Pharma Tender Sourcing Strategy: How Distributors & Hospitals Choose the Right Manufacturer

Introduction

Pharma tenders have evolved; they’re not just about the lowest price anymore. Hospitals, government agencies, and institutional distributors evaluate manufacturers not just based on price but through a risk-balanced lens that considers both the cost competitiveness of a manufacturer’s products and how mature the manufacturer’s compliance measures are, and their delivery reliability, or ability to deliver products in the contracted time period, as agreed to by that manufacturer. If a manufacturer made a low bid but did not provide acceptable quality, documentation, or continuous supply of product, the manufacturer would risk causing shortages for the purchaser, being penalised by that purchaser, and being held responsible for a failure to meet patient care needs.

This guide outlines how institutional buyers are now selecting manufacturers when bidding on pharmaceutical tenders, the types of criteria that will be the most important when evaluating a manufacturer for potential inclusion in a pharmaceutical tender, and how the purchasing strategies for tenders differ from traditional open-market procurement. (Read: API Price Trends 2026: Cost Drivers, China Dependency & Alternatives for Buyers)
 

How Pharma Tender Buying Is Fundamentally Different

In contrast to purchasing on the open market, tender sourcing is unique in that tendering processes include:

• Technical and regulatory eligibility as pre-requisites
• Commitments to a volume purchase over an extended period of time
• Specific delivery schedule and penalties for late delivery, if applicable
• Zero tolerance for any non-compliance with the requirements set forth in the tender opportunity

Once a tender has been awarded, a buyer will generally find it challenging, to switch suppliers if not impossible. Buyers, therefore, will be focused on reliability and certainty with respect to audits of their suppliers versus suppliers competing solely on price.
 

Three Pillars of Tender Manufacturer Evaluation

Institutional buyers typically evaluate manufacturers across three core dimensions.

1. Price Competitiveness (Not Just Lowest Price)

Typically, institutional buyers will consider three core areas when evaluating potential manufacturers in a tender.

• Landed cost of product over the duration of the contract
• The volatility of price associated with individual batches of product
• The risk of increase in the price of product due to supplier supply chain conditions and materials or freight costs.

Manufacturers offering unrealistically low pricing often raise concerns about supply continuity or compliance shortcuts, especially in long-term tenders.
 

2. Researching and Meeting Compliance

For most tenders, the first cut is compliance. Bidders are evaluated based on:

• Good Manufacturing Practices (GMP) and current inspection results
• Dossier completeness and business compatibility with market authorization(s)
• Recent audits and how corrective actions were closed

For hospital and government procurements, there are times when the compliance history of the manufacturer is a higher priority than production capability.
 

3. Delivery Optimisation and Supply Assurance

The next area many low-cost bids do not perform is delivery. Buyers review:

• Prior on-time delivery histories
• Timeframes for batch release
• Contingency plans in the event of a disruption to raw material or capacity

In an institution, missed deliveries can mean penalties or a blacklist. Since hospitals often have the greatest need for immediate and reliable product supply, reliability is non-negotiable.
 

How Hospitals Evaluate Manufacturers

Hospitals evaluate manufacturers by focusing on:

• Protecting patients and uninterrupted supply
• Regulatory compliance and supporting pharmacovigilance
• Transparent labelling and packaging integrity

Procurement departments often prefer manufacturers that have a track record of successfully supplying tenders, even if the price is slightly higher, as risk associated with tender execution impacts clinical operations.
 

How Distributors Evaluate Manufacturers for Tenders

Distributors provide a level of risk mitigation between manufacturers and institutions. Distributors evaluate manufacturers by:

• Manufacturer responsiveness during the execution of the tender
• Timeframes for submitting documentation
• The ability of the manufacturer to ramp-up or down its volume during the term of the contract

Distributors seek partners who make it easier to work with them and do not focus on maximising short-term gains.
 

Common Tender Evaluation Criteria for Buyers

Why the Lowest Bid Often Loses

The lowest bidder is frequently not the winner of the tender, as many institutional purchasers have suffered due to the following:

• Supply chain interruptions
• Delay in batch releases
• Regulatory compliance issues

Therefore, institutional buyers are increasingly utilising risk-based scoring systems to score tenders, factoring price alongside the buyer's confidence in fulfilling the contract.
 

How Manufacturers Can Improve Tender Winning Rates

Manufacturers can enhance their chances of winning tenders by the following:

• Price realistically rather than aggressively
• Providing clear and transparent compliance documentation
• Assuring purchasers of their previous successes in executing tenders
• Including penalties for delivery SLA commitments

From the purchaser's perspective, these signals reduce uncertainty and future risk.
 

Tender Sourcing Strategy for Buyers in 2026

The best tender sourcing strategies for purchasers in 2026 will be those that optimise the following:

• Pre-qualification of suppliers based on their compliance record and reliability
• Multi-supplier frameworks to reduce dependence on an individual supplier
• Continuous monitoring of the supplier's performance throughout the contract

Such strategies minimise disruption while ensuring cost discipline is maintained.
 

Conclusion

In 2026, sourcing tenders in the pharmaceutical industry will be more about risk management than price. A hospital or distributor purchaser will select the supplier who can provide consistent competitive pricing, maintain compliance with all regulations, and meet the required delivery schedules for the entire duration of the contract.

Manufacturers who understand this mindset of the purchasers and work toward providing the necessary support are more likely to be successful in the institutional procurement process.

Frequently Asked Questions(FAQs)

1. Is price still the most important factor in pharma tenders?

Price is important, but it is rarely decisive on its own. Most tenders apply minimum compliance and delivery thresholds before price evaluation, and many buyers use risk-weighted scoring models rather than selecting the lowest bid.

2. Why do hospitals prefer experienced tender manufacturers?

Hospitals prioritize patient safety and continuity of care. Manufacturers with proven tender experience are less likely to face compliance issues or delivery failures that could disrupt treatment availability.

3. How do distributors manage risk when bidding for tenders?

Distributors mitigate risk by selecting manufacturers with strong documentation readiness, responsive communication, and the ability to scale supply. This reduces operational and regulatory exposure during tender execution.

4. What causes most tender execution failures?

Common causes include unrealistic pricing, weak compliance systems, raw-material dependency, and poor delivery planning. These issues often surface after contract award, when switching suppliers is difficult.

5. Can multi-supplier strategies work in pharma tenders?

Yes. Many buyers use primary and secondary suppliers to reduce dependency and improve supply security, especially for critical or high-volume products.