Emerging biopharma’s critical lever for growth and valuation: Procurement

by Luca Di Giuseppantonio

Emerging biopharma leaders today must navigate a tougher environment: capital is tightening, operational risks are mounting, and investors are increasingly selective. Bringing a novel therapy to market can cost well over US $2 billion, with the bulk of it spent on external partners. As a result, how external costs are managed is critical to a company’s ability to operate and scale – as well as attract investment and ultimately make a premium exit. Once seen as a support function, procurement is rapidly becoming a strategic lever for growth, risk mitigation, and investor confidence. 

For leading organizations, the question is no longer whether procurement matters, but how to harness it effectively. So, how can C-suite leaders in emerging biopharma companies effectively leverage procurement to create a strategic advantage?
 

Market signals emerging biopharma can’t ignore

The external cost challenge: 60-70% of the $2B-plus journey to market is directed to external partners such as CROs, CDMOs, raw material suppliers, logistics providers, and specialist equipment vendors.

Escalating operational risks: Supply chain fragility is intensifying. Drug shortages reached a 10-year high in Q1 2024, with more than 320 active shortfalls reported globally. Freight costs and lead times have spiked due to geopolitical disruptions and constrained capacity. For emerging biopharma companies, these risks can derail clinical programs and undermine investor confidence.

The rising bar for funding and M&A deals: Simultaneously, the emerging biopharma funding and M&A landscape is shifting. Capital is still flowing into the life sciences sector, but it is being deployed more selectively. Total venture funding has decreased, but the average size of individual investments has grown, signaling a shift toward fewer, more execution-ready companies (Figure 1). In parallel, M&A activity remains high in volume but deal value is lower, suggesting buyers are strategically acquiring de-risked, scalable assets instead of seeking blockbuster deals (Figure 2).