Tendering can often be a complex process within the pharmaceutical world.
In this article we break down the 3 core principles of the tendering process in a comprehensive summary of:
- tendering types,
- durations,
- and awards splits.
Tender types
A tender is typically defined by the number of suppliers allowed to bid for the supply contract.
Open Tender
Bidding is open for all interested suppliers.
Restricted Tender
Participation limited to pre-registered or pre-qualified suppliers.
It’s important not to confuse tendering with competitive negotiation where the buyer approaches a small number of potential suppliers to negotiate for specific price/terms.
Tender Duration
Non-fixed duration tenders
Tenders occur at irregular periods at the discretion of healthcare authorities.
This makes tender planning difficult for manufacturers and demands high agility for their tender submission processes.
Fixed duration tenders
Tenders which occur at fixed periods e.g. multiyear, annually, multiple times per year.
For example, in the UK, manufacturers are invited to tender for the supply of fertility treatments cyclically in each region every four years. Although this makes submission planning easier, losing a multi-year tender can create issues for the manufacturer in terms of multiple years of lost revenue and production of excess stock.
Tender award splits
Single Buyer Tenders
One bidder is awarded the entirety of the tender contract.
Awarding a single bidder the entire award carries a higher perceived impact on reducing price levels but it also means that the buyer faces a higher risk of encountering a drug shortage.
Multi-buyer Tenders
The tender contract is split between a number of bidders
Although awarding multiple bidders carriers less risk in terms of potential supply shortages, it also means a lower perceived impact on reducing price – one of the key buyer motivations for tendering.