Alfasigma, the Bologna-based pharmaceutical company, is going through a period of significant change as it integrates three acquisitions over the last 12 months.
To keep pace with this change Fabio Russo, who recently joined as the Chief Procurement Officer, is pioneering a transformation of the procurement function.
Leveraging his background in management consulting, he is introducing a new target operating model that repositions the procurement function as a strategic business enabler to support the company’s growth.
“Consulting is very much about delivering concepts and designs. I missed rolling up my sleeves and going into execution mode. I’ve joined Alfasigma at a very exciting time,” he says.
In the latest episode of the PharmaSource podcast, Fabio breaks down his strategy, the digital journey that the team is embarking on, and how to stay aligned with the needs of an evolving business.
Integrating acquisitions and driving change
Alfasigma has experienced a lot of change, complexity, and geographic expansion over the last 3 months – transitioning from an Italian company to a US and Northern European company.
The company’s recent acquisitions have included Intercept Pharmaceuticals, the filgotinib business from Galapagos NV, and SOFAR.
For Fabio, this brings with it a variety of challenges to tackle which makes the procurement transformation “even more interesting”.
“There are opportunities to take advantage of economies of scale. The supply base has increased significantly, with increased contractual complexity. In some cases, the same entity has multiple contracts with multiple commercial agreements behind them. We’re also trying to combine and maximize the scope of the different suppliers.”
“Harmonising both price and specification of technical requirements” is an opportunity for the company in the immediate short term, says Fabio.
In the longer term, he sees the company moving towards “proper strategic supply relationship management. Shortening the supply chain is an opportunity to be more resilient in the face of geopolitical instability.” he adds.
Why pharma is both “Beauty and the Beast”
Fabio says that he views the pharma industry as both Beauty and the Beast. The beauty is driven by three main drivers.:
“Firstly, the purpose of the industry is fantastic; secondly, the industry is continuously evolving with the development of new solutions. Thirdly, it is an industry which is increasing the strategic focus on procurement and better management of the supplier base.
The beast is because the industry is heavily regulated and not harmonized. “Every country has its own requirements which make changes and development pretty complex and the lead time to do things is long, even on the easiest things. For example, even if you just want to change artwork, you need to go through regulatory approval in many countries.”
Engaging suppliers at an earlier stage of development
Fabio explains that while procurement was previously only involved at a late stage, but this is now changing.
“We have two main channels – things that you produce in-house, and those that we ask external manufacturers to produce.”
Using contract research and manufacturing at an earlier stage has a positive impact on margins and makes it easier to get products to the market quicker, says Fabio.
“There is a strong tendency now to engage suppliers in the early phase.” he says. “Now we support clinical development with CROs all the way up to the final production.”
A new Procurement Operating Model
“We have redesigned the organisation and the target operating model.”
“In some cases, it was more a lift and shift of the processes that were there before – the GMP pharmaceutical procedures that need to be respected. But quite a lot of activities within procurement have changed.”
A new operating model has been designed, not only within procurement, but also where procurement is involved. They now have a centralised approach to category management, procurement excellence support, and the use of digital tools.
Fabio refers to his team as a “cross-functional small tribe that is really pushing things forward.”
“We need a big step up in digital maturity,” he explains. “We currently have a limited use of technology and dashboarding, but are transitioning into the use of predictive analytics. We want to understand not only what has happened in the past, but also what the possible scenarios that might happen in the future are.”
“It starts with a culture of data consistency, and then building a more sophisticated suite of tools to support company decision-making.”
Aligning with company strategy
None of this works unless you are clear about your company’s goals, says Fabio.
“It’s crucial to design your 6, 12, and 18-month journey in a way that is aligned with management to ensure full harmony.”
“the two things need to go hand in hand. Otherwise, you risk Procurement having its own strategy which becomes very difficult to accomplish because it differs from what the company wants to achieve,” Fabio explains.
“You also need to be very clear on what the priorities for the company are, and sometimes you need to make tough calls. There are things that you may feel should be expedited or prioritised because they are needed, but they may not match the maturity of the company.”
Bringing people along
In order for this to be successful, we need to bring people along with the journey, integrating everyone from the acquisitions.
“It shouldn’t be my vision or my goal only. This is something we need to build together as a team because if you don’t believe in what you’re doing, it won’t happen,” Fabio emphasises.
While it’s OK to use communications tools like Teams or Zoom, Fabio believes that “when you see people around the table and then you have time to really problem solve things, it makes a difference. It accelerates this kind of sense of belonging.”
Fabio brought the team together to co-create their roadmap, ending up with a manifesto or journey that they want to take over the next two to three years.
LIVE on June 13 2024 
