Advice You - Business

e-Sourcing is the use of internet technology used by purchasing professionals to find suppliers and negotiate prices or reduce cost for a wide range of goods and services

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

. A variety of online negotiation tools are used – including RFI (Request for Information, RFQ (Request For Quotation), RFP (Request for Proposal) and electronic auction

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

Examples of combination products may in

.

It is important to understand when and how each should be used to achieve the best results. Incorrect use can bring about unsatisfactory experiences and can lead to “

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

ad press” for e-Sourcing.

This article focuses on the criteria which should be applied to determine the most appropriate e-sourcing tool to use.

Strategic importanc

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

of the category

An auction is generally recommended for those products with a high value and a minimum or small risk. High spend, low complexity is the ideal sce

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

Combination pro

ario for this type of price negotiation. The level of spend which will attract suppliers will differ from category to category but as a rough benchmark we generally look

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

at spend over ?150,000. In nearly all other cases, requests for quotations (RFQ), requests for proposals (RFP) manual negotiations will be much more appropriate.

I

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

the specification clearly defined?

Clear and unambiguous requirements must be specified so that suppliers are competing on a ‘like for like’ basis and not working

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

o different assumptions. A clear set of requirements (commercial, technical, logistical etc) will allow suppliers to work out the cost of servicing the account prior to

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

he auction. If requirements cannot be clearly specified then the RFP is likely to be more appropriate.

Are the market conditions favourable?

An auction requir

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

s competition in the marketplace. The more potential suppliers there are available, the more likely a good auction result will be achieved. Also consider the marketplac

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

Following aspects would a

e dynamics – are there new entrants eager to win market share? How profitable is this sector to suppliers? Depending on the category these conditions may change quite fre

dd to the challenges in developing combination products:

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

uently so holding the auction at the right time is crucial. If the category does not pass this test, other sourcing strategies will be more appropriate and will probably

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

involve the need to work closely with suppliers to secure supply and will focus less on price but on total cost.

Cost/risk of changing supplier low?

A category

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

may not be suitable for auction if the time taken to change supplier, the risks associated with change or the cost of changeover is high. Switching costs should be clearl

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

understood in relation to the length and value of the contract.

It is possible to auction certain complex categories but this is generally done after a thorough tender

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

Professional from academic institutions, pharmaceutical industries, health care indust

/ requirements definition process has been undertaken. This ensures that both parties understand the cost and implications of doing business. Good e-sourcing platforms

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

ill cover both the tender and auction aspects and allow suppliers who have passed the non-price evaluation be ‘rolled over’ into the final auction.

In summary, e-sourcin

.

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

can bring considerable benefits to optimising purchasing costs. Certain categories will work well by simply running an auction, other categories will require a more det

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

Companies that provide selfless information through particip

iled tender process and others will rely on more traditional purchasing techniques. By considering the criteria above, buyers should be able to make an informed decision

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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