Betapharm

BetaPharm

Oct. 15 2015 Kevin LIU

1. Introduction and Problem Definition

Under the pharmaceuticals industry remaining in recession with low growth rate predicted for the next few years, pricing pressures from managed care and government programs, and the loss of patent protection on many leading drugs, Betapharm needed to search for new ways immediately to remain profitable and maintain its position as one of the largest pharmaceutical companies. The solution of Betapharm was to focus on reducing procurement spending, and implement new system for eProcurement activities and reverse auctions. Now, the management is arguing whether products as diverse as hotel contracts and raw materials could be sourced with this system, and the problem is obviously defined as is it worth doing it?

2. Situation Analysis

3.1. External Situation Analysis

The depression of pharmaceuticals industry forces players like Betapharm to search for solution to remain profitable and maintain their positions in pharmaceutical market. As a reaction of unoptimistic situation, many pharmaceutical companies looked to procurement management in order to decrease costs. It was estimated that 50% of every dollar in revenue was spent on cost of goods. Some companies began using online procurement tools that included a large number of suppliers with each bid. The National Association of Purchasing Management in the U.S. estimated that using e-procurement would reduce the cost of purchase order generation from 84 euro to 17 euro per order, a substantial savings for companies that create a large numbers of purchase orders each business cycle. Facing on the reality, Betapharm implemented eprocuement system as well. Global hotels and malic acid as potential extended products of Betapharm eprocuement system are highly focused right now, analysis the suppliers and competitive situation in both the global hotels and malic acid product spaces is essential.

3.2. Internal Situation...