Pharma industry is certainly going through the big trend of
outsourcing. Considering the pharmaceutical companies have to determine the optimal
flows balancing its supply chain network activities with manufacturing
activities and distribution channels. The pharmaceutical companies are seeking
for minimum costs from different business models and outsourcing with
contractors is one way to balance meeting the multimarket demand satisfaction
and minimizing costs. However, there are other issues regarding outsourcing
like compliance and quality control. Since pharma industry is facing strict
regulations from health care authorities (FDA/CMS), manufacturing plants have
to follow certain laws to be considered a qualified manufacturing plant.
Outsourcing lowered the operation costs, however, higher the risk of losing
control over quality control.
There are certainly advantages for pharma companies to
consider outsourcing. Lower operational and labor costs is the primary reason
for companies to choose outsourcing. Outsourcing also enable pharma companies
be flexible about their manufacturing plant location based upon the disease demography.
Outsourcing also increase pharma companies’ open partnering with other
companies, hence driving the VIPCO model, which is “Virtually Integrated
Pharmaceutical Companies”. The VIPCO is the future trend of pharmaceutical companies,
which means pharma companies don’t have to develop vertically along their value
chain like in the past. Instead, pharma companies will increase open partnering
with any companies for any services at any point in their value chain,
meanwhile utilize and leverage the resources outside of the company.
The main question regarding pharmaceutical outsourcing is
that the pharma companies can’t control the quality, hence facing the risk
during quality control point and compliance issues. Hence companies need to
balance this risk with the advantages.
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I believe that this question - the pharma companies can’t control the quality - is already being take seriously by pharmaceutical outsourcing companies.
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