In the highly competitive pharmaceutical industry, optimized lab supply procurement is critical for maintaining a competitive edge. At the 8th Annual R&D Procurement and Sourcing in Pharma Summit, industry leaders came together to share innovative solutions to common procurement challenges. A panel featuring Florian Wegener, ZAGENO’s founder and CEO, and Achraf Bannai, Sanofi’s Global Head of Scientific Procurement, explored how Sanofi achieved significant cost savings and enhanced scientist satisfaction using the ZAGENO lab supply marketplace.
A long tail to be tamed: Flagging scientist satisfaction and productivity
Sanofi is a global healthcare company headquartered in Paris, France. With over 90,000 employees extending to 90 countries, Sanofi specializes in pharmaceuticals, vaccines, and consumer healthcare products.
Sanofi was facing significant challenges with their decentralized procurement system, as scientists were spending an inordinate amount of time ordering lab supplies, particularly tail-related spend. Despite a main distributor handling 70-80% of Sanofi’s spend, the remaining 5% of tail spend consumed 30% of scientists' time. This excessive time spent searching for and ordering supplies detracted from primary research activities and lengthened supply cycles, highlighting the need for a more efficient, cohesive procurement strategy.
Playing to win: Centralizing procurement efforts using ZAGENO
As part of Sanofi’s Play to Win strategy, CEO Paul Hudson announced targeted savings of a total of up to €2 billion from 2024 to the end of 2025, with a targeted €700 million coming from procurement savings. This top-down mandate empowered procurement to centralize efforts to create a more streamlined and efficient system. The goal was to reduce the time scientists spent on procurement and allow them to focus more on their core research activities, as well as impact cash flow and P&L impact in accordance with the mandate.
Bannai and his team turned to ZAGENO, the industry’s leading AI-driven lab supply marketplace, as a major component of its procurement optimization efforts. ZAGENO offers over 40 million SKUs from 5,300 global brands, providing easier product identification, competitive pricing, streamlined ordering processes, and simplified billing.
Sanofi’s initial steps to optimize lab supply procurement
Step 1: Understanding scientist pain points
First, Bannai’s team conducted a comprehensive survey across five key countries to identify the specific procurement pain points their scientists were experiencing. The survey revealed several issues to be addressed:
- 65% of Sanofi’s scientists found the procurement process cumbersome and time-consuming.
- The lack of a centralized procurement system was causing prolonged supply cycles and inconsistencies, impacting the quality and speed of research projects.
- Feedback also confirmed the disproportionate amount of time spent on tail spend ordering.
“One of the main challenges that we identified is trying to free up time for scientists.”
– Achraf Bannai, Global Head of Scientific Procurement, Sanofi
Step 2: Examining the preferred distributor push
A major effort was made to communicate the benefits of using their preferred distributor vendor to all scientists to take advantage of negotiated discounts and consolidated spend. However, Sanofi encountered limitations in how much spend the main vendor was able to handle; typically hovering around 73% - 76% of needs. Part of this was caused by the fact that some diagnostic manufacturers prefer independence rather than aligning solely with distributors or direct procurement models. The result was a largely unmanaged, growing long tail.
Step 3: Addressing the tail spend obstacle
With the aggressive savings target of €700 million, Sanofi needed a way to make tail spend competitive. Procurement discovered that when it came to tail spend, scientists were purchasing items at the public, non-negotiated price, typically with new or uncontracted suppliers. Further, these items usually fell below procurement thresholds, averaging around 500 euros. Acquiring these items involved contacting vendors online, obtaining codes, and waiting potentially weeks for setup in the system. Compounding the issue, Sanofi’s procure-to-pay (P2P) system automatically approved requests under 500 euros, fulfilling ad hoc orders as soon as the master data was in the system, circumventing procurement’s ability to offer competitive product alternatives or savings guidance to the operations teams.
Step 4: Searching for a front door to lab supplies
Sanofi sought a “front door” to lab supply procurement that would function as a one-stop solution to tame the time and money spent managing the long tail. Bannai shared:
You need a neutral platform that enables this kind of one-stop solution. [Sanofi] reached out to Florian and the ZAGENO team, knowing that they are very capable in this area. Why don't we make use of the IT and digital skills of a flexible and nimble company to enable this single-entry point solution?... You reduce your turnaround time and get rid of a lot of wasted time and resources. And you can repurpose to do science, because at the end, it's about having a laser-sharp focus on products, customers, patients. And [procurement] doesn’t generate value for anyone by searching in SAP or EVA or in any other product. That's a waste of time.
The business case for taming long tail spend with ZAGENO
Looking for a simple yet powerful solution to manage tail spend, Bannai looked to ZAGENO for its ability to not only make it easier for scientists to find supplies, but also introduce competition among suppliers, ensuring better prices and availability.
Sanofi’s head of R&D was pleased at the opportunity to free up scientists’ time, but also make it possible for R&D to offer up savings, something that is not typically seen. Sanofi’s CEO, Paul Hudson, appreciated that ZAGENO would make it possible to recognize the benefits of consolidation with a main distributor, while also aggregating and taming tail spend.
“[Using ZAGENO] matches my goal, and management’s goal, and it matches the R&D goal, which is R&D productivity.”
– Achraf Bannai, Global Head of Scientific Procurement, Sanofi
Results: Enhanced cost savings and scientist satisfaction
In an environment where the R&D budget is growing on average every year, it’s difficult to demonstrate P&L savings. Further complicating this measurement lies with the distributors. Each year, Sanofi purchases between 30,000 to 35,000 different items. After their analysis, it appeared that only 20-25% of those were recurrent purchases. This surprisingly low figure was due to the following:
- The nature of research results in changing product needs.
- Even if scientists repurchase the same item, the packaging size may be different, which results in a different manufacturer number.
- Sometimes manufacturers and distributors change the manufacturer number to prevent year-over-year comparison.
The ZAGENO marketplace is built to address these issues, facilitating year-over-year spend comparison on the item-level. Unless the manufacturer number changes, spend remains in alignment, with easy re-ordering, and real-time spend visibility. Further, the ZAGENO team assists clients with comparison on various dimensions, such as unnegotiated versus marketplace pricing and year-over-year comparison within the marketplace.
Scientists first check product availability with the main distributor. If the item isn't available there, they can explore direct manufacturers. For the remaining long tail items, the marketplace offers an Amazon-like solution, saving considerable time previously spent searching, introducing competition and transparency.
The implementation of ZAGENO's platform resulted in notable improvements. Sanofi experienced significant cost savings, reduced procurement times, and increased overall efficiency. The top-down approach, coupled with ZAGENO's solution, transformed Sanofi's procurement process, delivering tangible benefits to their operations. Sanofi's success metrics were twofold: financial savings and scientist satisfaction.
- By comparing the costs of tail-end items pre- and post-ZAGENO implementation, Sanofi demonstrated substantial savings.
- Repeated surveys showed a marked decrease in the time scientists spent on ordering, dropping from 30% to 10%, thus significantly boosting productivity.
Sanofi's experience demonstrates that a centralized approach, combined with utilization of advanced platforms like ZAGENO, can significantly enhance efficiency and cost management in lab supply procurement for biotech and pharma companies.
Additional resources
Custom-built for life sciences, ZAGENO offers streamlined lab operations in one simple solution, with over 40 million SKUs from over 5,300 global brands. Discover how the industry’s leading lab supply marketplace gives scientists more time for eureka moments, while contributing to procurement’s savings and efficiency goals. Contact us for a demo today.
