A Negotiator's Guide to Pharmaceutical Tendering

Understanding the tendering process is a must for any negotiator. The tendering process forms an important function in the business, and negotiators must be able to demonstrate a complete understanding of both the industry and their own expertise if they wish to succeed.

One of the most competitive sectors is pharmaceuticals. Even in countries with nationalised health services, the pharmaceutical market offers big business opportunities, with the global market estimated to have revenues worth approximately $1.6 trillion in 2023. To get ahead in this highly competitive market, negotiators need to have the right tools on their side.

What is tendering?

The tendering process is a competitive bidding opportunity that invites potential suppliers to submit a formal offer on a contract for works or services. This formal offer will include negotiated terms such as the intended work, the goods or services supplied, the price of the exchange (both the total value and a breakdown of individual parts such as labour or manufacturing costs), and additional stated conditions.

Tendering typically takes one of four forms:

Open tender — Anyone can submit a tender to the inviting organisation.
Selective tender — Only specifically invited suppliers can submit tenders for consideration.
Negotiated tender — A negotiation between an organisation and one specific supplier.
Single-stage and two-stage tender — Single-stage tendering occurs when the project is fully finalised, and the organisation just needs a supplier. Two-stage tendering is a collaborative approach with tendering companies also submitting plans for how to complete the project.

The tendering process can be long and complex. This is not an easy form of negotiation and even selective or negotiated tenders can come with a lot of pressure and a difficult path that might not end in success. Negotiators need to be realistic about what they can both offer and achieve, especially in a niche like pharmaceuticals where gaining a competitive advantage can be incredibly difficult to do.

What do pharmaceutical tenders typically seek?

Pharmaceutical tenders can be offered by either government contracts or the private sector. Supplying medical devices and products, or even the medication itself, is a lucrative business with multiple major contracts on offer. Typically, deals can include:

Medical procurement contracts

Both brand-name and generic drugs and medication are bought in large quantities by governments, typically to be used in hospitals, healthcare facilities, and state operations such as outfitting a military. A government needs to be able to build a healthcare sector that can easily compete with that of private organisations, and tenders form a crucial part of this.

Clinical trial contract partnerships

Clinical trials form an important stage in the drug development cycle. Often, these tests have to take place before regulatory approval and sale to the general public can commence. While some clinical trial partnerships are formalised through public tenders—especially in the public sector—many are negotiated through B2B contracts with contract research organisations (CROs).

Vaccine procurement contracts

Vaccine procurement often follows a tendering process. However, in emergencies or multinational efforts, centralised or restricted procurement mechanisms are sometimes used. This will help prevent the spread of disease and should help to limit and prevent outbreaks in communities.

Supply chain and logistics contracts

The manufacture of drugs and healthcare devices are not the only contracts available in this niche. Logistics and delivery can be complex and need to be handled by experts, giving room for companies specialising in these services to bid on such tenders.

Emergency response contracts

During national emergencies like disease outbreaks or natural disasters, medication and medical equipment can quickly become in short supply if governments and third-sector organisations have to rely purely on their stockpiles. Companies can tender for emergency response contracts to supply medical equipment in these times of emergency.

What are the challenges in pharma tendering?

No negotiation is straightforward, and this is even more so true when you bring in the pharmaceutical industry. Many challenges exist here and skilful negotiators need to have a clear understanding of how their company intends to fill the gap presented by the tendering brief. Some challenges frequently seen in the pharma bidding process include:

Lengthy procurement cycles

Some tendering and submission processes can be relatively short. However, this is not the case in the pharmaceutical and healthcare industry. Just as the products themselves can have a lengthy research and development time before general market access is granted, so will the procurement last a long time. Complete alignment between pharmaceutical companies and their intended buyers needs to be achieved.

Process complexities

Any procurement involves a lot of box-checking and regulatory management. This only increases for a complex industry like pharmaceuticals which requires strict regulatory compliance at every level. Procurement agencies may need to operate across several jurisdictions, ensuring that they reach the standards set by every single one.

Resource constraints

Resource constraints will always play a role in the tendering process, especially if negotiators are pursuing NHS procurement contracts. Limited resources, changing budgets, and fluctuating staff employment rates can all play their part in dictating contract management. When budgets dictate spending and saving, deadlines can be delayed.

How to stay ahead in pharmaceutical tendering

Negotiators who want to win a tender submission and get every contract their company bids for need to be able to push themselves ahead of the pack. Tendering is not easy, nor is it straightforward to navigate. To be successful here, negotiators must:

Know the niche

Look, you don't have to understand the ins and outs of the pharmaceutical industry; that is not why you are there. You are not going to be the one going into the lab and making the groundbreaking discoveries, but you will be the one stepping forward and explaining why your company is the best one to offer that product or service.

It can be very unprofessional to constantly call for an adjournment because you need to call to clarify a detail. Educate yourself on your niche so you can confidently answer any question and make decisions.

Follow the up-and-coming developments

As part of your education in the niche, you need to stay up-to-date with the biggest developments in the industry. This can include developments within your own company and those from major competitors too.

By studying the big developments that are about to launch or imminent breakthroughs, you can try to predict market shifts. Knowing how to take advantage of these changes and push your organisation's products or services ahead can give you that edge you need during a competitive negotiation and tendering process.

Develop your skills and strategies

If you want to close deals and win contracts for your company, you will need to ensure your negotiation skills are the best they can be. You could be offering the lowest price with clear cost savings and a high-quality product, but if you cannot demonstrate that during negotiations, you run the risk of losing the contract to another company.

Some people have a natural talent for negotiation, but even those who have been in the game for years can still find ways to improve their skills and strengthen their negotiation know-how. You need to know which skills are your best, where you could use improvement and the strategies that best fit with your natural negotiation style to help you bring those deals home.

What skills do pharma negotiators need?

Negotiation experts need to be able to pull from a wide range of skills to be able to close deals and successfully get the terms they seek. Depending on the deal on the table, whether it is pharmaceutical tenders or any other form of contract, different skills might be used. We usually see pharma negotiators needing to use the following skills:

Strategic value communication

Tender submissions are the place to really articulate the full value of a proposition clearly. From clinical efficacy to economic benefit or even the value in service support offered, there are many areas to focus on to show how value will be delivered. Messaging can and should be tailored depending on who will be receiving it.

Remember, tenders are often won by the company, and therefore the negotiators, who can demonstrate and deliver the best value, not just the lowest price.

Data analysis

No two tendering procedures can be the same. This highly competitive environment can require multiple pricing models and smart volume scenario analysis to assess profitability and break-even points. Negotiators need to be able to look at the data being presented to them and use it to predict competitor behaviour and accurately simulate win/loss outcomes.

Without robust scenario planning, you risk underbidding and eroding margin, or potentially overbidding and losing the tender entirely.

Relationship building

The tendering process is all about the relationship built between your company and the company you intend to tender. Building stronger relationships with procurement officials and policy influencers while participating in consultations and advisory boards can help to establish trust in your company.

Experience and trust can be just as beneficial in shaping the outcome of a tendering period as the submission itself.

Negotiation agility

Factors can change incredibly quickly during pharma tendering. Regulations can change, a competitor can launch something new, or a new study could be published that could either benefit or hamper your own proposal. Being able to pivot and adapt strategy and coordinate effectively with other teams are underrated skills that negotiators will nevertheless need to pull from.

Tendering and negotiation can often be team sports. Misalignment can lead to missed opportunities and even compliance risks.

Ethical rigour

With the pharmaceutical industry being so heavily regulated, transparency is a strategic necessity. A successful negotiator must demonstrate full transparency in pricing, claims, and commitments. Any conflicts of interest must be avoided, and rigorous records should be maintained.

Ethical missteps can result in disqualification and blacklisting from tendering processes, leading to further reputational damage for the company. Don't doubt the power a history of integrity can have in a final decision.

Build negotiation confidence with Scotwork

Tendering systems and submissions can be a real test of a negotiator's core skills and integrity. With so many strategies and paths open to pursue, it takes confidence to know how to press forward. The pharmaceutical industry is packed with opportunities and pitfalls in equal measure, and negotiators must know how to navigate them successfully.

Your skills will always form the foundation of any tendering strategy. Knowing your strengths and weaknesses and how to leverage them towards success will be key. This is where Scotwork's experts can help. Our negotiation training courses can help you identify the skills you wish to improve and can give you the frameworks to help you take them to the next level.

Whether you wish to pursue a high-value pharmaceutical tender or just learn how to gain more confidence with bargaining, get in touch today to find out how we can help you.