In today’s healthcare market, pharmaceutical companies are expected to demonstrate a commitment to sustainability throughout their operations. Patients, healthcare providers (HCPs) and policymakers are increasingly considering sustainability factors when making purchasing decisions, with many expecting companies to align their practices with environmental and social objectives.

The rising significance of sustainability in healthcare necessitates procurement professionals’ awareness of their suppliers’ environmental practices. Additionally, they need to be able to assess the sustainability of various goods and services. By doing so, they can make informed decisions that support their sustainability goals while meeting their customers’ needs.

There is an increasing focus on environmental, social and governance (ESG) criteria in procurement practices across the EU. The integration of ESG criteria involves assessing technologies’ environmental footprint, considering their potential contribution to sustainability, and aligning with the EU’s commitment to carbon neutrality and the World Health Organization’s call for sustainable healthcare practices.

By embracing this holistic approach, the EU is leading the way in ensuring that environmental sustainability is considered alongside efficacy, safety and cost-effectiveness, ultimately promoting the development of healthcare technologies that contribute to both human health and environmental well-being.

The healthcare procurement landscape in Europe varies from country to country, each characterised by its unique set of regulations. Despite this diversity, some common trends can be observed.

Many European countries are centralising healthcare procurement, either at the national or regional level. Although this approach can enhance efficiency and cost-effectiveness, it may also disadvantage small and medium-sized enterprises in competing for contracts.

Moreover, there is a noticeable increase in transparency within healthcare procurement across Europe, driven by factors such as increased data availability and patient activism.

‘The EU is leading the way in ensuring that environmental sustainability is considered alongside efficacy, safety and cost-effectiveness’

This trend is likely to continue as patients become more engaged in their healthcare decisions and demand greater accountability from healthcare providers and suppliers.  One prominent trend is the increasing governmental focus on sustainable procurement. In the EU, sustainability initiatives and regulations that significantly influence healthcare procurement include:

• The European Green Deal: mandates considering sustainability in public procurement
• The Circular Economy Action Plan: encourages environmental considerations in purchasing decisions
• The Medical Devices Regulation: requires manufacturers to disclose environmental impacts.

Despite these challenges, there are significant opportunities for companies that embrace sustainable procurement practices:

• Long-term cost reductions: sustainable procurement practices can reduce costs in the longer term through energy efficiency and waste reduction
• Enhanced reputation among stakeholders: pharmaceutical companies that implement sustainable procurement practices can enhance their reputation among stakeholders, including patients, healthcare providers and investors
• Innovation in sustainable products and services: sustainable procurement can drive innovation in environmentally friendly products and services. This can lead to new market opportunities for pharmaceutical companies
• Competitive advantage for sustainability leaders: pharmaceutical companies that are leaders in sustainability can gain a competitive advantage over their rivals, with sustainability becoming increasingly important to patients, healthcare providers and investors. Prioritising sustainability also attracts environmentally conscious consumers, helping companies gain a competitive edge and expand their market share
• Regulatory compliance: adhering to sustainability regulations and policies ensures compliance with environmental standards, mitigating legal risks and promoting ethical business practices
• Access to markets: healthcare systems increasingly prefer suppliers that meet sustainability criteria, making sustainability a prerequisite for accessing key markets and securing partnerships.

Building upon the trends highlighted earlier, pharmaceutical companies are presented with a unique opportunity to harness sustainability initiatives to propel their growth and enhance their market position. To harness this growth potential, pharmaceutical companies can adopt the following strategic recommendations:

1. Enhancing value creation and differentiation
A strategic approach to sustainability is paramount for pharmaceutical companies seeking to thrive in an increasingly environmentally conscious marketplace. By embedding sustainability principles into their core business strategies, companies can align their objectives with societal and environmental imperatives while simultaneously driving value creation and differentiation. Setting clear sustainability goals, establishing measurable metrics and making greener decisions are essential steps in this strategic journey.

2. Investment in innovation
Innovation is central to sustainable growth. Allocating resources to invest in data and analytics capabilities enables effective tracking of sustainability performance. This promotes using data-driven insights to measure progress, identify areas for improvement and make informed decisions about sustainability strategies.  Pharmaceutical companies are encouraged to invest in research and development efforts aimed at fostering innovation in environmentally friendly products and processes. Exploring alternative materials, sustainable packaging solutions and eco-friendly manufacturing practices not only reduces environmental impact but also opens doors to new market opportunities and enhances competitive advantage.

3. Stakeholder engagement and transparency
Engagement and transparency are foundational elements of sustainable business practices. By fostering meaningful dialogue with stakeholders, including patients, healthcare providers, regulators and investors, pharmaceutical companies can build trust, credibility and goodwill. Transparent communication about sustainability initiatives, progress and performance metrics demonstrates accountability and reinforces the company’s commitment to responsible business practices.

4. Monitor regulatory changes
Navigating the complex landscape of sustainability regulations and standards requires diligence and foresight. Pharmaceutical companies must remain vigilant in ensuring compliance with evolving environmental regulations at both regional and global levels. By staying informed, conducting regular audits and implementing robust governance mechanisms, companies can mitigate legal risks and uphold ethical business conduct.

5. Engage with suppliers
Proactively engaging with stakeholders across the supply chain is essential to developing sustainable solutions. This includes sharing best practices, setting joint targets and providing support to suppliers investing in sustainability initiatives. Fostering collaborative relationships can drive positive change and create shared value across the entire ecosystem.

6. Collaborate with industry peers
Collaboration with industry peers can lead to collectively addressing common sustainability challenges through sharing knowledge, exchanging best practices and developing joint solutions. Engaging in industry forums, consortia and initiatives to drive progress propels the industry towards sustainable procurement goals.

By leveraging these recommendations, companies can not only mitigate risks and capture opportunities but also contribute to a more sustainable and resilient future for the pharmaceutical industry and society as a whole.

The pharmaceutical industry stands at a pivotal juncture, where integrating sustainability principles into business strategies offers unparalleled opportunities to drive innovation, enhance competitiveness and foster long-term growth. Sustainability has become a strategic imperative for pharmaceutical companies aiming to thrive in a rapidly evolving landscape.

Through strategic alignment with sustainability goals, proactive engagement with stakeholders and steadfast regulatory compliance, companies can mitigate risks and enhance their reputation and competitiveness.

Embracing sustainability as a fundamental aspect of company operations not only drives economic value but also contributes to a healthier, more sustainable future for generations to come.

Gerdi Strydom is Managing Director at Valid Insight, part of Bioscript Group