RKL eSolutions Blog Trends and Insights

6 Must-Have ERP Features for the Pharmaceutical Industry

Many pharmaceuticals companies operate as start-ups until they secure funding or FDA-approval of their products. Initially, QuickBooks and other entry-level mid-market solutions are sufficient to manage finance operations and inventory but once customer orders are accepted and production begins, the gap between the company’s needs and QuickBooks functionality starts to widen dramatically. That gap is often filled by excel documents and manual ad-hoc processes, leaving room for potentially dangerous errors. [Sound like your company? Read our blog on Pharmaceutical Inventory management for key red flags] Savvy CFOs soon realize that a solution tailored specifically to the pharmaceutical industry is imperative to scale effectively.

Here are the six most common, required functions for growing pharmaceutical companies that traditional discrete manufacturing solutions do not provide.

1. Contract Manufacturing

It’s common among pharmaceutical companies to outsource the manufacturing processes to a trusted contract manufacturer. This allows the organization to focus on innovation, sales, and performance while investment in equipment and the manufacturing is completed elsewhere. Contract Manufacturing functionality allows the company to define the formulations and routing instructions, secure the procurement of raw materials from trusted vendors, relieve vendor managed inventory, and recognize the costs of production without performing the actual activities in-house. Most importantly, traditional discrete manufacturing solutions do not properly account for revenue and cost recognition regulated under percentage-of-completion methods (PCM).

2. Inventory Management

Pharmaceutical companies require inventory with product features such as active ingredients, stock managed by potency, average potency percentage, expiry, use-by-date coefficients, lot control, serialization, and other regulatory compliance requirements.

An ERP that delivers out-of-box item attributes and business processing logic dependencies for the pharmaceutical industry reduces the need for customizations. Customizing a solution that isn’t designed for pharmaceuticals intensifies the project scope and go-live risk resulting in increasing costs, lengthened project duration, and ongoing costs of maintenance with future releases.

3. Quality Control for Regulatory Compliance

Defining, capturing, and reporting Quality Assurance (QA) and Quality Control (QC) data is critical for pharmaceutical organizations with strict tolerance of raw materials, storage and handling, formulations, and finished products. Quality data should be integrated and associated with each touchpoint throughout the product lifecycle for on-demand status inquiries and reporting. Thorough and extensible functionality in the QA/QC space will include safeguards to protect from undesirable outcomes like quarantining, non-conformance, and safe disposal.

4. Formulation Management with Dynamic Batch Sizing

Traditional manufacturing solutions are programmed to track products and components that can be assembled or disassembled discretely. Process manufacturing methods rely on complex formula optimization with variables that include chemical properties, reactions, variants, dynamic batch sizes, yields, and ‘sandboxes’ for R&D.

5. Traceability and Recall Management

Unfortunately, mistakes happen and sometimes product recall is necessary for product integrity, company reputation, and consumer safety. In the event of a recall, coordination with regulatory agencies and proactive communication is vital to resolution. Audit controls and reporting that can generate parent-child relationships through forward-backward traceability provide transactional data and assurance that the company adheres to current good manufacturing practices (CGMP).

6. Automated Intercompany Purchases, Sales and Elimination Entries

Another common best practice for growing pharmaceutical companies is to establish independent entities for overseas facilities and international sites. Multiple company scenarios are required to meet the unique in-country regulatory requirements and accounting localization standards for distribution, taxation and reporting. A system that supports automated intercompany transactions and elimination entries streamlines the accounting practice to ensure proper currency exchanges, cost absorption and revenue recognition. Automated entries create an audit trail for transactional integrity and help reduce period-end close adjustments from mistakes or omissions.


If you suspect your growing company could be falling into a widening technology gap, start by running an audit of your organizations software and processes. Once you identify the shortcomings of your existing solution and their impact on business, you’ll be able to outline your upgrade project based on the urgency of your need and begin investigating alternative software solutions.

idea (1)Hint: Make sure Sage X3 is on your list.

Sage X3 is tailored to meet the needs of the pharmaceutical space. Sage X3’s pharma-specific configurations, combined with robust out-of-box reporting functions, reduce the need for customizations. RKL’s experience implementing Sage X3 helps reduce project scope by leveraging the best practices and expertise of its extensive Sage X3 user community.

Walt Goodfield

Written by Walt Goodfield

Walt is based in Cleveland, OH and has been selling, implementing, and supporting ERP software for over 25 years. Currently, he is the Chief Business Officer at RKL eSolutions, driving revenue growth through customer acquisition and strategic business partner alliances.