Pharmaceutical Industry

Frequent supply bottlenecks and temporarily limited availability of active ingredients and drugs are prompting the pharmaceutical industry to rethink its approach. Relocating production facilities for relevant active ingredients back to Europe can be a solution here.

Procurement optimisation in the pharmaceutical industry

For years, extending the supply chain for active pharmaceutical ingredients to Asia was seen as a panacea against ever-increasing cost pressure. Since the beginning of the Corona virus pandemic, a rethink has set in: There is now a consensus that the active ingredients for medicines needed en masse should not be produced exclusively in India or China.

The temporarily limited availability of central active ingredients such as painkillers or antibiotics shows very clearly the risk that arises when precursors are only sourced from one region or even from a single supplier. Since medicines are not consumer goods but part of the provision of public services, permanent production and delivery capability must be ensured.

This does not mean that the entire supply chain must now be located in Europe, which would not even be possible given current capacities. But the move away from single sourcing is a necessary measure in view of supply risks. Selecting European suppliers strengthens the resilience of the entire system.

In order to diversify or re-regionalise supply chains, strategic procurement is indispensable. Our experts analyse your company’s existing supply chain and support you in establishing and qualifying local suppliers.

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Define and implement sustainability goals

The topic of localisation strategy in particular is not only about the availability of active pharmaceutical ingredients, but also about higher sustainability standards than are possible with the current global structures in the pharmaceutical industry. Modern production facilities and shorter transport routes, for example, are a starting point for the necessary decarbonisation. Further, sustainable solutions, for example in packaging, can be a measure to conserve resources. Our experts can advise

you on the development and implementation of sustainability goals in procurement. More on sustainable procurement

Cost reduction in Indirect Spend

In the procurement of pharmaceutical companies, the daily routine is often dominated by the production or contract manufacturing of finished products. Expenditure for requirements that do not flow directly into the value creation process is often neglected. Experience has shown that there is great potential for savings in the areas of marketing, logistics, facility management and IT. We support you in reducing your procurement costs in the so-called indirect requirements and act as an interface for

cooperation between procurement and the specialist department.

More on indirect spend

Inflation in Procurement

Procurement teams with the knowledge of all of its cost drivers will find that not every increase is justified. This makes it possible to fend off price increases and look to adapt commercial models to ensure fairness for both sides when commodities start cooling off. – Sushank Agarwal, Managing Director INVERTO – BCG Company