Nextpharma (Gottingen, Germany) announced a joint venture with Indian manufacturer Centaur Pharmaceuticals (Mumbai, India) to offer solid-dose manufacturing. The companies are jointly building a new facility in Pune, India. NextPharma
is providing the facility design and equipment specifications and will be responsible for quality systems and assurance. It
will provide sales and marketing efforts to reach clients in the Western countries and is putting in a small amount of capital.
Centaur will provide most of the investment capital and will handle day-to-day operations. Operations are expected to begin
in April 2007.
In addition, Pfizer CentreSource (PCS, Kalamazoo, MI), the API and contract manufacturing unit of Pfizer, Inc., announced a joint venture with two Asian suppliers
for the manufacture of generic steroid APIs currently manufactured by Pfizer. PCS will transfer the manufacture of 18 steroid
products over the next three years to its partners ScinoPharm Taiwan, Ltd. (Tainan, Taiwan) and Shanghai Pharmaceutical Group (Shanghai, China). PCS will continue to handle the early stage, technology-intensive bioconversion manufacturing step at
its Kalamazoo facility but send the intermediate for late-stage processing to its partners, whose operations are in more cost-favored
locations. The venture is seen as a step to make Pfizer's steroid APIs more competitive in the global market.
Sign of things to come?
In a symbolic gesture that could nonetheless set a pattern for other global corporations, IBM (Armonk, NY) has moved its global procurement headquarters to China. The shift includes moving the office of Chief Procurement
Officer (CPO) John Paterson from the New York City suburbs to IBM's China Procurement Center in Shenzhen. According to the
company's announcement, the Shenzhen center is one of IBM's largest procurement operations outside the United States.
The shift is symbolic in the sense that the global nature of IBM's procurement operations makes the location of its CPO's
office almost irrelevant: IBM has procurement operations in 60 countries, according to its press release. The size of its
annual procurement spend—$40 billion—is more than the annual revenues of all but three major pharmaceutical companies.
At the same time, the move to Asia is meaningful because it is being made in anticipation of changes in the way IBM does business.
The company noted in its announcement that Asia already accounts for 30% of its $40-billion procurement spend, distributed
among 3000 suppliers, but most of that spending is to support its hardware business. However, in the future, the company expects
to tap into Asian suppliers to support its software and services businesses, which now account for over two-thirds of its
$100 billion in revenues. "To meet the demand, it will require developing relationships with new partners and suppliers and
working with existing ones to help them build skills, processes, and management practices to compete globally in the services
market," the company said in its statement.
Though it's unlikely that any major pharmaceutical companies will move their sourcing headquarters to Asia in the foreseeable
future, the IBM move is instructive for the pharmaceutical industry on several levels. A growing share of pharma's procurement
spend is flowing to Asia, so much so that most major companies now have major procurement operations located there (mostly
in Singapore). Furthermore, like IBM, the mix of what pharma is buying in Asia includes more and more "human capital," (e.g., R&D services) along with physical goods such as raw materials. These trends are likely to accelerate as major pharmaceutical
companies establish R&D and manufacturing operations in Asia and as they seek to increase their sales in those countries.
Contract research and manufacturing organizations must take note as well. As pharmaceutical company sourcing becomes more
global, they will have to develop their own strategies to service these global procurement operations, lest they cede that
business to local suppliers.
Jim Miller is president of PharmSource Information Services, Inc., and publisher of Bio/Pharmaceutical Outsourcing Report, tel. 703.383.4903, fax 703.383.4905, firstname.lastname@example.org