy (eg, one vs multiple suppliers, high vs low cost country) and challenge product characteristics that are not critical-to-quality (eg, secondary packaging paper, chemical purity, particle size distribution) even when it becomes regulatory-relevant. We also identify and realize opportunities in reconfiguring the organization & the governance of the spend.

 

 

 

 

  • Sourcing pratice assessment & benchmarking
  • Spend analysis & opportunities identification
  • Cost benchmarking of selected items
  • Quick wins realization (eg, renegotiations, supplier switch,
    Roadmap for phase 2 (initiatives, business case, sequence/critical path, resources)
  • Despecification of non-critical characteristics
  • Dossier changes
  • Tenders
  • New suppliers /new material tests in production
  • Realignment of sourcing organization & governance
  • In/outsourcing (or „different“ sourcing)
  • Sourcing knowledge upgrade & training

 

 

 

What makes execon’s Pharma Direct Cost Down Program  unique?

Our “secret recipe” is made up of four ingredients:

  • e-toolbox:  that contains proprietary tools like our chemistry teardown (that calculates the direct costs of a chemical substance and identifies if supply price is too high / there is room for negotiation), or our saving opportunity identifier (an algorhythm that identifies opportunities based on limited purchasing data)
  • cross-functional working mode: the program is sponsored & governed  by sourcing together with technical operations, quality, marketing, regulatory, & finance to overcome functional silo solutions
  • experienced teams: the execon consultants  that lead the program have more than 10 years experience in in sourcing and purchasing of direct spend with global organisatons
  • industry experts network: we pressure test selected key recommendations with our 100+ strong pharma industry expert network in a confidential way (client´s name not disclosed)