Betapharm Case Synopsis

BETAPHARM CASE SYNOPSIS 4

Betapharm is a company specialized on drugs for depression, pneumoniaand antibacterial. According to Kulp and Randall (2005), Betapharmwas enjoying a 10% market share in the pharmaceutical industry.However, the company’s patent was due for expiry in two years.After then, the market would be filled with generic drugs andBetapharm would lose its market share. The company had to reduce onits procurement spending in order to continue with its growth trend.Betapharm sought to reduce its procurement cost by using the EmptorisePass system when outsourcing.

The primary decision problem in the Betapharm case is about theappropriate way to reduce the procurement costs through theoutsourcing strategy.

The key organizations include:

  1. Hotels used by Betapharm employees while they are on business trips. They include chains of international hotels such as Hilton or boutique hotels.

  2. Tao pharmaceuticals- the firm provides Malic acid

  3. Chun Wu, Liou Laboratories, Chemlab Pharmaceuticals, Zhang Huang and Yu Sheng- Asian companies bidding the tender to supply Malic acid.

Initially, employees booked hotel rooms based on their preferences.However, if the firm will adopt the electronic bidding system, theplan will have 100 reverse auctions and 120 eRFQs that will cover the40 countries and 1500 hotels (Kulp &amp Randall, 2005). However, themain constraint for this plan would be numerous hotel preferences forthe employees. It will require a lot of manpower to put them intoconsideration.

The plan by Betapharm to computerize its outsourcing program is anexcellent way to cut down on procurement costs. The company can nowget the best deals after analyzing a wide range of potentialsuppliers. However, Betapharm’s decision to outsource Malic acidfrom Asia may turn costly in the end. The inconsistencies of seatravel may cause delivery delays and loss of business.

Reference

Kulp, S. L., &amp Randall, T. (2005). Procurement at Betapharm Corp.(A), Case Document, Harvard: Harvard Business School, August,25, 2005, 9-105-030