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• How to post a question?
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Angad Singh Senior Research Analyst
Beroe-Inc Dialing in from:
India
Host
Members for the Webinar
Shriram Engagement Manager
Beroe-Inc Dialing in from:
India
Moderator
01 Demand scenario
02 Demand management
03 Justify the Monopolistic Control
04 How Buyer Side Procurement can Counter the Monopoly
33
34
35
36
37
38
39
2012 2015 (F)
Lo
ss in
Billio
n U
SD
Patent Expiries
Opportunity Loss Comparison – 2012 vs 2015(F)
38
Patent Cliff
Growing Emphasis on Reducing Healthcare Costs
Generics
Inflation
Increased dependency on secondary market research
Spend Of 10-50 million USD on secondary market research
On an average, 60-70% of this amount is spent “on the monopolistic provider”
Patients, Payers & Prescriber Competitor Landscape & Drug
Positioning
Increased dependency on secondary market research M
ark
et
New Market Same Product
New Market New Product
Same Market Same Product
Same Market New Product
Product
? Data Insights
Pharma Consultants
Patent Cliff in 2011-2012
35 Billion
Increased demand for secondary market research services
Individual company opportunity
loss as high as 6.1 billion USD On an average 3 billion USD for top
pharmaceutical organizations
Recovering from the Economic Slowdown
Service Providers Unable to Sustain
Stakeholder Facing Budgetary Cuts
Innovative Procurement Trend – Single Base Service Provider Dependency
Win-win Situation
Assured Revenue Influx Accommodating Budgetary Cuts
Attracted More Client Portfolio's
Buyer’s Constraints Budget Cuts (Minimum
of 3% – 5%)
Supply Risk – Financial Instability of Service
Providers
Service Provider’s Leveraging Points
Operated on Low Profit Margins
As low as
7-10% Financial Stability
Overall Revenue
USD 2.1
Billion
Capability to Service Across Geographies
Organic expansions
New business
units
Research Revenue
USD 750 Million
Net Profit
USD 311 Million
Inorganic expansions
M&A
Highlights
Ownership For Outsourcing was on the
Service Provider
RFI & RFQ Process
On-site Support
Global Contracts
Services at Competitive Prices
Spend Consolidation
Continuous Revenue Influx
Captive Working Model – FTE Basis
YES!!
North America
Suppliers – 40-50
Latin America
Suppliers – 25-30
Europe
Suppliers – 40-50
APAC
Suppliers – 75-100
Africa
Suppliers – 10-20
Globally, About 160 – 170 Service Providers Competing Across “The Perceived Giant’s” Service Lines
Cost of services is 10%-15%
lower
100
75
50
Service Provider 1 Service Provider 2
0
25
55-65%
65-70%
2/3 Demand
Step by step de-bundling of
services
Identify markets with presence of alternates
Initial phase
Phase I Engage with
alternatives on short term basis
Phase II
Engage with preferred service providers on long
term basis
Evaluation Phase Review
performance of service providers
Service like payer insights, patent insights, prescriber insights, patient & physician insights
Key market like US, UK, France, Germany, Pharmemerging markets
• Here the contract duration may range from 3 months to 1 year
• Evaluate & filter out service providers
• Long term 2-3 years
• Parallel engagement would ensure a platform to benchmark services
• Value Benefits Provided • Accuracy of Insights • Ease of Integration
• Ability to bring in service innovation or onboard technology to meet buyer’s business objectives
• Measured Based on Database Synchronization, Refresh Rate, Server Downtime
• Preferential pay-back terms, ability to work on a pay-for-performance model
Value Benefits Provided Accuracy of Insights Ease of Integration
Market Leader Buying out Competition 1
Relative Value/Profit Impact
Market
Ris
k C
om
ple
xit
y
Critical
Acquisition Leverage
Strategic
Low
High
High
Shifting Balance towards Supplier
Low
Possibility is Low
Amount of competition in the market is HIGH
Increased Sourcing Complexity 2
Center-led Procurement Structure
Business Unit 1 Business Unit 2
Business Unit 1 Category Director
Business Unit 2 Category Director
CPO
Corporate Purchasing
Centralized procurement with regional corporate
control
Increased Harmonization Costs 3
De-bundle up to (60-70)% Implies 5%-10% saving on
purchasing secondary market research services
On time investment on harmonization cost would be
3%-5% of the spend
“Realize cost savings from second year itself”
Leverage Value Benefits • Implement pay-for-
performance pricing mode • Free ad-hoc projects
Create Supplier Competition • Parallel sourcing –
monopolistic service provider & alternatives
Reduced Supply Risk • Evaluation of untapped
supply base
Higher Negotiating Power • Discounts on pricing points • Preferential service provider
fee payment terms
Pros
Increase Sourcing complexity
Increased Harmonization
Costs
Keep in Mind
• Increased service provider base
• Multiple contract management
• Internal re-structuring • Service providers &
procurement team synergies
“Change is inevitable”
The time to evaluate alternative providers is “NOW!!”