What’s next when it comes to contract life cycle management (CLM) for the life sciences and medtech industry? In our article, we review contracting obligations that we commonly see in the industry and unpack some of the risks of noncompliance—potential revenue loss and misallocation of staff—as well as challenges with managing those risks. We also explore potential solutions, including advancements in AI.
Life sciences and MedTech companies work with third parties globally along the value chain. These parties provide goods and services such as the following:
Compliance issues can be just as costly outside of the regulatory realm. A late or incorrect payment can lead to penalties and slow down research through clinical trials. Beyond that, failure to follow negotiated rates can result in lost revenue from sales contracts with customers and excess spending on contracts with suppliers.
And obligation risks are hard to manage because terms, dates, and other critical details vary from contract to contract, making them a challenge to track across thousands of agreements. Organizations often end up pulling resources from higher-value activities to conduct time-intensive, manual regulatory compliance checks.
So, what does it take to improve compliance with contracting obligations?
Compliance with contracting obligations is a critical component of effective contract management. It helps companies avoid overspending on suppliers while helping them capture what customers owe. At the same time, it significantly reduces the financial, operational, and reputational risks of noncompliance. And by following leading practices for managing contracting obligations, life sciences and MedTech companies can set themselves up to capture the extended benefits of improving the contracting process end to end.