http://www.outsourcing-pharma.com/news/ng.asp?n=85511-ms

Outsourcing of Production Gaining Pace in Big Pharma

Phil Taylor, 5/27/08

Pharmaceutical manufacturers are now withdrawing from manufacturing at an unprecedented rate, with four of the top 10 players announcing major new outsourcing programmes in 2007, says IMS in a new document which explores the implications of that trend.

The pace of change indicates that some beliefs that were once entrenched within the average industry executive have been rooted out: it's no longer necessary to join R&D to manufacturing; intellectual property no longer needs to be jealously guarded in-house; and the skills needed to make drugs can be found just as readily in emerging markets.

"This shift towards outsourcing of manufacturing is likely to be followed by other functions within pharmaceutical companies, including some elements of R&D," commented Murray Aitken, senior vice president for IIMS Healthcare Insight group, at a press conference earlier this month.  IMS has identified outsourcing of production as one of its key 'harbingers of change', the top 10 strategic issues facing the pharmaceutical industry at present.

Although it is something the industry has adopted largely out of necessity as it struggles to cut costs - faced with a tougher operating environment and slower growth rates - outsourcing also has other possible benefits.   It could hasten time to market for new products, give multinationals an entry point into emerging pharmaceutical markets, and make it easier for companies to manage changes in product demand and "concentrate on differentiating competencies such as innovation and brand building," according to IMS.

But the flipside is that despite the clear technical prowess of countries in emerging markets - particularly India - there is uneasiness about the quality and safety of some of the products sourced from them.  While many of these concerns stem from recent problems with consumer goods, some have involved pharmaceutical, said IMS.

"As manufacturing processes become more complex, pharmaceutical companies will be required to provide impeccable sources and guarantees," according to IMS. It points to the problems Sanofi-Aventis had with its manufacturing contract with Inyx USA, which became bankrupt last year and left the drugmaker to deal with alleged breaches of good manufacturing practice (GMP).

The drug industry should also be mindful of lessons from other industries, such as electronics. For example, Taiwan's Acer was a contract manufacturer but eventually developed its own personal computer brands and started to compete with its former customers.

"Contract manufacturers can turn the tables," says IMS, noting that concerns about intellectual property protection as complex manufacturing and processing information is signed over to third-parties has receded but "could well come back to haunt major pharmaceutical companies as the true cost and complexity of manufacturing becomes transparent."

Finally, IMS points out one concern that has not yet become overt - the economic implications  of the pharmaceutical industry taking manufacturing and R&D jobs out of its strongholds in the US and Europe. 
The industry provides 640,000 jobs in the European Union, including more than 100,000 in R&D, as well as a €34bn trade surplus. This is so valuable to the region that political intervention may follow if it is perceived as being under threat, suggests IMS.

Forecast: BioPharma outsourcing will grow '08

January 16, 2008

http://www.fiercebiotech.com/story/forecast-biopharma-outsourcing-will-grow-08/2008-01-16?utm_medium=nl&utm_source=internal&cmp-id=EMC-NL-FP&dest=FB

Biotech and Big Pharma alike are taking outsourcing to new heights in 2008, according to IDC's Health Industry Insights report. This year everything from R&D to clinical trials and manufacturing will be outsourced in growing volumes to countries like Singapore, India and China, says the new forecast. Singapore in particular was lauded for its huge investments in the drug development and manufacturing field and a reputation for strong intellectual property provisions.

http://www.fiercebiotech.com/story/eli-lilly-outsource-half-research-2010/2007-12-17

Eli Lilly to outsource half of research by 2010

December 17, 2007

While other big pharma companies have been making headlines with big layoffs and global restructuring plans, Eli Lilly has been steadily chipping away at its own strategy--quietly outsourcing jobs and services for research and manufacturing around the world as it gradually lowers its head count. About 40 percent of its IT work has already been outsourced with outside partners expected to handle half of its research work by 2010.

http://www.fiercebiotech.com/story/r-d-spending-going-gangbusters-china/2007-11-15

R&D spending going gangbusters in China

November 15, 2007

Everything drug related is going gangbusters in China. Last year, China grabbed $2.2 billion of the global action on drug R&D. By 2010, the country expects that to grow to $10 billion, two percent of the planet's total R&D budget. Time dissects the numbers for us, listing AstraZeneca, Novartis, Eli Lilly and GlaxoSmithKline among the leaders in the pharma world who are blueprinting some ambitious expansion plans. It's clear to see what's attracting the drug giants: Lower research costs, expert scientific help and a massive population suffering from the kind of big ailments that can spawn blockbuster therapies. It's also a growing market in its own right. China bought $13.6 billion in pharmaceuticals last year--and that's expected to double by 2010. Natch.