5 Trends Impacting Pharmaceutical Contract Lifecycle Management

By David Parks

As the need for digital transformation accelerates around the globe and in virtually every business segment, nowhere is this more apparent than with pharmaceutical organizations. Every stage of pharmaceutical contract lifecycle management from drug discovery to development to commercial delivery is being impacted by today’s new operating environment.

Dealing with challenging trends such as rising costs, evolving supply chain dynamics, the need for faster innovation, slowing growth and policy and regulatory changes are an ongoing reality and have a direct impact on you organization’s contracts. Whether it’s buy-side agreements with suppliers, sell-side negotiations with Pharmacy Benefit Managers (PBMs), or even managing clinical trials with Contract Research Organizations (CROs) and physicians, contract management plays a vital role in your pharmaceutical organization’s ability to not only survive, but also thrive.

Let’s take a look at each one of these trends as they relate to pharmaceutical contract lifecycle management.

Rising costs of doing business

Drug development costs continue to grow at unprecedented rates. According to PhRMA, the cost of drug development has more than doubled over the last decade from $1b to $2.6b. Clinical trial complexity, larger clinical trial sizes, increased PBM fees, and higher failure rates for drugs tested in earlier-phase clinical studies are all contributors.

This fact, coupled with greater reimbursement challenges, has created a real business issue for the industry. As a result, most pharmaceutical companies need to find new and better ways to manage expenses and control spend. Whether it’s optimizing vendor management, controlling R&D expenditures, or identifying other economies of scale throughout the organization such as better inter-department spend visibility, contract management holds the key.

Evolving supply chain dynamics

Discovering, developing, manufacturing, marketing, and distributing drugs is a complicated process with many internal and external stakeholders and organizations involved. Those complexities, coupled with the impact of COVID-19 and potential for force majeure, have made supply chains more risk-prone, yet more mission critical, than ever.

Supply chain diversification or breadth in supply, improving reliability or increasing depth and timeliness in supply, and whether to onshore or even outsource supply, are all important considerations when it comes to an organization’s resiliency and business continuity. Therefore, managing your relationships with all parties involved in your supply chains is extremely important and contracts play a critical role because they are the backbone of any organization. Whether it’s a term sheet, memoranda of understanding, or letter of intent, contracts are the bedrock of all your business relationships and transactions.

Need for faster innovation

The need for speed when it comes to R&D, clinical trials and FDA approvals is an ever-increasing demand on drug makers, your suppliers, and the overall pharmaceutical ecosystem. According to IFPMA, there are over 4,500 medicines in development in the U.S. alone. Contracts and effective contract lifecycle management play a significant role in your organization’s ability to adapt, pivot and move at a fast – yet compliant – pace.  At the end of the day, inefficient contract negotiations delay drug trials, lack of contract collaboration impedes PBM relationships, poor contract analytics limit your ability to optimize vendor management, and manual systems unnecessarily slow Confidential Disclosure Agreement (CDA) execution. The right approach to managing contracts can empower you to overcome these types of challenges and increase your agility and speed of innovation.  

Slowing growth

The pharmaceutical sector is a massive component of the U.S. economy. According to PhRMA, the pharmaceutical industry in the U.S. employs over 4 million people and is the single largest funder of business R&D with an 18% share.  Despite all of this, drug makers have seen a slowdown in revenue growth from double-digits to single-digits over the last decade. And while still a fast growing market, pharmaceutical companies are not growing as fast as related industries like healthcare and medical devices.

That slowdown, coupled with the fact that today, nearly half of U.S spending on brand medicines goes to the supply chain and other entities, and not to the pharmaceutical companies that research, develop and manufacture the medicines, is a major concern. Contracts and proper contract management is an important element to offsetting these issues. With the right analytics and insights, pharmaceutical contract lifecycle management can be extremely effective in optimizing legal agreements with supply chains, PBMs and other parties.

Ongoing policy and regulatory changes

FDA rules and regulations are constantly changing but more so now than ever because of COVID-19. Keeping up with all the latest changes to regulatory requirements such as the FDA’s Center for Drug Evaluation and Research (CDER) New Drug Development Process is no small feat. Pharmaceutical companies understand the critical importance of complying with every regulatory requirement from test tube to new drug application review and beyond.

Whether you are a small group of scientists working on your first Initial New Drug (IND) submission, at an established drug maker preparing a New Drug Application (NDA), or simply trying to navigate the latest International Conference for Harmonization (ICH) guidance, regulatory compliance is top of mind for all pharmaceutical companies. How well you manage your contracts and related documents is a foundational element to any pharmaceutical company’s governance, risk, and compliance (GRC) success. The right contract management solution helps pharmaceutical organizations ensure, enforce, and prove regulatory compliance and mitigate the risk of monetary fines, loss of accreditation, lawsuits and lack of intellectual property protection.


As pharmaceutical contract lifecycle management becomes more complicated as a result of these trends and  others, the tools you use to create, approve, negotiate, execute and manage your legal agreements need to keep pace. You may have thousands, or even tens of thousands, of contracts covering a wide variety of departments and facilities, involving multiple agencies and vendors, and potentially governing an enormous volume of transactions and trials via numerous clauses and contingencies. Whether it’s evaluating research and development, tracking rebates, building partnerships, protecting IP, or optimizing vendors, taking a data-driven approach to contract management is key for success.

Contract Logix has extensive experience working pharmaceutical and biotechnology organizations of all sizes. We are understand the unique business requirements and complexities of your industry and have a data-driven contract management software solution that is designed specifically for your business needs. Speak to one of our CLM Specialists to see how we can transform your contract management into a modern and agile function.