Building Sustainable Biopharma Supply Chains Starts With Procurement

By Jose Saiz de Omeñaca

Direct pharmaceutical manufacturing accounts for as little as 2% to 11% of the emissions associated with drugs from the world's largest producing countries. The rest occurs upstream, in energy, chemicals, transportation, and services.¹ Consequently, changing the way organizations select, procure, and use goods and services can have a substantial effect on environmental performance.

Sustainability used to be a secondary corporate responsibility issue. It is now a strategic consideration in procurement and supply chain management. Biopharmaceutical manufacturers are increasingly expected to understand what they buy and how much they pay and also where raw materials and packaging come from, how they are manufactured, the environmental impact, and if suppliers operate ethically and transparently.

This shift is significant for pharmaceutical manufacturers that depend on complex global supply chains involving raw materials, APIs, packaging, and outsourced services.

Historically, procurement was often viewed as a cost-control function. Procurement teams were expected to negotiate lower prices, consolidate suppliers, reduce purchasing costs, and ensure that products were delivered on time. However, focusing exclusively on purchase price can overlook significant costs and risks that emerge later in the product or supplier life cycle, including the effects those products have on the environment and the people all along the supply chain path.

Sustainable procurement means going beyond the traditional objective of obtaining goods at the lowest possible price. It involves integrating environmental, social, ethical, and economic criteria into purchasing decisions while maintaining quality, safety, resilience, and value for patients.

Sustainable procurement introduces a broader definition of value. Instead of asking, "Which supplier offers the lowest price?" organizations can ask, "Which option provides the best overall value over its useful life while meeting our environmental, social, ethical, and quality requirements?"

The transition from cost reduction to value creation also changes the relationship between procurement and suppliers.³ Suppliers cannot be seen simply as vendors competing on price; instead, organizations can develop longer-term partnerships with suppliers capable of improving emissions performance, resource efficiency, and supply chain resilience, as well as maintaining labor standards.

Sustainable procurement can consequently become a source of innovation by developing lower-carbon products, reducing packaging, introducing reusable or recyclable materials, improving logistics, providing better information about product footprints, or implementing the Digital Product Passport (DPP).⁴ The procurement function becomes a mechanism for creating value across the entire supply chain rather than merely reducing expenditure at the point of purchase.

The Organisation for Economic Co-operation and Development (OECD) emphasizes many of the environmental and social impacts associated with business activity in the pharmaceutical and biopharmaceutical sector. The OECD identifies “complex, global and multi-tiered supply chains involving raw-material suppliers, biotechnology firms, contract research organisations, contract manufacturers and distributors, and the adverse impacts may occur at any stage of the pharmaceutical supply chain, from raw-material extraction through drug production and distribution.”⁵ Its guidance on responsible business conduct therefore encourages organizations to use risk-based due diligence to identify them.⁵

Sustainability should become part of the entire supplier life cycle:

• Prequalification: Identify environmental, social, and ethical risks.
• Supplier selection: Evaluate sustainability alongside quality, price, service, resilience, and technical capability.
• Contracting: Establish measurable sustainability commitments and reporting requirements.
• Supplier development: Work collaboratively with suppliers to improve performance.
• Monitoring: Track sustainability indicators throughout the contract.
• Renewal or exit: Use performance data when deciding whether a supplier should continue the relationship.

Procurement occupies a unique position within corporate sustainability because purchasing decisions determine what enters an organization's operations in the first place. Supplier selection should therefore include measurable sustainability criteria. These might include:

• current greenhouse gas emissions and reduction targets
• energy and water consumption
• use of recycled or renewable materials
• responsible sourcing of raw materials
• labor and human rights policies
• transparency of Scope 1, 2, and 3 emissions
• supply chain mapping and risk management
• evidence of continuous improvement.

Responsible sourcing is closely connected to transparency. Companies cannot effectively manage risks that they cannot see. Traditional procurement often focuses on the immediate supplier — the company with which the organization has a contract. Sustainable procurement requires a broader perspective that considers upstream suppliers, raw materials, manufacturing locations, transportation, and, where relevant, end-of-life disposal.

Transparency should therefore be viewed not merely as a reporting exercise but as a risk management capability. Collecting supplier information does not guarantee responsible performance. Organizations should use audits, documented independent certifications, performance data, and risk-based supplier assessments where appropriate.

A sustainable procurement program needs measurable performance indicators, which might include KPIs like:

• Spend covered by sustainability criteria: procurement expenditure for which suppliers/products are evaluated against defined environmental and/or social criteria during sourcing.
• Supplier emissions reporting: percentage of suppliers, preferably weighted by procurement spend or Scope 3 emissions.
• Supplier emissions reductions: reduction of emissions associated with suppliers, goods, or services compared with a defined baseline.

Sustainable procurement represents a fundamental evolution in the role of procurement. It moves the function from a narrow focus on price and short-term cost reduction toward a broader responsibility for value creation, resilience, ethical behavior, and social impact.

Among biopharmaceutical organizations, this opportunity is substantial. Since a large portion of environmental footprint originates in the supply chain, procurement decisions can have an impact far beyond the purchasing function.

References:

1. Hagenaars RH, et al., Lancet Planet Health. 2025 Mar;9(3):e196-e206. doi: 10.1016/S2542-5196(25)00028-2.  
2. https://lifesciencesweek.co.uk/pharmas-carbon-problem-ambitious-targets-a-stubborn-reality/
3. https://www.cips.org/intelligence-hub/sustainability/sustainable-procurement
4. https://data.europa.eu/en/news-events/news/eus-digital-product-passport-advancing-transparency-and-sustainability
5. https://www.oecd.org/content/dam/oecd/en/publications/reports/2025/07/responsible-business-conduct-spotlights_f7f722d0/due-diligence-essentials-for-responsible-pharmaceuticals_3ef83d6e/d23c0086-en.pdf

About The Author:

Jose Saiz de Omeñaca is a pharmaceutical executive with 25 years of experience in procurement, supply chain, and operations in pharma, CDMO, industrial, and retail environments, with experience in medium and large companies, as well as in transformation and operational improvement projects. He received a Master of Business Management from Instituto de Empresa (IE) and Master of Supply Chain at Universidad Carlos III de Madrid. He serves as an expert with UNECE/UNCEFACT. Email him at josesaizmonzon@yahoo.com. Connect with him on LinkedIn.