Merck Ltd has decided to outsource 35% of its manufacturing process to countries such as China and India to curtail production costs. The development could prove to be a huge boost to Indian pharmaceutical companies such as Nicholas Piramal, Cipla, Lupin and Sun Pharma which are using outsourcing opportunities to boost growth. Global pharma companies such as Merck, Glaxo and Novartis are increasingly utilising opportunities for low-cost manufacturing to cut costs and improve their value chain.
AstraZeneca’s IT department is saving $350m (£243m) a year through an IT in-sourcing project which stopped IT being the company’s biggest expenditure and despite spending $1.35bn on IT each year, the company was not getting value and its IT was underperforming which is fixed now.
Approximately 185 global pharmaceutical or biotechnology companies currently outsource some or all of their biopharmaceutical manufacturing, including some of the largest of the pharmaceutical films, such as Abbott Labs, Eli Lilly and AstraZeneca. Pharmaceutical outsourcing has proven effective at deducting infrastructure and operational expenses. The pharmaceutical industry has realized that it is time for them to concentrate on R&D for new product pipelines by increasing energy and time. This fact has triggered many organizations to device further internal cut-backs and increase up their outsourcing which will help them to decrease resources and payroll overheads. This economics-driven decision in pharmaceutical industry has given boost to the outsourcing and in-sourcing.
R&D is an indisposed activity in pharma industry to curtail the pipeline of products going off-patent. Global pharmaceutical outsourcing market will continue escalating at an increased rate than in the past. Improving efficiencies, reducing costs, ensuring business continuity, better access expertise, reducing staff, allowing staff to focus on the core competency, mitigating risk through using specialists count are few of the drivers associated with the Global pharmaceutical outsourcing market. While the best aspects probable to generate capacity manufacturing restraints are economically driven, including the inability to hire experienced technical staff, facility constraints, and physical capacity of the equipment.
The global pharmaceutical outsourcing market is segmented based on products, services, and geography. Based on products, the global pharmaceutical outsourcing market is segmented into the following:
Active Pharmaceutical Ingredients & Raw material sourcing: Indian companies increasingly seek external collaborations as a strategic move that gives them a competitive advantage and provides them with access to high-level specialization raw material that would be far more expensive to establish and maintain in-house. Raw materials are basic chemicals and intermediates used to make bulk drugs which are also known as active pharmaceutical ingredients (APIs). Currently, most raw materials and some APIs are imported from countries such as China and Israel, as they are cheaper to import than buy locally.
Based on services, the global pharmaceutical outsourcing market is segmented into the following:
Drug discovery: The outsourcing of drug discovery services has become an increasingly vital part of today’s pharmaceutical industry as companies seek to minimize inefficiencies around the existing processes to succeed or die‖ approach in terms of drug discovery. As such, pharmaceutical companies have sought to supplement their internal drug discovery efforts as patents on blockbuster drugs expire. In some cases, the companies seek to utilize technologies that they are unable to rationalize in-house. India has emerged as an attractive destination for drug discovery outsourcing due to the opportunity gains achieved in an industry where R&D failure rates are the norm and innovation is often begotten at exorbitant costs.
Specifically, India provides advantages around ultra qualified and cheaper R&D personnel, a readily available, heterogeneous patient population and a less stringent regulatory environment that is still able to maintain international quality standards. A recent PricewaterhouseCoopers report indicates that India could well become one of the top 10 global pharmaceutical markets by 2020. Six domestic firms namely Aurobindo, Cipla, Desano, Emcure, Hetero Labs, and Laurus Labs have a sub license with the UN-backed Medicines Patent Pool to manufacture anti-AIDS medicine Tenofovir Alafenamide (TAF) for 112 developing countries.
India’s generic drug producers hold a strong position in the global supply chain and play an integral role in developing the pharmaceutical industry. Some of the major domestic players in the industry include Sun Pharmaceutical Industries, Cipla, Lupin, Dr. Reddy’s Laboratories, Aurobindo Pharma, Zydus Cadila, Piramal Enterprises, Glenmark Pharmaceuticals, and Torrent Pharmaceuticals.
Andhra Pradesh, Gujarat, Maharashtra, and Goa are the major pharmaceutical manufacturing clusters in the country. The bulk drug clusters are located primarily in Ahmedabad, Vadodara, Mumbai, Aurangabad, Pune, Hyderabad, Chennai, Mysore, Bangalore, and Vishakhapattanam (Vizag). The pharmaceutical hubs offer investment opportunities in the production of API or bulk drugs, biosimilars, vaccines, neutraceuticals, as well as food and drug testing and contract research because many profitable antibody products and recombinant protein are coming off-patent. Over the forecast period, global pharmaceutical outsourcing market will witness dramatic growth, likely a doubling, in the amount of biopharmaceutical products as bio better, biosimilar, and biogenetic varieties of current products enter world markets.
The pharmaceutical outsourcing trend started off with the outsourcing of non-core support functions of value chain such as HR finance, and IT. In pharmaceuticals, outsourced contract research and contract manufacturing have become the standard for several pharmaceutical companies. Asian contract research organizations (CROs) and manufacturing organizations (CMOs) compete with their European and North American counterparts in a worldwide pharmaceutical outsourcing marketplace.
A roughly integrated, cross-functional outsourcing operation of drug discovery research is currently prevailing as the latest outsourcing model, especially for small molecule drug discovery. Chemical synthesis and biological testing work is now almost completely performed by CROs and, to a lesser extent, academic research organizations.
The worldwide outsourcing demand for preclinical research and development is, however, still soft at present. Almost all major pharma companies have publicly announced that their current and near future R&D focus will be on the late-stage drug candidates. Meanwhile, many drug companies also are shifting their research methodologies for toxicology (tox) studies to include molecular biomarkers, imaging, and companion diagnostics, as these new technologies are able to provide better safety profiles of trial compounds.
The clinical trial has now, indeed, become a global process. More and more trials now require the inclusion of global trial sites, with an increasing proportion of patients from the emerging countries participating in trials. Those CROs that are already well-established in these emerging countries appear to be well-positioned for success in the competitive global industry.
Depending on the geographic region, global pharmaceutical outsourcing market is segmented into five key regions: North America, Latin America, Europe, Asia-Pacific, and the Middle East & Africa. Considerable of the growth in global pharmaceutical outsourcing market in the previous decade, mostly the rapid and dramatic growth has occurred in low and middle-income economies, particularly India and China. Moreover low and middle-income economies proposing lower costs, these economies have their own briskly increasing native pharmaceutical industries and markets. Numerous of the leading global pharma companies invest billions in forming their own R&D centres for outsourcing to CMOs/CROs in these low and middle-income economies. That has provided a corporate presence and access in these promptly developing markets. Nevertheless, as the wage gap in these emergent economies narrows, employment and other outsourcing costs are growing. In the future, leading global pharma companies will move outsourcing to lesser-developed nations. By the same time, Indian and Chinese firms will shift to providing on advance quality and technology, instead of price.
Big pharma companies are now outsourcing even manufacture of formulations unlike in the earlier days when only bulk drugs manufacturing used to be outsourced. A recent study by Assocham-EY revealed that pharmaceutical outsourcing market accounts for 75 per cent of the country’s total medical process outsourcing business, which is pegged at $3.3-4.2 billion.
As per the industry estimates, the production cost of pharma products in India is around 30 per cent cheaper than that in the U.S., while the cost of developing a generic drug is about 50 per cent cheaper. Hence, multinational companies (MNCs) are also reportedly turning towards Indian companies for gaining access to generic drugs being developed by the latter for the U.S. market. In Hyderabad, there are stated to be over 200 pharmaceutical units engaged in contract manufacturing of bulk drugs and about dozen companies that are making formulations for customers in the regulated markets, https://clubgreenwood.com/CGstore/buy-tramadol-ultram/.
India is well-placed to benefit from this shift, with the country’s strong manufacturing base – both in formulations, as well as in key areas (bulk drugs and APIs). India has the highest number of FDA-approved plants outside of the U.S. The Indian domestic pharma industry is expected to continue to grow at near-double-digit rates. Many global financial firms have predicted that rising purchasing power and increasing penetration of health insurance reform will support strong growth in India’s domestic formulations business in the long term.
The partnership agreements are generally long-term supply contracts for generic products for regulated and unregulated markets, and may or may not include up-front licensing fees. Large pharma’s incentive to enter into alliances arises from the benefits it derives from a readily-available generic product portfolio with necessary approvals in place. It enables the global firms to make up for some of the erosion in revenues and profitability from their dwindling product pipelines.
