Nowadays, it’s a well-known fact that tender management is essential across most markets. Thus, as part of your tender management strategy, you must setup a network of tender champions or a global tender network. However to address the specifics of tendering across various markets and diverse portfolios, a tender management organization needs to be built.
Within any life science organization, there is a need to create — at least informally — a tendering organization. A recent HighPoint Solutions’ benchmarking study revealed that more than 60% of life science companies have a dedicated resource for tender management. But where should this resource sit? Should this resource report to other departments? What are the tools needed to support day-to-day activities?
For the Record: You Need a Dedicated Resource for Tender Management
It is standard practice across all above average performing companies to have a resource dedicated to tender management. This resource doesn’t necessarily need to be located at global headquarters, but there is a need for a dedicated person who can alert senior management on tendering. If there is no one able to observe how tendering is performing in a given year or quarter, it’s impossible to distinguish its overall importance and need. When starting the tender management journey, this is the first challenge faced by many of our clients. It is also the first, essential task of a dedicated resource and the prime motivator to have one in place.
Besides providing visibility, a dedicated resource should also drive the harmonization and adoption of a governance for the tender management process. Whether the governance be global, regional, or local is an entirely different concern, but there is a need to create this governance and to have it enforced and adhered to by the entire organization.
We will address governance in a future post. But what needs to be stressed is the fact that enforcing governance cannot be achieved without a resource overseeing it. In addition, technology choice and implementation is another aspect that drives the need for a dedicated tender management resource. Delegating those choices and implementations to IT may sound like a good strategy. But if business and other departments are not involved, the adoption rate will be drastically reduced.
Overall, it is the responsibility of the tender dedicated resource to drive the program to ensure all needs are covered and an appropriate strategy is being undertaken. Questions — such as, do we want a global calendar or shall we shoot for an in-country end-to-end solution — can only be answered by a dedicated resource that understands the complexities of tendering and the specificities of a company’s business model.
Location: Not So Obvious
Where should this resource be located? And what department should oversee tendering activities? Most companies would naturally allocate the resource to the market access department. In fact, market access is a natural fit for tendering. Usually, market access managers see tendering as an integral part of market access. Isn’t tendering some form of advanced marketing to payers?
But you also cannot ignore volume. Almost every country has instituted penalties when a company is unable to deliver. So, shouldn’t supply chain oversee tendering? Delivering the goods (drugs, medical devices, et cetera) to the /issuing body is really the endgame. What about the rebate strategy? When responding to an open tender issued by a hospital, isn’t the rebate structure and net price the most important factors in the response, a concern of the sales department?
As you can probably tell by now, the answer is not obvious and straightforward and every company is driven by different approaches and methods. Regardless, when allocating the resource, the following points should be assessed:
- What major type of tender is the company responding to? The larger the tender, the more the market access department should be involved. The extreme case being a company only participating in a framework agreement, which is just an entry-ticket to a market.
- What are the company’s supply constraints? If there is a threshold in which a company cannot deliver , it is absolutely necessary to have supply chain involved.
- What is the most common response strategy for net price? In and in therapeutic areas, tender authorities prefer a flat price. This is the most common method, but some authorities prefer to receive a complex structure linked to pricing. In those cases, sales should be involved to ensure an optimal deal. If the bid structure is complex — for example, with tier pricing — the sales department should be involved. If sales are overseen by marketing, marketing should oversee tendering.
There are many aspects of a tender that need input and guidance from various departments. Nevertheless, a team and cross-functional effort will optimize your tender bidding and be the most successful approach. That holds regardless of where you locate it.
Technology and Resources
So you have setup the dedicated tender resource within the most relevant department. But the company still needs to define who should report to the dedicated resource, and if and what the technology supporting day-to-day activities should be. If all sales are done via tendering, an analytics team should analyze those numbers. Naturally, the dedicated resource should oversee the tender analytics team.
Also, the technology itself should be assessed. Depending on the team overseeing tendering, the needs and requirements of the technology will be different. The company also has to decide if they would like more visibility. A “Global Calendar” may suffice. Or would they prefer an end-to-end tender management solution. Then, in-country requirements need to be accounted for. The scarcer the resources are at any level, the more seamless the integration should be. In fact, if the in-country national account must enter the price in the ERP, it may be a waste of resources.
Ultimately, the requirements for proper tender analytics need to be considered as they impact which tender data is captured and at which level. The more in-depth the analytical needs are, the more seamlessly integrated the solution should be. Overall, technology choice for proper tender management is driven by team size, scarcity of resources, and analytical needs.
What’s Next? Strategy
Given the importance of tendering in life sciences, a company needs a dedicated resource for tender management. The best department to oversee this resource depends on company specifics such as their product portfolio, major tender types, and if supply constraints exist. Finally, the size of the tendering business should define the size of the tender analytics team; and this ultimately has an impact on technology selection.
But setting up tender management resources is only the first step towards tender management excellence. A well-functioning governance is that next step, in order to drive proper behavior across all teams and resources. That will be addressed in a future post.
If you want to learn more about tendering and our solutions, please contact Ruven Remo Eul.