Procurement at Betapharm Corp. Case
Procurement at Betapharm Corp. (A) Notes
George Brannigan, Vice President
Doug Burke, Director of eSourcing
- Betapharm recently implemented the Emptoris ePass system, which facilitates eProcurement activities and, specifically, reverse auctions
Industry Information
- Pharmaceutical sales experienced average growth in the low teens between 1996 and 2003, single-digit growth was expected over the next few years
- Betapharm outperformed the industry
- Industry benefited from increased demand and projected future growth due to: o A growing elderly segment o Increased average life expectancy o Rising incidence of chronic diseases
- Pricing pressures from managed care and government programs and the migration to generic drugs due to a large number of patent expirations plagued pharmaceutical companies
- North America, largest pharmaceutical sales market, 49% worldwide sales
- Europe 28%, Japan 11%
- Market slow-down due to pricing pressures and the relative scarcity in new-product approvals
- During 2002 and 2003, many blockbuster drugs lost patent protection, causing sales growth to slow
- Margins are declining
- Not as innovation driven
- Many companies looked to procurement management in order to decrease costs
- By 2002, 9 of 10 companies planned to automate their spend-management processes
Company Information
- One of the largest, between 5% and 10% of the world’s pharmaceutical market including drugs in the following areas: o Anti-invectives o Central nervous system o Respiratory o Gastrointestinal/metabolic
- Sales of a small number of very successful products made up the majority of sales as Betapharm
- Responsible for approx. 7.5 billion Euro in annual production and nonproduction spend
- Majority of these drugs had patents that expired within the next two years and caused concern about the company’s ability to continue its historical growth trends
- Competing on cost, order qualifier versus Order winners, key requirements which
George Brannigan, Vice President
Doug Burke, Director of eSourcing
- Betapharm recently implemented the Emptoris ePass system, which facilitates eProcurement activities and, specifically, reverse auctions
Industry Information
- Pharmaceutical sales experienced average growth in the low teens between 1996 and 2003, single-digit growth was expected over the next few years
- Betapharm outperformed the industry
- Industry benefited from increased demand and projected future growth due to: o A growing elderly segment o Increased average life expectancy o Rising incidence of chronic diseases
- Pricing pressures from managed care and government programs and the migration to generic drugs due to a large number of patent expirations plagued pharmaceutical companies
- North America, largest pharmaceutical sales market, 49% worldwide sales
- Europe 28%, Japan 11%
- Market slow-down due to pricing pressures and the relative scarcity in new-product approvals
- During 2002 and 2003, many blockbuster drugs lost patent protection, causing sales growth to slow
- Margins are declining
- Not as innovation driven
- Many companies looked to procurement management in order to decrease costs
- By 2002, 9 of 10 companies planned to automate their spend-management processes
Company Information
- One of the largest, between 5% and 10% of the world’s pharmaceutical market including drugs in the following areas: o Anti-invectives o Central nervous system o Respiratory o Gastrointestinal/metabolic
- Sales of a small number of very successful products made up the majority of sales as Betapharm
- Responsible for approx. 7.5 billion Euro in annual production and nonproduction spend
- Majority of these drugs had patents that expired within the next two years and caused concern about the company’s ability to continue its historical growth trends
- Competing on cost, order qualifier versus Order winners, key requirements which