“You can’t develop medicines without an ecosystem. Suppliers are probably one of the most neglected sections of the ecosystem.”
In the latest epsiode of the PharmaSource podcast Tanya Momtahen, Vice President of Integrated Product Solutions at Thermo Fisher explains why prioritising the supplier ecosystem has become critical for the pharma industry.
“The amount of money that’s spent in the supplier world is daunting, to say the least,” says Tanya “yet too often key suppliers are treated transactionally.”
While this attitude might make sense when procuring something that already exists “if it’s services that are supporting research and development of a medicine it is crazy.”
Tanya spent nearly two decades at Sanofi, over which time she moved from research and development to becoming VP of global scientific and clinical procurement.
She explains that she moved to procurement with a mission to champion the “neglected supplier world” and truly partner with suppliers.
Moving to procurement Tanya faced “many naysayers” but for her, changing how to partner with suppliers came with a moral responsibility
“I had a mission and the mission was: if I work on a couple of products (in R&D), those are the only ones I can impact. But if I go and take over outsourcing and drive the suppliers to bring better solutions forward, I can affect many more medicines.”
“We owe a responsibility to the world not to waste money that can be spent on additional medicines. It’s frustrating to see people killing products that may work because there’s just not enough money to go around to develop them. Some of the products that are not so publicly known are the easiest ones to kill internally. But they also may be the ones that may work.“
Now working at Thermo Fisher, her role is to help sponsoring biopharma companies to get the most out of a wide range of outsourcing services. Her experience has given her a broad perspective on how to make partnering work from both sides of the table.
How to negotiate transformational partnerships
Here is Tanya’s advice for sourcing and procurement professionals to get more from their supplier ecosystem.
1. Understand the supplier’s business model
Tanya recommends that procurement leaders really understand the ecosystem and what is important to the supplier,
“They always say, especially in negotiations, to put yourself in the shoes of the other people.” says Tanya. “To set up more strategic relationships with suppliers you need to understand their business model, which is nothing like Pharma.”
The differences between the business models needs to be understood when negotiating partnerships that work for both parties.
2. Prioritise suppliers as you would an innovation partner
“Pharma companies need to recognise that they spend a lot of money on suppliers that help them develop medicines, and they probably aren’t set up to manage that the same as they would an innovation partner.”
Tanya gives the example of asset deals with another biotech or biopharma company, which typically involve considerable executive attention, alliance management and measurement.
“The supplier network is treated a little differently. With some suppliers, that’s okay but if it’s suppliers that provide clinical trials or manufacture your product and develop science for you, that’s probably not the best way to manage them.”
Her advice is to learn from how alliance management operates and combine it with the best practices of procurement and sourcing, and “ensure you have relationships at the very top of the supplier.”
3. Identify what’s really important for your business
“Find out what is a win for you, internally. Some of it will be to save money, but that won’t be the only thing. “
“Time is a metric that has huge amount of value back to R&D especially when competition is very tight. You may negotiate a saving of $100,000 but if you lose two weeks in development, that $100,000 doesn’t mean anything.”
4. Aim for a Win-Win
“If you make a supplier lose, you lose.” says Tanya.
“If you get such a lean model that you’ve sucked all that margin away, they’re not going to give you the best people. You need to know that there’s a limit to the negotiation. It won’t feel like a win after some point, and if you push that past that line it will backfire on you.”
“Suppliers care about growth. So how do I leverage the growth for the benefit of my products and my delivery?”
“Have a very strategic contract, that has value from end to end with that supplier. Bundle as much work in each supplier that is feasible, but without putting your company at risk. Create a goal for every year we’ll work together.”
5. Practise negotiations
“There’s nothing worse than walking into millions of dollars deal and not even have thought to practise!”
“I mean, we practise to get funding, to sell services on the supplier side, we practise to do a lot of things, why wouldn’t we prepare ourselves?”
6. Change is driven from the top
When it comes to creating a better relationship with your supplier ecosystem, change comes from the top.
“The right leader can drive the right change” says Tanya “If a Chief Procurement Officer, Finance head or head of R&D cares then everybody will start caring.“
“The credibility and influence of procurement can rise in the organisation but you have to focus on many more things that are important to the business than savings.” Otherwise you end up in a situation where procurement, doing their own thing and the business does another.
In that situation “The business is forced to go through procurement because it’s a policy. But that’s not going to drive collaboration.”
Listen to the latest episode of the PharmaSource podcast for the full interview
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