As noted previously, the US' position atop the rankings this year is reflective of the substantial European presence in this
industry. When the respondent sample is narrowed to Western Europeans only, the US is easily the favored destination for outsourcing
in the next five years cited by 35.3% of respondents, up slightly from last year's 31.8%. After the US, Europeans are most
likely to look in their own backyard, with strong consideration shown for Germany (29.4% of respondents cited in 2013, from
22.7% in 2012) and Belgium (23.5% in 2013, from 22.7% in 2012).
European responses were evaluated indicating more positive consideration for country destinations as either a "strong likelihood"
or "likelihood." The US was again the top response (23.5%), with European countries following: Germany and Ireland (each at
17.7%), followed by Belgium, France, and Sweden.
This year India was a consideration for outsourcing by just 11.8% of European respondents, down from last year's 22.7%. China's
fall has been more precipitous: it was indicated to be a country in consideration by only 5.9% of respondents, down from last
year's leading 36.4%.
US-based respondents are more favorable to Singapore, handing it the top position, with 32.3% of respondents considering it
a "potential" destination. After Singapore came Germany (29%), followed by the UK, China, and India.
This list suggests that US companies appear to be seeking traditional biomanufacturing hubs rather than emerging ones at this
time. Compared to last year, respondents in the US demonstrated a heightened potential for outsourcing to some destinations
in Western Europe, such as Germany (29% vs. 25%), the UK (26% vs. 22%), Scotland (16% vs. 6%), and Italy (13% vs. 6%). Respondents,
however, cooled on China (26% vs. 34%) and India (23% vs. 28%).
A dose of regulatory reality.
After several years of study data showing China and India becoming more heavily favored outsourcing destinations, this year's
results are striking and merit some attention. There are some signs that respondents' increased attention to traditional hubs,
at the expense of China and India, is likely related to a renewed focus on regulatory issues. This may be drawing industry
attention away from emerging manufacturing clusters, where there may be less confidence in the regulatory expertise.
As with years past, geographic location continues to be one of the least important factors: only 7% of respondents this year
indicated "be local to me" to be a "very important" consideration, squarely in the less than 2-10% range found in the past
As geography plays a lesser role, regulatory expertise is becoming a crucial factor in decision-making. This year, 45.6%
of respondents said that it was "very important" that CMOs have regulatory compliance expertise, a significant rise from 38.1%
who attached that level of importance last year. This comes amidst separate data suggesting that biomanufacturers are focusing
more on regulatory issues to improve operational performance and avoid capacity constraints. It could also be a result of
clients outsourcing more core activities than in earlier years, with regulatory compliance more rigid for these activities
than for the lower value-added services that have typified outsourcing in the past.
Finally, although much investment has been made in facilities in China and India for biogenerics production, some companies
have been using their existing facilities, looking to leverage well-understood facilities that might otherwise be under utilized,
and which are able to quickly and cheaply produce clinical material. Much of this CMO-sourced material has been produced in
the US, which may be slanting future expectations for outsourcing.
Although there has been a noticeable shift in attention away from China and India as outsourcing destinations, there is reason
to believe this situation will reverse. Those countries are accounting for an ever-greater share of global biomanufacturing
capacity—together, they represent approximately one-sixth of capacity, according to BioPlan's WIKI resource on global biopharmaceutical
facilities (2), which pegs China's share of biopharmaceutical manufacturing concentration at 8.6% and India's at 8.1%. Although
that's significantly behind North America (35.9%) and Western Europe (26.1%), it's a growing trend that the industry is not
It's important to remember that China is a relatively new player, which continues to suffer from legal and regulatory aspects
that hinder commercial-scale contract manufacturing. It may take years for Chinese CMOs to come up to full cGMP standards
and to be permitted to operate at commercial scale. These study results may simply be a reflection of the industry thinking
that such progress may not come as quickly as expected. Nevertheless, it's short-sighted to believe that this situation will
not change. China and India represent a majority of the world's population, and with its growing middle class, biologics production
will likely continue to play an important role in their healthcare policy. While some emerging destinations may not find substantial
growth in the short term, India and China will need to produce biologics for their huge local populations, and some of this
experience will have Western markets taking a close look at their capabilities.
Eric Langer is president of BioPlan Associates, tel. 301.921.5979, firstname.lastname@example.org
, and a periodic contributor to Outsourcing Outlook.
1. BioPlan Associates, 10th Annual Report and Survey of Biopharmaceutical Manufacturing Capacity and Production (Rockville, MD, April 2013),
2. BioPlan Associates, Top 1000 Global Biopharmaceutical Facilities Index,
http://www.top1000bio.com/, accessed May 27, 2013.