International Business Management (International Business Practice)
Topic.
Assessment Description.
Global Pharmaceutical Contract Manufacturing Market to Reach US$40.7 Billion by 2015.
The global market for pharmaceutical contract manufacturing witnessed robust growth in recent years, and the future continues to hold tremendous prospects for the industry. With the onset of global economic recession, several countries in the developed world began scouting for ways to minimize expenditure on drugs. Resultantly, pharmaceutical companies were compelled to seek ways of minimizing cost of drugs, which in turn forced them to evaluate opportunities for manufacturing outsourcing.
Despite tough times faced by companies in the pharmaceutical contract manufacturing industry during the recession, overall market maintained a positive growth posting only a moderate slowdown in growth. However, a drop in venture capital funding due to the recession has compelled many pharmaceutical and biotechnology companies to cut down on spending, affecting the fortunes of contract manufacturers worldwide. As a result, several projects were kept on hold and new project starts were delayed, cascading the impact of the pharmaceutical industry to the outsourcing industry as well.
Global pharma industry has been witnessing drastic changes such as increasing competition in generic markets, declining research and development (R&D) productivity, shrinking average patent life, and mounting governmental pressure to reduce drug prices. Further, the drug development process is known to extend over a period ranging from 8 to 15 years, and the cost of bringing out a single new molecule into the market is more than US$800 million. With limited new blockbuster drugs, the decisive factors for growth and sustainability are faster new drug development and cost containment. When the drug gets regulatory approval, pharma companies will require large quantities of product supplies for marketing and distribution. Given the considerable timelines of drug development, it is not only difficult to project a company’s manufacturing needs but also challenging to procure extensive capital requirements. As a result, PCM outsourcing emerged to bail out pharma companies from these manufacturing uncertainties. Initially, it gained popularity in the US and Western Europe. Over the years, PCM outsourcing shifted its base to low-cost nations.
Today, manufacturing capacity constraints are only one of the reasons for outsourcing. Pharmaceutical manufacturing entails sophisticated technology (cGMP synthesis and scale up, impurity profiling, lyophilization) and strict regulatory compliance (good manufacturing practices – GMP). Outsourcing such activities to Contract Manufacturing Organizations (CMOs) enables a pharma company to expedite its R&D, and thus realize the potential revenues. Moreover, CMOs are increasingly offering a wide range of value-added services, which make PCMO an indispensable opportunity to pharma companies.
The US represents the largest regional market for Pharmaceutical Contract Manufacturing worldwide, as stated by the new market research report on Pharmaceutical Contract Manufacturing. Europe trails behind the US. However, future growth in the market is expected to emanate from developing regions, such as Asia-Pacific. Japanese market for Pharmaceutical Contract Manufacturing alone is projected to register a compounded annual growth rate of 12.8% during the analysis period. Segment-wise, solid dosage forms represent the largest segment. The market for liquid dosage forms is projected to record a compounded annual growth rate of close to 6.0% during the analysis period.
Source: SFGate.com Jan 13, 2011.
Assignment 1: Individual
In reference to the extract: Global Pharmaceutical Contract Manufacturing Market to Reach US$40.7 Billion by 2015, analyse FOUR reasons contributing to the growth of the Global Pharmaceutical Contract Manufacturing Market.
Assess the potential risks and benefits inherent in the adoption of this form business practice in the pharmaceutical industry.
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