Pharma Contract Management Concept

Top 7 Risks Companies Can Avoid with Pharma Contract Management

Pharmaceutical businesses rely on entities, including vendors, suppliers, organizations for drug research and development, and regulatory authorities to run their operations. The relationship between pharma companies and these entities is established through contracts.

Contracts determine the nature of your pharmaceutical company’s obligation to these different entities and vice versa. Your business can only become liable for legal and regulatory compliance risks with a proper pharma contract management system. 

What is Pharma Contract Management?

Pharmaceutical contract management involves the creation, execution, and monitoring of contracts between pharmaceutical companies and relevant stakeholders. These stakeholders may include entities in the supply chain, healthcare professionals, institutions for clinical studies, and regulatory organizations. 

Contract management plays a huge role in streamlining pharma business operations. The pharmaceutical industry is heavily regulated, owing to the increased medical research and development. Amidst the chaos, contract management allows you to simplify your commercial interactions. 

Importance of Contract Management in the Pharmaceutical Industry

Contracts are intrinsic for all major pharmaceutical transactions. Whether it is about buying from suppliers or conducting clinical studies, contracts are the cornerstone of all commercial interactions for pharma companies. 

The healthcare and pharmaceutical industry is quickly adopting the latest CLM models. Studies show that CLM in pharma and health is estimated to provide 25% of CLM revenue.

On the other hand, a lack of proper contract management gives rise to legal, regulatory, and financial risks. Establishing a robust contract lifecycle management system is the best way to mitigate these issues. 

Common Risks Companies Can Avoid with Well-Organized Pharma Contract Management

Pharma contract management is an invaluable asset for businesses looking to expand their growth in the pharmaceutical industry. Here are the common risks companies can avoid with a well-organized pharma contract lifecycle management system:

1. Legal and Regulatory Compliance Issues & Data Security Breaches

Before commercializing a new medication, pharmaceutical companies have to take care of a lot of paperwork. This involves creating error-free contracts that comply with local regulatory guidelines.

Lack of compliance leads to delays in the form of missed deadlines and financial liabilities. Contract management allows companies to ensure that all relevant documents meet compliance regulations to prevent compliance issues. 

pharmaceutical contract compliance

Data security risks with contract management are quite common. A well-organized contract management system takes into account potential security breaches and offers a centralized solution to prevent this problem

2. Financial Losses

Pharma businesses can incur financial losses because of poor contract management in the form of erroneous contracts, data leakage, and legal fees spent on conflict resolution. Contract termination, claims, warranty problems, and compensation associated with missed milestones can also increase the risk of financial losses.

You need a proper contract management and monitoring system to avoid missing deadlines. This may lead to competitors taking your place in the market and grabbing your market share for the same medication. 

3. Supply Chain Disruptions

As pharmaceutical companies grow, their supply chain process gets more complicated. The firms require more supervision to ensure their products reach the market at the right time. Even the smallest disruption in the supply chain can lead to the loss of time and financial resources. 

Contract management systems help you optimize your supply chain process by allowing you to stay ready for market opportunities, ensure complete contract visibility, and address the procurement and delivery risks within the contract. 

4. Damaged Reputation

Your company’s reputation is the most important factor affecting your bottom line in the long run. The lack of an organized contract management system leaves a negative impact on your vendors and relevant stakeholders. 

With pharma CLM, you can establish yourself as a trustworthy partner throughout the company’s supply chain. An organized contract management system helps build a positive brand reputation that increases your profit margins.  

5. Inefficient Operations and Resource Allocation

Pharmaceutical contract management processes that need more efficiency can reduce business productivity and efficient resource allocation. An automated contract management system offers a better solution for resource management.

Contract management allows you to establish a company-wide standard operating procedure for creating, executing, and monitoring contracts. When the process gets automated, it will enable you to utilize your resource and streamline operations efficiently. 

Pharmaceutical contract management

6. Missed Opportunities for Innovation and Growth

The opportunities and innovations in the pharmaceutical market are growing at a rapid pace because of the latest clinical research and development in the medical domain. This presents a new challenge for pharma companies in the form of intense competition. 

When you have an established system for managing contracts, you can avail the proper growth and innovation opportunities that come your way. Since the contracting process gets automated, it helps you save valuable time exploring these opportunities. 

7. Loss of Competitive Advantage

The pharmaceutical industry is known for being aggressively competitive. You need the right approach for streamlining your business operations to get ahead of the competition; contract management is essential. 

Pharma companies that invest in contract management solutions get to enhance the effectiveness of their contracting processes. As a result of that, they get a competitive edge over their competition. 

How Can Well-Organized Pharma Contract Management Help Mitigate These Risks?

Pharmaceutical companies can benefit a lot from investing in contract management systems. Here is how a well-organized pharma contract management system can help mitigate the common risks associated with poor contract management:

  • A well-organized contract management system streamlines compliance by ensuring the contract meets the legal and regulatory guidelines. 
  • Contract management systems offer a proactive way of creating and monitoring contracts to avoid delays and missed deadlines.
  • Effective contract management improves brand image by helping build trust with the vendors through timely and accurate contracts.
  • You get to stay ahead of the competition by streamlining the contract lifecycle management across the business supply chain.
  • Contract automation enables pharma companies to save time and resources that they can use to grab opportunities for innovation and growth.


Poor pharma contract management presents a wide array of legal, compliance, financial, and supply chain risks that affect your company’s growth. However, effective contract management offers pharmaceutical companies a viable solution to mitigate these risks by providing you with a smart way to create and execute contracts and manage their lifecycle. 

Investing in robust pharmaceutical contract management software offers the best way to improve your contract management processes and boost your business productivity. 

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