Role of Procurement in Pharma’s Commercial Success and Enabling Future Ready Healthcare Organizations
As the pandemic raged, innovative business models emerged. Procurement’s “call to action” was to help marketers to create market value, optimize cost to serve, and drive agility.
Procurement is the entry point for the company to the external world. So, we inquired,
How did Procurement transform in the last 18 months, adapt to the new normal and how do you see the future evolve?
Insights-driven action took center stage. As people started working from home, we discovered that every aspect of work can be different. End of the day, it is the “same work done differently.” We can break it down into simpler parts—understand the business need, bring related enabling functions to address the needs.
Yes, in the new digital world, it is the “same work done differently”; however, Businesses, HCPs, and patients are demanding more and have high expectations.
Pandemic brought urgency. Ushered in the cultural and behavioral change of “we need to do it now.” We have no choice, but to accelerate digital engagement. Patients visited hospitals less, Access to HCPs was limited, and ‘face to face’ detailing nosedived. We started questioning, how do we influence patients and HCPs in the digital world? Specifically, is the content serving the purpose? Is it the right content? Is it being produced the most efficient way? We started looking at outcomes linked to business impact. This drives the intimacy of agency and marketing teams. Medical Legal Review and enabling functions started rethinking their review and approval processes as well.
How have procurement operating models evolved with the advent of new commercial constructs?
Ultimately, the guiding factor is down to “value”: What value do the suppliers provide to the marketers? and in turn to our patients? With the acceleration of speed to market, we are looking at new ways of interacting and contracting with suppliers—a hybrid of “time and material” to “gain share” (in media space) or “outcome based” (in commercial space). But it takes time. While the preference is to stick to strategic suppliers. The start-ups have a nimble mindset with a minimal viable product (MVP) orientation. New solutions and commercial models from start-ups are so attractive and different that procurement is forced to look at them. We are trying to see how to draw out a hybrid model from these firms. The challenge is how to interject them into this large enterprise ecosystem.
- Need for Entrepreneurial Mindset: Entrepreneurial mindset drives innovation, amplified by collaborating with start-up suppliers. SRM is about driving new business models—how can I reach my HCPs faster? The supplier ecosystem is a tremendous source of information and innovation. Learning new ways of interacting with these start-ups requires new skills in supplier relationship management blended with commercial selling skills such as storytelling, influencing, and convincing to position the proposition.
- Change Management: Typically, current structures are around “customers” or “categories.” Today we have to do both. Functions have to come together as a team (egos cannot be the stumbling block); understand the business needs and how the work needs to be done? How to get the job done across categories? how do we best allocate resources and partners for optimal results? We need a different pace of agility. Attitude needs to be “We are in this together. Let us get down to it and get things done.” Procurement needs to coach internal teams and stakeholders through the change.
- Risk Management: During the pandemic, Industry had to look at regulations differently, as we had to be agile and draw out an accelerated approach to serve our patients. We joined hands with regulatory and quality teams to work on this new approach and identify new ways of working. Today we are collaborating with suppliers to understand “What exactly is the risk?” how can we address this risk?
HCP engagement is a stated goal across the globe, how has Omnichannel strategy evolved to meet the demands of HCP engagement?
Typically, business requirements start with patient journeys. Mapping the journeys is complex. Unfortunately, along the way, this gets lost! In the last 6–9 months, we are seeing “business plans” and in turn the “communication plan” targeting each individual across the value chain. The fundamental question is “How do people consume information?” “What are their preferences?.” CPG companies have been doing this for years—Why can’t we set the benchmark? Omnichannel is a buzzword. Some organizations are further ahead. At the core, the guiding source needs to trace back to business requirements and brand portfolio. It has pushed procurement to work with brand teams to enable diverse channels and forge intimate working relationships with suppliers toward an outcome-based approach. What can we do differently within the guidelines of our industry? Linked to the brand strategy, the MVP model of start-ups—“Build it,” “Test it,” and “Enhance it” linking omnichannel content to business objectives has become the standard. “Failing fast and learning fast” is a change in mindset that is required.
Talking of value creation, there is a shift in the way category management is looked at: How are you looking at category management from a value creation perspective?
Value creation stems mainly from “speed to contract”—as a discipline we are moving from stovepipes to an ecosystem train of thought. Value is in understanding the need quickly, defining the ecosystem, and aligning with the stakeholders to get the project started quickly. Today, procurement is not really causing the lag from a speed-to-contract perspective. Enabling functions in legal and compliance need to really adapt and speed up taking an entrepreneurial approach? We need to work as a group to speed up contracts.
Drilling into a category around advertising media and promotion. The pandemic saw a spike in Ad spending. How did procurement balance agency spend with cost optimization?
This is a billion-dollar question. Historically, cost has been the main driver. Every large pharma is consolidating the fragmented agency base. The focus is to work with strategic, reliable, and trusted agencies. Pandemic forced marketers to seek creative ways to solve problems. When they were constrained for bandwidth, they sought smart talent and turned to agencies, including start-ups to solve problems. Start-ups with prized talent have brought value creation and innovation to the forefront. Today, we are balancing the sourcing strategy.
Organization productivity—fast tracked us to the “future of work”—how are you looking at organization productivity?
This is a vast topic. Sanofi is turning to Digital and Analytics to gain productivity. Ambition is to provide analytics tools to the “buyers” to free up bandwidth. Productivity can come from external ideas as well. Ultimately, productivity happens in the trenches on how to do things better. There is enhanced awareness and sensitivity on what can we do dramatically different from what we do today?
I want to thank the panelists for their participation at the webinar and provide their insights to understand procurement’s role in enabling pharma’s commercial success and implementing best practices. you can find the recording here to learn more.