Program Overview
In the highly regulated and cost-sensitive pharmaceutical industry, profitability hinges on mastering the art of managing cost structures without compromising quality or compliance. This program takes participants through the full spectrum of COGS – from raw materials and labor to overheads, logistics, and regulatory costs – connecting operational efficiency with financial outcomes. Through real-world examples from global leaders like GSK, Pfizer, and AstraZeneca, participants explore how to balance pricing, compliance, and lean operations to protect and improve gross margins. The course emphasizes actionable cost optimization, financial modeling, and supply chain analytics, enabling teams to translate cost data into informed, strategic business decisions.
Features
- Understand how to break down COGS and identify key drivers impacting profitability in pharma manufacturing
- Design and manage pricing strategies to optimize margins while maintaining cost efficiency
- Apply cost reduction techniques across production, procurement, and distribution channels
- Evaluate the financial impact of regulatory compliance and quality control on overall margins
Target audiences
- Finance Managers
- Supply chain and Procurement Professionals
- Production Heads
- Pricing & Cost Analysts
- Ops Teams
Curriculum
- 6 Sections
- 36 Lessons
- 1 Day
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- Understanding COGS in Pharma Manufacturing6
- 1.1Key components of COGS: Raw materials, labor, manufacturing overhead
- 1.2Cost of manufacturing vs. cost of distribution
- 1.3Fixed vs. variable costs in pharma manufacturing
- 1.4Regulatory impacts on COGS (e.g., GMP compliance, packaging standards)
- 1.5Gross margin calculation and interpretation
- 1.6Quick diagnostic – Identify the COGS breakdown in their current organization using an industry benchmark
- Cost Drivers & Impact on Profitability7
- 2.1Material costs: Sourcing, inventory holding, and procurement strategies
- 2.2Labor costs: Productivity, shift patterns, and outsourcing vs. in-house production
- 2.3Overhead management: Energy, utilities, and regulatory compliance
- 2.4Economies of scale and production efficiency improvements
- 2.5Margin dilution: Price erosion and competition
- 2.6Case Example: GlaxoSmithKline and Novartis – optimizing COGS through lean manufacturing and supply chain cost management
- 2.7Group activity – Identify cost reduction opportunities in their supply chain and production lines based on a real case study
- Pricing Strategies & Margin Optimization7
- 3.1Understanding pricing models: Cost-plus, value-based, and market-driven pricing
- 3.2Impact of price sensitivity and regulatory price controls on COGS
- 3.3The role of distribution and logistics costs in pricing decisions
- 3.4Bundling strategies, rebates, and discounts as levers for margin management
- 3.5The balance between price, cost reduction, and customer value proposition
- 3.6Example Sharing: Pfizer’s approach to pricing complex generics and branded drugs for competitive positioning
- 3.7Simulate a product launch, factoring in COGS, market pricing, and profit margin targets
- Financial Impact of Regulatory Compliance on COGS7
- 4.1Impact of GMP (Good Manufacturing Practice) on production costs
- 4.2FDA, EMA, and other regulatory standards — testing, validation, and certification costs
- 4.3Managing compliance documentation and audit trails
- 4.4Cost of non-compliance: Fines, recalls, and reputational damage
- 4.5Strategies for reducing compliance costs without compromising quality
- 4.6Case Insight: How AstraZeneca and Roche manage regulatory compliance costs while maintaining healthy profit margins
- 4.7Exercise: Design a cost optimization plan that balances compliance and cost-efficiency for a new product line
- Supply Chain Optimization & COGS Reduction Strategies6
- 5.1Lean inventory management: Just-in-time (JIT) vs. Just-in-case (JIC)
- 5.2Vendor management strategies for cost control
- 5.3Cost-to-serve analysis: Distribution, warehousing, and logistics costs
- 5.4Integrating ERP and AI for real-time supply chain visibility
- 5.5Collaborative supply chain models and cost-sharing mechanisms with distributors
- 5.6Supply chain simulation – Optimize an end-to-end supply chain model to reduce COGS and enhance cash flow using a simple ERP-based tool
- COGS Management Roadmap3
Instructor
