Cost-Effective Vendor Selection: A Formalized Process for Biotechs

Cost-Effective Vendor Selection

Written by Sabine Hutchison

Sabine helps life science companies and leaders create the right business narrative, get stakeholder buy-in, navigate growth to reach their full potential to make an impact in their fields.

June 9, 2023

Does cost-effective vendor selection exist? Effectively outsourcing critical clinical research activities to external vendors, particularly Contract Research Organizations (CROs), is an essential element of achieving success in the dynamic biotech industry.

However, when embarking on the selection process for a vendor for your clinical research activities, it is vital to meticulously assess both the evident, hidden and potential unexpected costs associated with this endeavor.

Implementing a structured and well-defined vendor selection process empowers biotech companies to optimize decision-making, minimize timeline delays, and mitigate cost overruns. By engaging external experts with extensive knowledge of the vendor market, organizations can identify a partner who not only aligns with their specific requirements and budget but also prioritizes a culture of accountability and transparency.

This approach facilitates a cost-effective and efficient vendor selection process while establishing a solid foundation for a productive and reliable long-term partnership.

The cost of a vendor selection for biotechs


While biotech companies may choose to outsource various services to vendors, such as CROs, CMC, and logistics suppliers, selecting the right vendor is a complex process that can become a bottleneck for success for emerging biotechs.

On one hand, the vendor selection process itself can be time-consuming, delaying important research activities and accumulating costs while potentially diverting the team’s focus from other crucial activities. On the other hand, without past experience and inadequate knowledge of the vendor market and its pricing models, as a result, biotech’s may select vendors which do not offer the best value and quality for their budget or engage in a vendor collaboration that is prone to accumulating costs through change orders.

If the selected vendor provides substandard services or fails to comply with regulatory requirements, this can not only be costly but can also harm the biotech’s reputation as well as risk the prospects for successfully bringing their drug or medical device to market

Even if a biotech has a well-established working relationship with a vendor, it remains crucial to explore other potential vendors in the market. By doing so, the biotech can assess whether there are alternative options that offer more competitive pricing or superior service without compromising quality. This evaluation process can be facilitated through benchmarking, comparing the performance and offerings of different vendors to make informed decisions.

To mitigate these risks, biotech companies must invest in acquiring a thorough understanding of the vendor market and its pricing models. This involves conducting market research, engaging with industry experts, and leveraging historical data and benchmarks to gain insights into prevailing pricing structures and value propositions. Below we outline considerations of how a formalized process can help navigate the challenges of vendor selection for biotech and save time and costs.

Formalizing the process to control costs

Cost-Effective Vendor Selection

#1 Data-driven decision frameworks can ease and accelerate decision-making.

Adopting a data-driven decision framework can help to save time and improve outcomes for a cost effective vendor selection process. Data-driven frameworks offer a high degree of flexibility, allowing to weigh initial objectives for a vendor selection to tailor specific criteria and best-fit KPIs. These criteria can serve as a basis for customized RFPs, providing a comprehensive overview of the relevant vendor landscape for the desired service. Agreed-upon selection criteria also create a unified approach for the sponsor team’s interactions with potential vendors.

Translating a biotech’s decision makers’ expertise into data-driven decision metrics can help to reduce biases in decision-making and enable the identification of vendors who are an excellent fit but might have been overlooked without an objective market scan. Formalized decision metrics create an even ground for sponsor team discussions, saving time on alignments and ensuring fair, objective comparisons of key vendor metrics.


#2 Using formalized steps to codify the human factor

A good connection between the sponsor and vendor teams is vital for a successful relationship. The importance of cultural fit should not be underestimated, as it plays a significant role in successful vendor collaborations. When there is a lack of cultural alignment between a biotech and its vendor, it can lead to miscommunication, errors, and ultimately, delays in the delivery of essential services. These delays, in turn, can result in the accumulation of unexpected costs that impact project timelines and budgets.

To assess vendor culture, an external expert-guided process can be valuable in converting intuition-based assessments into concrete steps. By using a data-driven decision framework customized to the sponsor team’s needs, cultural factors that are important to them, such as accountability and transparency, can be prioritized. At the same time, metrics such as staff turnover rates can also provide insights into the vendor’s work style and culture. Additionally, external experts can facilitate technical calls and informal conversations during coffee chats, creating a process that builds trust in the vendor’s cultural fit and expertise.

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#3 Tapping into deep industry expertise for optimal vendor comparison.

For many outsourced services, a niche CRO or specialized vendor can be a better fit for a biotech company than working with larger players. Yet, while smaller vendors may offer more customized services and more flexible pricing models they may lack full compressive services needed for global services for biotechs, it can be challenging to obtain a comprehensive overview of the vendor landscape, their pricing models and discount options. External experts with extensive knowledge of CROs and industry best practices can help narrow down the list of vendors and ensure there are proper benchmarks and sufficient data for comparison, In addition to providing support in initial market scans, external experts play a valuable role in enhancing vendor communication and contract negotiations.

This is particularly beneficial for emerging biotechs and first-time sponsors who may require guidance in maximizing the value for their budget when outsourcing clinical research activities. By partnering with experienced professionals, biotechs can benefit from their ability to ask the right questions, even the tough ones, to potential vendors. External experts possess the knowledge and expertise to identify critical factors that may impact the success of vendor collaborations. Their insights enable them to ask pertinent questions regarding capabilities, experience, quality standards, and compliance measures, ensuring that the chosen vendor aligns with the biotech’s specific needs and expectations. This diligent approach helps biotechs make informed decisions and secure the best possible value for their allocated budget.


#4 A formalized process with clear roles for the sponsor team can streamline processes.  

Bundling expertise and streamlining processes can be key to a successful and cost-effective vendor selection. This can be accomplished by getting the right people in a room together and integrating input from all relevant experts, such as data analysts, project managers, and subject matter experts, with clearly defined roles in order to build an efficient decision-making framework. Moreover, standardizing processes, such as RFP generation and analysis of RFP responses can save significant time during the evaluation of potential vendors while also helping to identify the strongest candidates to participate in bid defenses. Standardized processes can also safeguard against skipping important steps or missing potential risks, which could lead to the accumulation of hidden costs later in the process. An unbiased and comprehensive due diligence is key to ensuring the quality and compliance of a vendor and constitutes the first step toward risk mitigation. Importantly, having a formalized process with all data in place and all the documentation in an audit-ready format can be a means to save costs and time later on in the process.


Choosing the right vendors is critical for the success of biotech companies.

By implementing a formalized and cost effective vendor selection process, biotechs can benefit from streamlined operations, reduced costs, and improved outcomes. The structured approach ensures that vendors are chosen based on objective criteria, reducing the risk of selecting inappropriate or ill-fitting vendors. This not only enhances the efficiency of the outsourced services but also contributes to the overall success of the biotech company.

In summary, the adoption of a formalized vendor selection process is crucial for biotech companies. This process saves time and costs, ensures quality and compliance, and mitigates the risk of delays and complications that may result in cost overruns. By employing an objective and data-driven approach, biotechs can identify novel vendors that offer customized services within their budget. Tailoring the formalized process to their specific needs further enhances the outcome of the vendor selection process, allowing biotechs to focus on their core business activities.

Book a call with our team of experts at Seuss+ to learn more about our approaches to vendor selection for biotechs.

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