Advice You - Business

I am amazed that it is taking such a long a time for procurement departments of indirect goods and services to perish and be replaced by a function called “commercial”.

It seems that some of the good old procurement

According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product

and business bureaucrats have managed to keep this function alive and kicking while spending hard-earned company money trying to save it.

In fact some bureaucrats have gone much further and persuaded their boards to

; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.

Examples of combination products may in

develop a sophisticated procurement system solution which they claim will save a huge amount of money.

They have even managed to convince their companies that after they build this great system, they will save even m

lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.

ore money, perhaps up to 50 per cent, if they also use an e-procurement tool that will interact automatically with all concerned.

I am not saying that creating an IT system for purchasing is a bad thing or not needed

here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe

to control stray spending and increase leverage. I am not saying that creating an e-procurement solution is not a good thing or that it doesn’t save time and money, especially when buying paper clips and printer tone

d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.

Combination pro

s.

I am simply asking how much that saving is and at what expense is it achieved?

The overall success of any procurement department surely comes from its ability to increase the competitiveness of its organisation i

ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc

n the marketplace. This success largely comes from being a commercially-centred department facing outward rather than a system and process-driven one facing inward.

I think building the system and buying stationery u

easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi

sing e-procurement tools should be left to finance to handle. They usually know best how to build and manage a computer system that deals with money.

When I worked at House of Fraser Group earlier in my career, a cor

nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically

e function of the finance organisation was running the purchasing and invoice matching systems. The purchasing department or, as they call it in retail, the merchandise department, was more concerned with making deals

and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ

, researching products and markets and managing a merchandise system to understand the movement of stock. The same department was resourced with highly professional expert buyers, negotiators and merchandisers.

In th

ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi

indirect purchasing of goods and services, good old bureaucrats are still maintaining a function that has long been transferred to finance in the retail and manufacturing world.

Such bureaucrats seem afraid of facin

ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.

Following aspects would a

g the real world of negotiations, sophisticated markets, dealing with suppliers, markets and technology, creating relationships and, most importantly, handling change.

Professionals who really drive and contribute to

dd to the challenges in developing combination products:

Which markets to tap where the combination products can do fairly well?
Which combination prod

the overall success and competitiveness of their companies in the marketplace are needed.

For once, I will not blame senior management or company boards who have actually done their best to create the right environm

cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin

ent for the procurement department to flourish, modernise and increase its leverage.

Many companies have centralised the procurement function and made it part of the overall governance. All they got in return was mor

tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen

e demands from their procurement directors to build new systems. Company Boards nowadays seem to hear one mantra from their procurement directors which goes something like this, “if you build it, the saving will come”

t?

As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel

But does the saving come?

You will never know unless you ask the right question – how much did your function contribute to the company’s overall competitive position in its market place?

This is a commercial questi

ping new procedures for reviewing their safety, efficacy and quality.

Professional from academic institutions, pharmaceutical industries, health care indust

on to be asked by senior management and not a system and process based one. What does a 60 per cent discount really mean? It means nothing unless it is compared with other discounts given to other organisation by the

y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products

same supplier in the same market. And not only that, but also, on what terms is the deal is based and for how long if this supplier happens to be strategic?

Procurement departments must move quickly before they are m

.

As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de

oved by someone else. They should become a commercially-centered function resourced with highly professional and commercially-oriented people who add value by increasing the competitiveness of their organisation in th

elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.

Companies that provide selfless information through particip

e marketplace.

At the same time they should relinquish their system administration responsibilities to the finance department. After all, the first task of computers when they were invented was to computerise finance

tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products

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