Five Spend Analysis Benefits Pharmaceutical Executives Should Know About
January 20, 2022
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6 min read
As per a report from McKinsey “Predictive analytics and data visualization offer pharma business leaders the opportunity to transform commercial-spend optimization and lift returns by 10 to 25 percent.”
Spend analysis, is often overlooked in pharma, but when accurately performed, it is integral to understand the organization and can lead to surprising, yet meaningful insights. Such insights can be a catalyst to informed change, delivering organization-wide efficiencies and cost savings. Using a spend analysis solution such as Spendkey, allows pharmaceuticals to bring together their often-fragmented raw data and uncover the hidden potential lying within. This can result in sustained, bottom-line impact and enhanced risk management strategies.
This guide will teach you how to use your spend data to transform your business for profitable growth.
Download our free Low Risk Low Value (LVLR® ) framework to get complete spend visibility and achieve over 20% reduction in costs.
Download our Category Management Optimiser Checklist that has helped business leaders monitor and improve the effectiveness of their existing spend categories and subcategories enabling them to add millions to their bottom line.
Spendkey knows how fragmented and disparate pharmaceutical spend data can be. As the first, fully automated solution Spendkey can normalise multiple sources of raw data into meaningful insights quickly and accurately, with potential to make significant impact to the organisation’s bottom-line. Traditionally this process of “data normalisation” – i.e. the extraction, cleansing, classifying and standardising of the data - has been manual. As a result it has been time-consuming, inconsistent and full of errors. With Spendkey it’s automated, and with Mundi Pharma hundreds of thousands of transactions were processed, normalised and turned into significant insights within two weeks. From this Mundi Pharma was able to calculate and claim substantial rebates in the first fifteen minutes of getting access to the dashboard.
Spendkey recognises that Pharmaceutical Executives are under immense pressure to both reduce material costs and increase profits. Spendkey can provide insights into both spending patterns and supplier profiles. As part of the spend analysis report, Spendkey can provide the insights to be able to implement control over the pharmaceutical’s operational activities. Spendkey has helped pharmaceuticals avoid late payments and the associated penalty fees, plus has been able to identify and evade duplicate payments. Moreover, Spendkey can improve working-capital benefit by identifying where payments terms can be extended.
Pharma purchasing teams may be focused on their daily tasks such as buying the ingredients and materials required by the organisation. Spend analysis is a strategic sourcing process to drive leverage across the entire organisation. Spendkey is experienced in supporting pharmaceuticals in driving most value from their data sets and delivering real benefits in supply chain efficiency. For example, Spendkey’s analysis report provided real-time insights into a pharma’s procurement activities and expenditures. This identified multiple suppliers being paid for the same materials across the divisions and sub-divisions of the organisaton. Subsequently Spendkey was able to reduce the pharma’s costs through consolidation of suppliers and negotiation of significant price reductions. As a direct result the pharma’s profitability increased by over 10%.
With Spendkey, pharmaceuticals can observe dependency on key suppliers by determining the level of dealings with them. The in-depth spend analysis which Spendkey provides helps pharmaceuticals to advance their risk management strategies. It is possible to distinguish core suppliers and identify where there may be over-reliance. Consequently, alternative sources can be secured to reduce dependency on certain providers. Effective risk mitigation in pharma can not only be converted into direct savings fast but can also make the supply chain more resilient and able to sustain change.
The data obtained through Spendkey and the spend analysis outputs, enable Executives to secure the benefits of a reliable supply chain which in turn gives them the capacity to scale up, or consider M&A opportunities, or enter profitable ventures.
Given the complex global, regulated and demanding environment that pharmaceutical companies operate, optimising your commercial spend is not easy; it takes investment in new processes, capabilities, and, in some cases, technology. It also requires a new organization culture about making business decisions based on data. The change, however, is worth it: companies that have fully embraced the new, integrated approach to commercial-spend optimisation have seen improvements in returns of 10 to 25 percent during the first year of implementation. With further tuning, these can rise even higher.
With traditional cost-cutting measures failing to drive business growth, finance leaders are discovering a new approach to cost control and growth — one that is focused on data-driven decision-making and continuous improvement.
With Spend Analytics, finance leaders can achieve greater accuracy in their budgeting and forecasting processes, which can lead to improved financial performance for their organisations.
In today's uncertain economic environment, Spend Analytics emerges as a transformative solution for finance leaders to meet the imperative of driving business growth.
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