Contract life cycle management for the life sciences and medtech industry
How can organizations level up their compliance game?
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.
Factors shaping contracting obligations for the life sciences and medtech industry
Life sciences and MedTech companies work with third parties globally along the value chain. These parties provide goods and services such as the following:
What’s at stake for the life sciences and MedTech industry?
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.
Leading practices to achieve compliance
So, what does it take to improve compliance with contracting obligations?
- A shift in mindset: Contracts need to be understood as a strategic business asset with value that can be won or lost from one end of the life cycle to the other.
- A well laid-out process: Effective management of contracting obligations depends on a process that gets the right people involved at the right time throughout the contract life cycle.
- Stakeholder engagement: It requires users to adopt contract life cycle management (CLM) technology to author, modify, and approve contracts in a collaborative manner.
- Artificial intelligence: AI capabilities can boost regulatory and noncommercial compliance by identifying obligations and keeping track of them.
- Systems integration: By integrating an AI-enabled CLM system with purchase order and other rebate management systems, companies can create a tight connection between contractual data and transactional data.
Leveling up your compliance game
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.
