From the archives
Recovered from an earlier Clark Outsourcing article. References, figures and announcements reflect the period in which it was written. Old prices and contact details have been omitted; some illustrations use images from the current site.
The global pharmaceutical industry, as many of us know, is constantly undergoing change. Recently, it has come to a drastic change of manufacturing resources, due to the increasing pressure of limiting costs while consequently maintaining revenues. Pharmaceutical companies have now opened themselves into reducing all internal strategies and outsourcing to different countries – more specifically Philippines and Indonesia – to earn more. They are now more dependent to outsourcing companies in accomplishing their tasks and solving their problems while monitoring their efficiency and improving their productivity despite this change in structure.
The past strategies of pharmaceutical companies differ with how they work things out today. Manufacturers often built all their products using their internal sources, with limited access to information and restriction to third party involvement. These have now become futile as the threat of generic drugs emerges and the costs to bring out a certain drug in the market increases. The change in the course of pharmaceutical companies today has positively affected those who countries that has outsourcing as an asset. One of which is the Republic of the Philippines. In line with this, here is an interview from Patrick Bogny of Genpact, who explains this new trend in pharmaceutical outsourcing.
WHAT IS OUTSOURCING?
Outsourcing is the newest innovation in the pharmaceutical industry that lets companies embrace the fact that the cost of every service they provide can be minimized while maintaining its integrity and reliability. It has become one of the most successful ways in handling a business especially if we are talking about production of imported and exported products. Outsourcing can involve different kinds of services. These services can be:
- Research
- Manufacturing
- Mass production
- Packaging and Delivery
- Clinical Trials; and
- Sales
United States alone covers for 10 to 12% growth rate in the use of outsourced pharmaceutical manufacturing. They’ve also started investing in other services they could outsource. This continued growth reflects just how much outsourcing has affected the business industry.
WHY OUTSOURCE?
Other than being cost-effective, outsourcing has a lot of benefits which is why it would be inevitable for businesses, most especially pharmaceutical companies to resist its temptation. Here are some of the benefits you can get from outsourcing your business:
- Reduced overall costs by 30 to 35%
- Faster research and development of new drugs
- Decreased potential problems in regulating drug development costs
- Enhanced manufacturing efficiency
- Reduced possibility of excess production by stripping down facilities, thus companies have;
- Minimized cost in producing facilities to manufacture products
- Improved net earnings and increased cash flow
- A wider opportunity to build up products by focusing in marketing
If outsourcing is used and executed properly, it has the ability to make your shareholders and investors happy. It’s basically spending a little less than the usual with the same promise of consistency in the quality of products and services offered. So, who would not want to outsource, if the productivity and quality remains the same?
WHY OUTSOURCE IN THE PHILIPPINES?
Philippines is now second to India in having the largest number of US Food and Drug Administration (FDA) approved drug manufacturing facilities. Furthermore, it continues to thrive in the outsourcing industry in general. Research says that the possibility of the country making it big in the pharmaceutical outsourcing industry is huge because they also have a high number of medical professionals who can vouch for the products, a cheaper cost of living, large pool of residents (being one of the top 20 most populated countries in the world), and with a high rate of unemployment, the recruitment of manpower will take lesser time and cost too. Although India and China have become aware of this booming industry of outsourcing, Philippines remains to be one of the best countries to put your outsourcing business into.
WHAT CHANGE DOES THE COUNTRY HAVE TO DO?
As much as the country is a hot spot for outsourcing your pharmaceutical business, judicial laws need to be followed by foreign investors. Prachi Saxena, an analyst said that, “…foreign citizens may provide services as medical providers, but if they wish to practice in a corporate form, foreign ownership should be limited to 40 per cent.” This law hinders the ownership and management of foreign pharmaceutical companies to outsource completely in the country. Thus, Saxena believes that in order for the outsourcing to happen, laws regarding it should be amended so that the country could benefit from the foreign investors as well. If this happens, more investors from different pharmaceutical companies who have embraced outsourcing could come into the country and become more productive with the use of cost-effective manpower.