Chertsey, UK, 10 July 2013: 59% of providers to the Life Sciences market are suffering discrepancies in matching orders to invoices. Yet despite growing margin pressures in the industry, 64% of businesses overall struggle to put regular exceptions reporting in place, in order to identify and minimise any resulting revenue leakage.
These were among the key findings of a survey of attendees at the 3rd annual Model N & EPP Life Sciences Price & Profit Optimisation Forum, held recently in Montreux, with partners HighPoint Solutions and Deloitte.
Other survey results underlined the growing importance of effective tendering. Specifically, the need to gain better competitive intelligence and identify best in class processes featured top of the list of ways to improve tender success, both cited by 25% of respondents. The automation of tendering processes was cited by 13% of the participants as a lower priority, confirming that the huge increase in tendering practices is forcing companies to evaluate their internal processes and how technology can increase effectiveness.
“The lack of KPIs to tackle revenue management performance is a surprising finding, which may be the result of technology and / or data issues within individual businesses,” says Alex Rumble, senior director, Model N Europe. “However, it also reflects that, with most pricing teams aligned to marketing, the commercial team or finance, these disparate reporting lines make it difficult to manage and control performance effectively. Of broader concern is that few providers to the Life Sciences market are treating pricing and profitability as a strategic board level issue driving change and this remains a real challenge.”
The survey highlights how firms still have some way to go in moving from a siloed pricing approach to one in which key departments collaborate in meeting strategic financial objectives for the business. “Implementing effective end-to-end revenue lifecycle management represents a transformational initiative for most businesses,” believes Rumble. “In our experience, the most effective change programmes are those in which all relevant departments work together, ideally under the leadership and control of an executive - in this case the CFO.
“There needs to be a greater sense of urgency. With 53% of firms seeing a slowdown in business and the remaining 47% either flat-lining or experiencing a drop in revenue, it is worrying that less than one third (29%) have a well-structured, enterprise-wide pricing organisation, while 23% have no dedicated method of pricing management.”
Leading the way
The Model N & EPP Forum is the only event of its type to focus exclusively on the Life Sciences industry and attracted a record number of senior executives, who came together to share best practice strategies in driving performance improvement.
Model N led the focus on revenue lifecycle management at this year’s Forum, entitled Performance under Pressure, which featured interactive workshops, networking events and speakers including major Model N customers such as Boston Scientific, Gilead and Corning Life Sciences B.V. The event also included a keynote address by Tobias Handschuh, principal at leading industry analyst Booz & Company.
“The success of the Forum reflected the increasing visibility and awareness of Model N in Europe and our uniquely powerful end-to-end approach to price, profit and revenue life cycle management,” says Rumble.
“We were also encouraged to see how both the Forum and the Model N survey provided plenty of evidence that Life Sciences manufacturers are recognising the important role of end-to-end revenue management in driving competitive advantage. As a result, there was much discussion throughout the event around what best practice looked like and how to put together a compelling business case for performance improvement.”