PHARMA DIRECT COST DOWN PROGRAM
Expert Pharma Sourcing & Operations
Phone: +41 78 652 52 98
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.
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)