Up to 30% of procurement value lost before impact: New insights highlight gaps in healthcare and pharma
A growing gap between negotiated savings and realized value is emerging as a critical concern in healthcare and pharmaceutical procurement. According to industry observations 20–30% of contracted value is lost before it reaches the bottom line, indicating a deeper operational inefficiency beyond sourcing. Most procurement leaders in healthcare and pharma know their savings figures, but few can quantify missed savings or explain the reasons. This gap reveals a deep rooted problem in procurement operations.
Procurement quality is often mislabeled as a sourcing issue, with the core focus on improving RFPs, negotiations, and vendor selection. Yet top-performing teams routinely lose 20–30% of contracted value before it hits the bottom line. The real issues occur before and after sourcing.
By the time procurement receives a requirement, key decisions are often predetermined. Vendors may be informally chosen, specifications may favor certain suppliers, or time schedules may limit competition. This intake issue is alarmingly widespread in healthcare and pharma. Immediate action is needed: procurement must engage earlier in budgeting and planning. Relying on improved forms alone will worsen outcomes.