What is Deal Benchmarking and it’s importance in the Pharma sector?
Planning, negotiating, and signing the right deal in a time of rapid growth, continuous evolution, and rising competition is extremely crucial, and equally challenging. As the pharma industries grows at an exponential pace, companies become increasingly focused on the value of their potential partnerships, contracts, and deals, leading to focus on deal benchmarking, contract management and more. Many tenets of supply market intelligence aim towards helping businesses develop a robust, collaborative, and well-planned supply chain, with efficient procurement, sourcing, and production departments. The ideal partner can help a company achieve major business goals while maintaining operational efficiency, meeting predetermined targets, minimizing expenses, and improving overall supply chain performance. In the pharmaceutical industry, companies are required to continually innovate, strictly comply to regulations, maintain competitive prices, manage supply-demand levels, and overcome various industry barriers to achieve success. Therefore, deal benchmarking helps compare potential contracts and partnerships with previously employed deals, or successful competitors’ partnerships.
Why is Deal Benchmarking Important in the Pharma Industry?
Identifying Cost-Effective Options: For procurement and sourcing departments, benchmarking most often helps companies identify and determine the most cost-effective options, or cost-reductive strategies. Ensuring low costs, minimal spend, and high returns is a crucial tenet of a chief procurement officers’ (CPO) duties, and not achieving the same can lead to significant losses, unnecessary expenses, and unexpected risks for the company. Deal benchmarking helps companies identify the most cost-effective options available within the market, and ensure their potential partnerships and business deals meet the same standard. High demand, strict regulations, and constant innovation lead to high expenses for pharma companies, and limiting unnecessary spend can help significantly.
Developing Data-Driven Strategies: Benchmarking requires in-depth research of various factors and dynamics impacting business within the industry, and as industries evolve, companies must keep track of market developments. In the pharmaceutical industry, companies must keep track of changing regulations, factors impacting raw material costs, evolving strategies, and new technologies. With deal benchmarking, businesses can closely analyze the equipment, approaches, strategies, and technology being utilized by competitors and industry leaders. With this comprehensive information, CPOs and supply chain managers can make research-driven business decisions and strategies. To develop strong and effective business plans, companies should utilize data and research.
Understanding Market Dynamics: While understanding strategies and technologies being utilized within the market is crucial, it is equally important to understand the various factors impacting businesses, including changing market dynamics, and constant industry developments. This includes analyzing major components within the market such as, availability of raw materials, changing trends, upcoming market risks or challenges, new regulations and policies, patent cliffs and expirations, and other significant influencers. Through the deal benchmarking process, companies can closely assess these factors, their potential impact on an upcoming deal, the ideal methods to tackle challenges, capitalize on growth drivers, and stay ahead of the curve.
Staying Ahead of Competitors: Developing a comprehensive understanding of an evolving market provides businesses with an unparalleled strategic edge, and enables well-informed, sustainable growth. This helps always stay a step ahead of competitors. During the deal benchmarking process, it is also crucial to closely evaluate competitors’ strategies, goals, and current or potential deals and partnerships, enabling data-driven strategies to keep pace with and surpass key competitors and industry leaders. As the pharma industry grows, competition rises at an exponential rate, and simply providing high-quality products and services will not suffice in maintaining a competitive advantage. Therefore, with supply market intelligence and by developing a robust supply chain, mitigating industry risks, and understanding how other companies are approaching changing market dynamics, pharma companies can develop and maintain an unparalleled edge.
Finding the Ideal Partners: A strong partnership, dependent business relationship, mutually beneficial contract, and comprehensive deal can help companies and suppliers alike overcome the impact of various factors, prepare for evolving market dynamics, and stay ahead of the curve. With deal benchmarking, pharma companies can identify, analyze, and prepare comprehensive strategies for all impactful factors in the market. Additionally, with a comprehensive understanding of the market, companies can identify their major needs and requirements from partners, the ideal industry standard for deals and contracts, and the best suppliers and vendors to partner with in their market. Deal benchmarking is not limited to developing the right contract and includes finding the best fit suppliers.
As the pharma industry in the United States is plagued by the rapidly spreading and extremely damaging COVID-19 pandemic, companies are facing a surge of demand, an unexpectedly rising requirement for further innovation, and consumers’ changing needs. A leading generic drugs manufacturer faced a similar challenge, and struggled to identify the right partner and develop a comprehensive deal that helped minimize unnecessary expenses, maintain profitability, and meet the countries’ surging demand. To successfully support government efforts to contain the pandemic, and maintain business continuity, the company chose to partner with SpendEdge and leverage deal benchmarking to mitigate the chances of another failed partnership. Our experts closely evaluated the market, conducted in-depth discussions with the pharma company and established a data-driven list of requirements. The manufacturer then leveraged our experts’ advice and guidance, and initiated a renewed search for the right partner, and soon found success with a strong, collaborative, and helpful partnership, fair, mutually beneficial, and comprehensive deal, and unparalleled manufacturing and distribution efficiency.