How To Identify The Right Outsourcing Partner In Asia–Pacific

Sep 01, 2010
Volume 22, Issue 9

The full version of this outsourcing feature can be read in the September issue of our digital magazine:

How to find the right partner in Asia–Pacific is a very complex question and there is no uniform answer. Firstly, you need to answer some basic questions:

  • What is your strategic intent of offshoring? (e.g., cost saving, market access in Asia, being closer to Asian customers, tapping into Asian talent pools, etc.).
  • What is the nature of your business you want to offshore? (e.g., R&D, manufacturing, regulatory, finance support, IT, etc.). If it's R&D, then is it clinical R&D, medicinal chemistry, or chemical and pharmaceutical development?
  • What is your risk tolerance? For instance, is intellectual property an issue? Is there an operational risk or an investment risk involved?
  • In the case of investments related to offshoring, are you aiming for shortterm returns or not?

Dr Frank Floether
Answering these questions is a first step because it will determine what direction should head in. For example, for chemical and pharmaceutical development activities, India is supposedly the preferred spot for a variety of reasons, including the sufficient availability of GMP facilities (both R&D and manufacturing) and its experience in full product development. For manufacturing of an API based on fermentation, you may prefer to go to China, the advantages being its wealth of experience and lack of power interruptions. For backoffice support, you may decide on Singapore, which is attractive for Expats. Further, it is not as important to be close to customers for back office work as it is for manufacturing or R&D. None of this is set in stone, but they are some examples of preferences.

After being clear about the country, you need to decide on the specific location. For example, is proximity to any governmental offices important? What about logistics, such as infrastructure, proximity to airports, and the time difference? Would electrical power interruption be an issue?

Labour costs can also be a deciding factor, with costs varying greatly between hubs, such as Shanghai and Mumbai, compared with tier 2 or 3 locations. Languagebased communication also needs to be considered, particularly in China.

Finally, if you don't want to invest in an offshoring location then thoroughly check your potential Asian CRO/CMO. The important features are:

  • experience in dealing with Western companies
  • GMP compliance
  • how long have they been in the business you are interested in
  • has at least part of their management been trained in the West
  • status of their facilities
  • are there any tax incentives (taxfree zones, industrial parks etc.).

Identifying the right partner highly depends on a variety of aspects, but this is probably the most important decision you have to make with the biggest impact! The key is to deal with a local professional representative in Asia who knows the landscape, the culture, the language and the pharma industry, or to seek advice from a person in the West who is experienced in both pharmaceuticals and has Asian expertise.

Although many in the industry are concerned about counterfeit APIs in Asia, I'd point out that approximately 80% of the APIs supplied worldwide come from India and China,1 which offers good proof of the countries' capability and reliability. When it comes to generic drug products — manufactured illegally if the API is still subject to intellectual property laws —it is a different ball game. In China, the vast majority of local medicaments sold domestically are still generics.

In terms of avoiding potentially problematic Asian vendors or domestic pharmaceutical companies, however, it is probably best to screen their portfolio for instances of possible counterfeits.

lorem ipsum