Global Outsourcing: A Roundtable of Contract Manufacturers - Pharmaceutical Technology

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Global Outsourcing: A Roundtable of Contract Manufacturers
Leading contract manufacturing organizations share their views on the current and future market dynamics shaping pharmaceutical outsourcing.

Pharmaceutical Technology

Roundtable participants: a snapshot of company capabilities and positioning
»Dowdeswell (Dishman): The pressure has been seen in two ways—some key elements of cost have risen in Asia while European and US manufacturers have taken steps to make their businesses more cost effective. Some Asian companies have been slow to appreciate this, however. The costs of investment in Asian countries remain significantly lower, and this will continue to drive the dynamics of outsourcing to Asia.

»Santhanam (Piramal): While costs in Asia have been rising at a faster rate than in the West, the differential in costs is still very large due to the abundant technical pool available in the emerging countries. The cost of FTEs (full-time equivalents) for chemistry or formulation work continues to be approximately 50–60% of the costs encountered in the West and is likely to remain at those levels for at least the next five to seven years.

On the horizon...
The challenge to Asian companies in competitiveness is often not from cost-per-hour, but productivity due to tools, techniques, and drug-development approaches. A large number of scientists of Indian/Chinese origin from the West are now returning to their homeland and helping train the larger scientific population in these techniques. The access to state-of-the-art equipment is also helping making step improvements in productivity, but there is still a ways to go.

»Hagen (AMRI): Current economic conditions have driven down the cost of energy and raw materials from their peak in 2008. In a tighter market, such as we have experienced in the last few quarters, there is more of a willingness on the part of suppliers to negotiate the price of raw materials. If we continue to reduce the cost of raw materials while maintaining strict quality standards, we can provide the customer with the assurance that less expensive does not mean lower quality. Hiring and retaining a qualified workforce is also a priority. Customers have expressed a concern about the level of internal resources required to manage an outsourced project at some of the Asia-based companies with which they have worked. This utilization of internal resources adds to the true project cost. [We feel] using a US-based point of contact, if necessary, and solid project-management skills provides an optimum interface for reducing the need for a customer to dedicate internal resources. Managing a project across multiple locations requires us to recognize potential issues, including cultural barriers, time-zone differences, and potentially logistical issues, but [we] strive to make the experience feel like it is all being done under one roof.

»Tyson (Aptuit): India's impressive technical and scientific talent and resources are paramount to any perceived or actual cost differentials available in that market. Certainly the industry—like all industries—is facing additional cost pressures in the current economic environment. However, cost pressures are inherent in drug development in any economy, and drug developers should be seeking outsourcing partners that understand their program, challenges and objectives, and who will be able to work strategically with them to advance their drug-development programs in an integrated network and deliver results on time, regardless of geographic location.


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