Title

Pharma procurement and supply chain predictions for 2027: Making room for future growth

Section
Insight
Summary

by Cesare Baratto, Viola Walthers

Pharmaceutical companies will enter 2027 facing growing pressure to protect profitability while continuing to invest in future innovation. Significant patent expiries are putting established revenue streams at risk, while evolving drug pipelines are changing manufacturing requirements and the capabilities companies need to secure. At the same time, advances in AI are creating opportunities to identify cost, productivity, and supply chain improvements.

For procurement leaders, these developments have a common thread running through them: their priority will be to help their organisations free up and redirect resources towards future growth. From reshaping the underlying cost base and managing complex supply ecosystems to continuously identifying opportunities for improvement, Procurement has an important role to play in enabling that shift.

1 Patent cliffs will intensify the focus on cash and structural productivity

As major pharmaceutical companies approach significant patent expiries, the potential loss of revenue to generic and biosimilar competition will put greater pressure on profitability and cash generation. M&A may play a role in replenishing drug pipelines, reinforcing the importance of preserving cash and financial flexibility to fund future growth. These pressures will accelerate the need for structural productivity improvements across manufacturing, operating models, and resource allocation, alongside traditional supplier price reductions.

Patent expiries will also sharpen the focus on working capital and cost flexibility. While pharmaceutical companies will already have planned for loss of exclusivity, demand may decline faster or more slowly than forecast; this creates challenges in managing inventory and supplier commitments, as companies balance the risk of excess stock and unused manufacturing capacity against the need to maintain supply. 

What this means for procurement leaders in 2027

  • Take joint ownership of financial outcomes. Work closely with Finance and Operations to jointly identify opportunities to improve cash flow, agree financial baselines, and take ownership of delivering measurable P&L and cash benefits. Establish shared accountability for delivering financial improvements, rather than measuring success primarily through negotiated savings.
  • Optimise working capital ahead of patent expiries. Work with Finance and Supply Planning to review inventory levels, minimum purchase commitments, and reserved manufacturing capacity against changing demand forecasts. Identify opportunities to adjust existing purchasing schedules and supplier commitments to minimise excess stock and unused capacity while maintaining supply continuity.
  • Reshape the underlying cost base. Challenge demand, specifications, and delivery models across categories such as R&D, Marketing, Professional Services, and Manufacturing. This could mean reducing unnecessary volumes or over-specified services, changing how work is delivered, and reassessing manufacturing footprints and outsourcing arrangements as product portfolios evolve.
  • Embed Procurement in M&A integration. Ensure Procurement has the right capabilities and governance to support acquisitions from planning through to integration. Involve Procurement early enough to identify opportunities to consolidate suppliers, address overlapping contracts, and realise cost synergies. 

2 Evolving drug pipelines will reshape manufacturing and partnership decisions

As pharmaceutical companies develop increasingly complex therapies, they are taking different approaches to securing the manufacturing capabilities they need. Some are turning to contract development and manufacturing organisations (CDMOs) for access to expertise, technology, and capacity. Meanwhile, others are investing in their own manufacturing capabilities; for instance, earlier this year, Eli Lilly announced a further $4.5 billion investment across its Indiana manufacturing operations, citing its evolving drug pipeline and anticipated demand as drivers.

As production requirements evolve, pharmaceutical companies will need to carefully assess which capabilities to develop or retain internally and which to access through external partners. These decisions will involve trade-offs across factors including cost, technical expertise, capacity, quality, speed-to-market, security of supply, and the strategic importance of individual products.

Where companies do outsource, the way they structure their relationships with CDMOs is equally important. Pharmaceutical companies may leave materials procurement to their CDMO partners, retain direct control, or adopt shared arrangements. Each model has different implications for purchasing leverage, cost transparency, working capital, and supply risk.

Regardless of the model, supplier dependencies remain a critical consideration. Specialist capabilities can be difficult to replace, with limited alternatives and lengthy qualification processes potentially restricting operational flexibility. These dependencies can also extend further upstream; for example, where a pharmaceutical company may require its CDMO to use a particular materials supplier, while leaving the CDMO responsible for purchasing from and managing that supplier. Without clear visibility into critical tier 2 and tier 3 suppliers, companies may end up facing hidden costs, supply risks, and unclear accountability.

What this means for procurement leaders in 2027

  • Shape cross-functional make-versus-buy decisions. Work closely with Manufacturing, Supply Chain, Quality, Regulatory, Finance, and Legal to evaluate the total cost of ownership and strategic trade-offs between internal manufacturing and CDMO partnerships. Beyond unit costs, Procurement should assess capital investment, capacity utilisation, speed to market, flexibility, technology transfer costs, and long-term supply risks.
  • Design the right CDMO procurement and operating model. Once outsourcing is selected, Procurement should help determine how sourcing, purchasing, and material ownership are structured between the pharmaceutical company and its CDMO partners. Options range from CDMO-led procurement and shared-control arrangements to direct procurement by the pharmaceutical company. Each model must be evaluated against its total enterprise value, considering commercial opportunities such as consolidated purchasing leverage, reduced CDMO mark-ups, price harmonisation, and rebates, alongside potential improvements in working capital and supply resilience. These benefits must be balanced against additional organisational capabilities, systems requirements, inventory ownership, contractual liabilities, and regulatory complexity. The preferred model should deliver the strongest overall net value, with clear accountability, operational feasibility, and a practical implementation pathway.
  • Manage dependencies across the supplier ecosystem. Create visibility into critical tier 2 and tier 3 suppliers, particularly where specific suppliers are mandated. Establish clear accountability for monitoring supplier performance, managing supply risks, identifying hidden costs, and responding to potential disruptions.
  • Strengthen long-term partnerships. Work with strategic CDMOs to anticipate future requirements, secure appropriate capacity, and support innovation. Procurement should establish commercially sustainable agreements with transparent pricing structures, flexible volume commitments, and clearly defined risk-sharing mechanisms that can adapt to evolving product pipelines and demand.

3 AI's next challenge in pharma will be turning predictive intelligence into action

AI is already helping pharmaceutical companies anticipate supply disruptions and identify manufacturing risks earlier. For example, Sanofi reports that its AI-powered platform, Plai, can predict 80% of stock disruptions, enabling its manufacturing and supply teams to take preventative action. In 2027, the opportunity will be to make these responses more systematic, ensuring predictive intelligence consistently informs commercial and operational decisions across the supply chain. 

Beyond predicting supply disruptions, AI and advanced analytics could also help transform how Procurement identifies value. Rather than relying on periodic assessments, organisations can develop continuous analytical capabilities to identify emerging opportunities across pricing, demand, supplier performance, and operational efficiency. 

The challenge will be translating these insights into measurable outcomes. Alongside investment in technology, this will require a rethink of Procurement's operating model, with clear ownership for validating, prioritising, and converting insights into action.

What this means for procurement leaders in 2027

  • Embed continuous opportunity identification. Use AI and advanced analytics to systematically identify opportunities across cost, demand, working capital, and supply risk. Develop reusable analytical tests and dedicated capabilities to translate insights into measurable outcomes.
  • Rethink decision-making processes. Work with Manufacturing, Supply Planning, and Quality to establish when emerging opportunities and risks should trigger action and who is responsible. Ensure the relevant functions can make timely decisions, whether that means adjusting sourcing arrangements, addressing inefficient demand, or responding to potential supply disruptions.
  • Measure realised business value. Don’t measure success solely based on the number of opportunities identified or the accuracy of AI prediction; these are a means to an end. Track the financial and operational benefits delivered, including cost and cash improvements, faster interventions, and improved supply continuity.

What pharma procurement leaders should prioritise

As pharmaceutical companies balance financial and supply chain pressures with ambitions for future growth, Procurement will play a critical role in shaping and enabling wider business decisions.

In 2027, the priority will be to translate commercial expertise and insights into measurable financial and operational improvements, helping organisations release cash and preserve the flexibility to invest in future innovation.