Biotech firm restructures purchasing as spend soars

31 March 2004
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01 April 2004 | David Arminas

Pioneering US biotechnology firm Genentech has begun to restructure procurement in order to handle a 35 per cent increase in its third- party budget.

The programme includes setting up four strategic sourcing teams and eventually hiring 10 more purchasers, according to Clive Heal, senior director of global procurement.

"The challenge is change management, getting people to work differently," said Heal, who moved from insurance giant Prudential in the UK in October and stepped down as chairman-elect of CIPS's board of management (see News, 2 October 2003).

San Francisco-based Genentech, which specialises in cancer treatment drugs, was one of the first biotechnology companies, founded in 1976, and now has 5,200 employees.

Genentech employs about 30 purchasers, soon to rise to 40, with 20 focused in strategic roles with no transactional work.

"Third-party spend will be around $1.7 billion this year, equal to half of the company's turnover, and all the new jobs will be at the strategic level," Heal said.

"The four strategic teams will be for capital investment that accounts for nearly half the $1.7 billion commercial spend, science, R&D and manufacturing," he said.

"We have rewritten every job description from scratch, but people have not had to reapply for their jobs," Heal said.

Genentech was voted 15th best company to work for in 2003, rising from 80th in 2002, by the American business magazine Fortune in January.

In October last year, US magazine Science ranked Genentech as the "top employer and the most admired company in the biotechnology and pharmaceutical sector".

Genentech expects turnover to rise by 20 per cent in 2004, thanks partly to its product Avastin, a breakthrough treatment for colon cancer that was approved by the US Food and Drug Administration earlier this year.

Heal said procurement has no savings target set as yet.

"Nonetheless, when a company grows as quickly as Genentech, procurement must show that it knows how to spend increased budgets wisely."


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