With expiring patents and growing gaps in revenue a reality in
today’s global pharmaceutical industry, an increasing number of
drug manufacturers are beginning to evaluate their supply chains to
identify any and all opportunities for savings so that they can
continue to bring innovative products to market and remain
competitive. With greater frequency, pharmaceutical firms are
seeking new sources that can deliver key inputs such as active
pharmaceutical ingredients (APIs) at a lower total cost than their
current suppliers. And in many cases, they are looking abroad.
While there are great gains to be had from sourcing in low-cost
countries, there is also substantial risk. As part of its Category
Chatter series, Ariba, Inc. (NASDAQ:ARBA), the leading provider of
spend management solutions, has created a podcast aimed at helping
companies understand these risks and develop sound strategies that
enable them to reap the cost-saving benefits of sourcing in
emerging nations without sacrificing the quality of their
products.
“As the costs of healthcare continue to soar, pharmaceutical
companies are taking aggressive steps to revamp their cost
structures,” said Christopher Merchant, Director, Healthcare
Sector, Ariba Spend Management Services. “But they face a unique
challenge in that while seeking ways in which they can generate
savings, they must also identify and resolve any areas in the
supply chain that might present risk, as the consequences of
contaminated products can have a dramatic effect on the global
population.”
To help do this, Ariba has compiled a list of steps that pharmas
can take to enforce their quality standards when sourcing APIs
abroad:
1. Do Not Let the Government Do the Work for
You
Pharmaceuticals should always hold its API sources to a higher
standard than those set by the Food and Drug Administration (FDA).
As stringent as FDA directives may be, approvals can be attributed
to political and other factors that may prevent proper scrutiny and
exposure of substandard operations.
2. Invest in Building a Strong On-The-Ground
Presence
It can take a pharmaceutical company several years to identify
API sources in low-cost nations and get them operating smoothly and
in compliance with quality standards. Consequently, a serious
commitment must be made upfront, to build a strong on-the-ground
presence to manage the process. Walking suppliers through processes
and procedures a few times or conducting random site visits isn’t
enough. Suppliers must be monitored thoroughly and regularly to
ensure they don’t cut corners or misinterpret expectations.
3. Limit Number of Offshore Partnerships
Every year, new API sources sprout up in low-cost countries
covering a wide variety of specialty chemicals. This presents an
opportunity to diversify the supply chain and maximize cost savings
by partnering with dozens of suppliers. However, given the
tremendous time and financial commitment involved in developing
each API source, it is wiser to emphasize quality over quantity.
Instead of trying to cultivate the same high standards within many
suppliers and risking a weak link, concentrate on one or two key
suppliers to ensure quality and safety over the long haul.
4. Emphasize Safety in Supplier Selection
The best way to create and enforce high standards is through a
rigorous and thorough process to identify the right suppliers. One
way to do this is to make safety a key criterion for selection in
the initial Request for Proposal. This not only makes suppliers
aware of safety from the get-go, but sets a baseline that can be
used to measure performance on an ongoing basis.
5. Be Patient
Companies that have successfully integrated low-cost country
suppliers into their supply chains did not do so overnight. Pharmas
must give themselves adequate time to build supplier networks that
take into account their unique needs, challenges and risks.
“Successful offshoring will be a key driver of success for drug
companies in the long term,” Merchant said. “Pharma companies that
invest in solutions and processes now that enable them to evaluate
and manage new markets and sources of supply will ultimately
realize the greatest benefits that low-cost regions can generate
down the road.” For additional insights, visit Ariba Category
Chatter and download the podcast, at
http://www.ariba.com/learningcenter/chatter.cfm.
About Ariba, Inc.
Ariba, Inc. is the leading provider of on-demand spend
management solutions. Our mission is to transform the way companies
of all sizes, across all industries, and geographies operate by
delivering technology, service, and network solutions that enable
them to holistically source, contract, procure, pay, manage, and
analyze their spend and supplier relationships. Delivered on
demand, our enterprise-class offerings empower companies to achieve
greater control of their spend and drive continuous improvements in
financial and supply chain performance. More than 1,000 companies,
including more than half of the companies on the Fortune 100, use
Ariba solutions to manage their spend from sourcing and orders
through invoicing and payment. For more information, visit
www.ariba.com.
Copyright © 1996 – 2009 Ariba, Inc.
Ariba, the Ariba logo, AribaLIVE, SupplyWatch, Ariba.com,
Ariba.com Network and Ariba Spend Management. Find it. Get it. Keep
it. are registered trademarks of Ariba, Inc. Ariba Spend
Management, Ariba. This is Spend Management, Ariba Solutions
Delivery, Ariba Analysis, Ariba Buyer, Ariba Category Management,
Ariba Category Procurement, Ariba Contract Compliance, Ariba
Contracts, Ariba Contract Management, Ariba Contract Workbench,
Ariba Data Enrichment, Ariba eForms, Ariba Invoice, Ariba Payment,
Ariba Sourcing, Ariba Spend Visibility, Ariba Travel and Expense,
Ariba Procure-to-Pay, Ariba Workforce, Ariba Supplier Network,
Ariba Supplier Connectivity, Ariba Supplier Performance Management,
Ariba Content Procurement, Ariba PunchOut, Ariba QuickSource,
PO-Flip, Ariba Spend Management Knowledge Base, Ariba Ready, Ariba
Supply Lines, Ariba Supply Manager, Ariba LIVE, It’s Time for Spend
Management and Supplier Lifecycle Management are trademarks or
service marks of Ariba, Inc. All other brand or product names may
be trademarks or registered trademarks of their respective
companies or organizations in the United States and/or other
countries.
Ariba Safe Harbor
Safe Harbor Statement under the Private Securities Litigation
Reform Act 1995: Information and announcements in this release
involve Ariba's expectations, beliefs, hopes, plans, intentions or
strategies regarding the future and are forward-looking statements
that involve risks and uncertainties. All forward-looking
statements included in this release are based upon information
available to Ariba as of the date of the release, and we assume no
obligation to update any such forward-looking statements. These
statements are not guarantees of future performance and actual
results could differ materially from our current expectations.
Factors that could cause or contribute to Ariba's operating and
financial results to differ materially from current expectations
include, but are not limited to: the impact of the credit crises on
Ariba’s results of operations and financial condition; delays in
development or shipment of new versions of Ariba's products and
services; lack of market acceptance of Ariba's existing or future
products or services; inability to continue to develop competitive
new products and services on a timely basis; introduction of new
products or services by major competitors; the ability to attract
and retain qualified employees; difficulties in assimilating
acquired companies, long and unpredictable sales cycles and the
deferrals of anticipated orders; declining economic conditions,
including the impact of a recession; inability to control costs;
changes in the company's pricing or compensation policies;
significant fluctuations in our stock price; the outcome of and
costs associated with pending or potential future regulatory or
legal proceedings; the impact of our acquisitions, including the
disruption or loss of customer, business partner, supplier or
employee relationships; and the level of costs and expenses
incurred by Ariba as a result of such transactions. Factors and
risks associated with its business, including a number of the
factors and risks described above, are discussed in Ariba's Form
10-Q filed with the SEC on August 7, 2009.
Ariba (NASDAQ:ARBA)
Historical Stock Chart
Von Jun 2024 bis Jul 2024
Ariba (NASDAQ:ARBA)
Historical Stock Chart
Von Jul 2023 bis Jul 2024
