APIs And GMP Consulting
In the past decade, many pharmaceutical companies have outsourced ingredient production to Asian countries including China and India in the hope of lowering production costs and increasing profits. However GMP Consulting firms have seen a shift back to US based production companies. In this article some of the reasons for the Asian outsourcing failure will be discussed.
When pharmaceutical companies decided to move the production if Active Pharmaceutical Ingredients (APIs) to Asia, they thought they would be getting a good deal on price. Production costs like labour and premises rent is better value than in the US. However, hidden costs in terms of logistics and communication are making this outsourcing more expensive than they expected.
Problems With Quality
The US has been scrutinising the quality of Asian-produced drugs since the contaminated Heparin affair last year which saw death and serious illness across the nation. And we have seen a bigger demand for quality products made on American soil from consumers, healthcare professionals and the pharmaceutical companies. Quality is stringently measured by the FDA so GMP regulations have to be met by US based manufacturers.
Logistics
The cost and complexity of logistics when it comes to outsourcing your ingredient production oversees is massive. And now the pharmaceutical companies are truly beginning to realise the true cost of this outsourcing. Translators have to be employed, offices have to be rented or bought and employees from the US have to frequently travel to their oversees partners to check on progress. These expenses on top of the other complications that are involved in oversees outsourcing can add up.
Communication Issues
As was mentioned in logisitcs, many manufacturers have to hire translators to interpret all of their communication between themselves and their foreign partners. This can make everyday conversations difficult, never mind important and technical information. Pharmaceutical companies also need to take into account the different time zones that the continents are on and this will slow down communication. Consumers and regulators demand instant information and when you have to wait for your partners to start their working day before you can get in touch with them, you put yourself in a difficult position.
Now that the production of APIs has been outsourced to Asia for a number of years, the massive financial windfalls that companies expected have not proved to be realistic. In fact, by moving your production back to the US you are filling your customers with confidence of quality and can make bigger profits.
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