Key events were the importation of contaminated heparin supplied from a Chinese facility (see sidebar, "Post-Heparin: Baxter Responds") and incidents of melamine in food and pet food products and diethylene glycol in toothpaste from China (1-4). In September 2008, the US Food and Drug Administration issued warning letters and an import alert for products made at two facilities of Ranbaxy Laboratories (Gurgaon, Haryana), one of India's largest pharmaceut ical companies, for deviations in current good manufacturing practices (5). And recent terrorist attacks in Mumbai, India's capital, raised security concerns.
Assessing Asia's roleBut before considering these events, it is important to evaluate the fundamentals of pharmaceutical outsourcing to Asia. "Cost has always been a driver of outsourcing decisions," says Mike Keech, director of PricewaterhouseCoopers' (PwC) advisory services group in the pharmaceutical and life-sciences sector. "But in today's market, cost is no longer the primary driver—it's just an additional evaluation point. You have to balance cost with risk and market opportunity. Companies today, for example, are balancing their outsourcing approach by trying to look at technology and intellectual property protection along with development and manufacturing capacity capabilities."
Other Asian countries are gaining a foothold as viable pharmaceutical outsourcing contenders. Korea and Taiwan are just a few steps behind China and India, says Keech, and will soon be followed by Indonesia and Malaysia. Much farther down on the list of ideal outsourcing candidates is Thailand, which "looks interesting from a labor perspective and because of their worldclass set of intellectual property laws," says Keech, but whose "interpretation and enforcement are far from ideal."