1. The pharmaceutical industry faces increasing challenges from rising costs, complex regulations, and changing technology that have made managing commercial and government contracts more complicated. 2. Contract management costs such as chargebacks and rebates are expected to increase over 50% in the next five years and analyzing contracts to optimize revenue is difficult due to lack of integrated systems and data quality issues. 3. Pharmaceutical companies' contract management teams often lack the commercial agility and effective processes needed to make contract management a strategic function, and transforming processes and establishing centers of excellence requires significant investment, change management expertise, and technology that many companies do not have.

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Growing compliance, cost and complexity concerns in
pharma calls for urgent contract management transformation
Contract management ► Industry challenges
Increasing competition, cost pressures, stringent regulations and technology
changes affecting complexity of commercial and government contracts and the
processes to manage them
Increasing
complexity
• Chargebacks and rebate process costs expected to increase by over 50%* over the
next five years; may run into billions of dollars
• Earlier a non-strategic P&L line item, now under scrutiny with industry’s focus on cost
Growing costs
• Life sciences companies contract management teams lack the necessary
commercial agility and process effectiveness to operate as a strategic function
• Information flows between multiple systems for revenue management, contract
management and ERP are often not integrated
• Use of analytics to optimize contracts and increase revenue not scalable due to lack
of poor data quality, limited automation and legacy operating models
Limited
process/
technology
maturity
• Significant investments, change management and expertise is
needed to setup and operate such COEs, which many life sciences
companies do not have internally
High
transformation
costs
*According to a 2012 Deloitte study
• Successful center of excellence (COEs) require scalable and integrated technology
platforms, lower cost of delivery, robust resource management, domain expertise and
flexible service based commercial models