Pharmaceutical companies operate in one of the most complex regulatory and financial landscapes of any industry. They must navigate a maze of pricing agreements, government mandates, and payer negotiations, where even minor missteps can lead to millions in financial penalties or regulatory scrutiny. Yet, many firms still rely on outdated IT systems and manual workflows, exposing them to inefficiencies, compliance risks, and lost revenue opportunities.
Now, AI, automation, and cloud-based solutions are changing that. From optimizing contract structures to automating compliance checks, these technologies are helping pharmaceutical companies streamline their operations, reduce errors, and drive smarter decision-making.
One of the leaders in this transformation is Kalyan Kilaru, a strategic technology leader with over a decade of experience in SaaS and revenue management. As Director of Contracting Solutions at Johnson & Johnson, a Senior IEEE member, and a recipient of multiple J&J Inspire Awards, Kilaru has pioneered AI-powered contracting and pricing solutions that ensure regulatory compliance while delivering millions in cost savings. He shares his insights on how AI is reshaping pharma’s commercial foundation—and why companies that don’t adapt risk being left behind.
Smarter Pharma Contracting
Managing pharmaceutical revenue has always been about balancing optimizing pricing strategies with government regulations. Contracts with Medicare, private insurers, and pharmacy benefit managers must account for shifting rebate structures and strict oversight. Historically, this process has been slow and vulnerable to costly errors: A single pricing miscalculation or regulatory oversight can mean millions in penalties—or even exclusion from government contracts, a critical revenue source for many firms.
AI is transforming this risk-laden system into a proactive and data-driven process. Generative AI and machine learning can analyze historical pricing patterns, assess market conditions, and flag compliance risks before they become liabilities. These tools also recommend contract structures that align with both financial and regulatory goals—especially relevant under the Inflation Reduction Act, which has introduced stricter drug price regulations and new Medicare refund mandates.
At Johnson & Johnson, Kilaru and his team are leading the charge by implementing an automated ledger system that tracks Medicare refund adjustments, significantly reducing compliance risk and improving financial forecasting. These innovations will help J&J comply with the new Inflation reduction act (IRA) to help reduce healthcare costs.
“GenAI can be massive force multiplier for contracting,” explains Kilaru. “People often associate machine learning with finance and forecasting, but contracting follows highly structured patterns. If we can anticipate pricing risks and optimize contracts before problems arise, we can change how the business operates.”
The Intelligent Revenue Advantage
Even outside of compliance, AI-driven computing is revolutionizing how pharmaceutical companies approach revenue strategy. In an industry where a single pricing decision can have multi-million-dollar implications, companies that leverage AI-driven insights gain a significant competitive edge. Yet, a recent industry report found that only 55% of pharmaceutical firms have the data maturity needed to build a meaningful GenAI capability—leaving a widening gap between early and late adopters.
Traditional revenue management systems rely on static pricing models that struggle to keep pace with evolving payer negotiations, shifting regulations, and real-world market conditions. By contrast, smart pricing platforms can ingest real-time data, model multiple contract scenarios, and recommend the most financially advantageous terms—helping companies maximize revenue without increasing compliance risk.
The results speak for themselves. Under Kilaru’s leadership, Johnson & Johnson transitioned key pricing and contracting functions to a SaaS platform, generating $40 million in cost savings in just one year. By automating price validation, rebate calculations, and compliance monitoring, J&J not only improved processing speed and accuracy but also reduced IT operating costs—freeing up resources for higher-value strategic initiatives.
“There’s more at stake than just efficiency,” Kilaru emphasizes. “These changes mean we can respond faster to market shifts and pass savings along to customers while maintaining the highest standards of service. The industry needs to move together on this.”
The AI-Driven Evolution of Pharma
While these technological integrations have already delivered millions in cost savings in revenue management, Kilaru believes its next frontier in pharma will be interoperability through AI—the ability to integrate contracting, pricing, and regulatory compliance into a smart, unified management platform.
AI-powered contract lifecycle management platforms are already becoming keystones of operations, capable of auto-generating contract terms and integrating with external regulatory databases to flag risk clauses. Meanwhile, machine learning models are being trained to predict policy shifts before they take effect, allowing pharmaceutical companies to adjust pricing strategies preemptively. With AI projected to create up to $110 billion a year in annual value for the pharmaceutical industry, the momentum seems inevitable.
However, widespread adoption won’t be without challenges. “AI isn’t a plug-and-play solution,” says Kilaru. “It needs strong governance and infrastructure to be integrated into existing contracting workflows. But firms that can deliver on its full value will set the pace for the rest of the industry.”