Authored by Patrick Kearns and Paul Hutchings, PM Society IARIG working group
“Value” is one of the most frequently used, and least clearly defined, terms in the pharma–agency relationship. Industry conferences and LinkedIn feeds suggest a sector in rapid transformation: AI-powered agencies, a move from time and materials to outcome-based pricing, and deepening strategic partnerships. Yet strip away the narrative and a more difficult question emerges. When pharma selects, pays, and reviews its agencies, is value genuinely being redefined, or are the same legacy measures driving decisions?
To better understand the reality behind the narrative, the PM Society’s Industry / Agency Relationship Interest Group (IARIG) conducted a series of attribution-free interviews with procurement leaders across large pharma, mid-sized organisations, and emerging biotech. What follows is a synthesis of those discussions, highlighting where perceptions of value align, and where they diverge.
The Starting Point for Value Definition
While operating contexts varied, the message from interviewees was strikingly consistent. In an environment where linking agency activity to brand outcomes-such as sales uplift-is inherently challenging, procurement defaults to valuing clarity, transparency, and maturity above all else. These qualities were repeatedly cited as the most desired attributes an agency could demonstrate during a selection process.
Across interviews, internal brief development emerged as the true starting point for value definition. Brand teams were seen as responsible for articulating clear scope, expectations, and priorities – inputs that allow procurement to establish KPIs and evaluate agencies meaningfully during selection. Where briefs lacked clarity, expectations of value quickly become misaligned.
The Rise of PSLs
The growing influence of Preferred Supplier Lists (PSLs) was another consistent theme, particularly at global level and within larger pharmaceutical organisations. Several respondents described PSL inclusion as an unspoken prerequisite for consideration or an early filter where value is assessed before any formal engagement begins.
“We’ve done the necessary checks for our PSL, including sustainability and AI compliance, and we’re keeping the door open to newcomers. It takes time to find the right agencies, so we’ve taken a more strategic approach to future supplier needs. For example, we stopped using traditional RFPs four years ago and now rely on our PSL, supported by chemistry meetings” – Large Pharma, Procurement Leader
When establishing a PSL, agencies are often given hypothetical brand assignments to evaluate their suitability for inclusion. Their value is assessed using a set of proxy measures, such as strategic thinking, capabilities that cannot be replicated in-house, global reach, alignment with sustainability goals, and cultural fit. Interviewees noted that this approach tends to favor larger agency networks, making it more challenging for independent agencies to operate outside the PSL model.
At the same time, interviews surfaced a persistent tension between global consistency and local relevance. A recurring critique was that large global agencies do not always demonstrate sufficient understanding of local market nuance, and that aligning global frameworks with local needs remains a challenge for pharma. This was frequently cited as an area where independents may have a more compelling, and differentiated, value story to tell.
The Search for Strategic Partners
Against a backdrop of pipeline pressure and ongoing efficiency demands, agencies that actively challenge ambiguity during the selection process were widely viewed as adding value before any work is delivered. Interviewees pointed to the importance of therapy area expertise, demonstrated through credible talent, relevant case studies, and the ability to solve strategic problems rather than simply execute briefs.
Innovation, too, was framed pragmatically: not as experimentation for its own sake, but as the ability to adapt thinking and delivery models in a fast-changing environment.
“Price is only a small part of the equation, we’ll pay more for quality. What matters most is whether an agency truly understands our strategy, our direction, our values. Quality and expertise remain critical, but innovation is becoming increasingly important. We now expect agencies to proactively show how they’re using tools like AI to add value, rather than waiting to be asked” – Large Pharma, Procurement Leader
Transparency, Maturity, and Trust
When discussing transparency, procurement leaders were clear about what they expect: visibility into cost drivers, clarity on how seniority is deployed, and a credible plan for how to overcome barriers and challenges, whilst avoiding unnecessary complexity and inefficiency. Opaque pricing models and “black box” effort make it difficult to distinguish efficiency from margin, and erode confidence quickly.
Maturity was another recurring theme, defined by how work would be run and decisions made. Consistent teams, proven processes, and the ability to reduce rework were all cited as tangible contributors to value. Team chemistry still matters, interviewees noted, but good personal relationships are no longer enough to excuse poor execution. This was not framed as a rejection of creativity, but as a reprioritisation of what makes partnerships sustainable.
“Transparency and honesty – that’s what’s missing. Too often, we don’t see genuine openness from agencies about costs, processes, or outcomes” – Large Pharma, Procurement Leader
The Promise, and Pessimism, of AI
If one topic crystallised the current tension around value, it was Artificial Intelligence (AI). Every procurement leader interviewed raised AI unprompted. Expectations are high: AI is assumed to reduce effort, compress timelines, and improve productivity. In theory, it should fundamentally change the economics of agency delivery.
In practice, procurement leaders said they struggle to see how, or where, those efficiencies are being realised. Agencies speak confidently about AI capabilities, yet procurement teams find it difficult to assess what is genuinely different or improved, a concern most often levelled at large holding companies. Expected efficiency gains are rarely visible in pricing or resourcing models, while uncertainty around data sources, intellectual property, and responsible use adds further hesitation.
As a result, AI has become a credibility test. Claims without evidence no longer carry the weight they once might have.
“AI is a huge topic, but it still feels alien. We had a perfect use case, testing renderings before a campaign, but the agency wouldn’t use it due to IP concerns. It shows potential, but I haven’t seen it actually delivered yet” – Small Pharma, Procurement Leader
Measuring What Matters
These challenges sit within a broader measurement problem. Most organisations have KPIs in place, but few interviewees believed they reflect what truly matters. Metrics tend to focus on what is easiest to track such as cost control, timelines, and delivery against scope, rather than longer-term contribution.
Several procurement leaders acknowledged that KPIs are often established at contract stage, then “quietly ignored” once work is underway. In engagements below spend thresholds, where procurement has limited oversight, KPIs are frequently absent altogether. Impact is discussed, but rarely measured in a way that informs future decisions.
“If you don’t capture KPIs, you’re managing on feeling alone. We’re not great at following up on KPIs, and sometimes to the point where it feels almost pointless to have them. KPIs need to be meaningful, measurable, and to matter when an agency falls below expectations.” –Mid Sized Pharma Procurement Leader
Against this backdrop, it is unsurprising that time-and-materials (T&M) pricing persists. Interviewees were candid about its limitations, but argued it remains dominant because it is defensible: comparable, auditable, and familiar within highly regulated environments. Time and materials survive not because it reflects value well, but because it minimises risk in systems under pressure. This raises an uncomfortable question: are current commercial models optimised for creating value, or for justifying spend?
“Time and materials still have a role, but it shouldn’t dominate in the way it does today. We’re very focused on T&M, yet there’s room to move towards more value-based approaches. We’ve looked at models like Vested, where client and supplier share outcomes, but measuring value and making fixed pricing work remains difficult.” – Small Biotech, Procurement Leader
Shared Responsibility
Several interviewees also noted that agencies themselves bear responsibility for the industry’s slow movement away from time and materials. Since the shift to hours-based models in the 1980s, agencies have often struggled to demonstrate upstream value – through inconsistent time tracking, limited pushback on scope creep, or giving away strategic thinking in pursuit of creative work.
With the arrival of AI and a renewed demand for transparency, these issues are now more visible than ever. The pressure on hours-based models has exposed longstanding gaps in how agencies articulate, and evidence, the value they create beyond execution.
Conclusion: A Structural Challenge
Taken together, these insights point to a structural issue rather than individual failure. Procurement teams are under-resourced and required to move quickly. Agencies are expected to deliver strategic contributions within commercial frameworks that reward short-term tactical delivery. Both sides are behaving rationally within a system that increasingly works against the outcomes it claims to value.
The cost of this misalignment extends beyond contracting friction. When value is unclear, time is spent negotiating scope rather than improving quality. Work is repeated rather than reused. Learning is lost. Investment is diluted rather than focused. Ultimately, this affects the relevance and effectiveness of communications reaching healthcare professionals and patients.
If the industry genuinely wants to move beyond hours as a proxy for value, it will require collective effort to define a credible alternative, one that focuses on outcomes and establishes a clear chain of causality linking agency activity to time to market, risk reduction, or better decision-making. This is a challenge the industry has yet to fully confront.
It should be noted that these perspectives reflect the views of a limited, but senior and diverse, group of pharma procurement leaders. They are offered not as a final word, but as a prompt for reflection. To continue to move the conversation forward, and as part of the launch of Pharmony, we invite further perspectives, which will culminate in an in-person Summit in June 2026 and the development of practical, industry-led guidance.
A CRITICAL ASK FROM US
We welcome your input: does this picture reflect your experience? Where is it not? And what assumptions about “value” might need to be re-examined if the industry is serious about outcome-focused partnerships by 2030?
Link to a short survey is here.
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