Research & development
Miller» Will having more sales and research and development (R&D) activity in the emerging-market countries result in more sourcing
from those countries?
Stuart» Not necessarily. Cost and quality of service offerings will ultimately drive the sourcing decision.
Griscti» I do not think that increased sales will result in more sourcing. However, more R&D activity probably will.
Miller» How large and developed do you expect R&D activities in emerging markets (e.g., R&D centers in places like Shanghai and Bangalore)
Stuart» They have already grown at a very fast pace, and I would anticipate this rate of growth to continue.
Griscti» I believe that the cost of doing business in India is escalating at such a rapid pace that it will become a limiting factor
to continued growth there in the next 5 to 10 years. Shanghai is also expensive, so growth will not continue at the current
pace. However, there are other places in the Asia/Pacific region where I expect to see substantial growth. In no case do I
see these regions rivaling the scope of activities in Western countries.
Lynch» This is an interesting question. Some people feel that the cost advantages in India and China will begin to erode. But I
believe that any movement to secondary markets will develop very slowly, largely because of the need to develop stronger regulatory
structures in some of these markets. I think there is enough opportunity within India and China at this stage, recognizing
that effort and resources are required to develop a strong supplier base. Pharmaceutical companies committed to outsourcing
must be prepared to make this investment.
Beyond India and China
Miller» Do you see sourcing opportunities moving beyond the first-tier countries (e.g., India, China) to second-tier country suppliers
(e.g., Vietnam, South Africa) in the near future?
Stuart» I believe there is lot of value yet to be extracted from the first-tier countries before any dramatic shift will take place
toward second-tier country suppliers. I don't foresee a significant shift in the near-term (i.e., three years).
Griscti» Not in the immediate future, but I certainly do see such changes in the near term in places such as Shanghai and Bangalore.
That said, the growth will depend upon their government's ability to develop an environment that is conducive to R&D activities.
Miller» How would you characterize the state of the vendor base for CMC development and manufacturing services? Do CMC service providers
have the requisite technical and operation skills to meet your needs?
Stuart» In general, yes. Certainly, there are real and perceived gaps in technical expertise at CMC service providers, but many companies
are figuring out ways to close these gaps. The key untapped opportunity may be more in the area of continuous improvement
and demonstrated ability to drive down cycle times.
Griscti» Suppliers are selected based on these prerequisites for any given project.
Lynch» We see a broad range of capabilities across the vendor base. Some are highly capable and very technically competent on several
fronts. If you look at the complete package of systems needed to effectively manage a manufacturing and supply system, there
are invariably some gaps that need to be addressed.
Miller» Do CMC service providers have the global capabilities to address your growing geographic scope?
Stuart» I don't see global scope as a barrier at this point. Certainly for those providers that have it, it can be leveraged effectively,
but overall, there is a broad range of providers across all geographies to meet CMC development and manufacturing needs. Having
said this, investment and partnerships by established Western suppliers in emerging markets could provide an important strategic
advantage over those who remain stagnant with respect to the global footprint.
Lynch» Across the range of service provider companies, many have established operations in the US, Europe, and in major emerging
markets. However, very few companies are equipped today to support operations on a truly global scale.