Global Supply and Procurement March On... - Pharmaceutical Technology

Latest Issue
PharmTech

Latest Issue
PharmTech Europe

Global Supply and Procurement March On...
The European CMO market gets even more crowded, while global sourcing takes several big steps forward.


Special from Pharmaceutical Technology


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,
http://www.pharmsource.com/.


ADVERTISEMENT

blog comments powered by Disqus
LCGC E-mail Newsletters

Subscribe: Click to learn more about the newsletter
| Weekly
| Monthly
|Monthly
| Weekly

Survey
Which of the following business challenge poses the greatest threat to your company?
Building a sustainable pipeline of products
Attracting a skilled workforce
Obtaining/maintaining adequate financing
Regulatory compliance
Building a sustainable pipeline of products
24%
Attracting a skilled workforce
30%
Obtaining/maintaining adequate financing
15%
Regulatory compliance
30%
View Results
Eric Langer Outsourcing Outlook Eric LangerBiopharma Outsourcing Activities Update
Cynthia Challener, PhD Ingredients Insider Cynthia Challener, PhDAppropriate Process Design Critical for Commercial Manufacture of Highly Potent APIs
Jill Wechsler Regulatory Watch Jill Wechsler FDA and Manufacturers Seek a More Secure Drug Supply Chain
Sean Milmo European Regulatory WatcchSean MilmoQuality by Design?Bridging the Gap between Concept and Implementation
Medicare Payment Data Raises Questions About Drug Costs
FDA Wants You!
A New Strategy to Tackle Antibiotic Resistance
Drug-Diagnostic Development Stymied by Payer Concerns
Obama Administration Halts Attack on Medicare Drug Plans
Source: Special from Pharmaceutical Technology,
Click here