Asian Hotspots

The dynamics of pharma outsourcing and location decisions in Asia are changing. Cost reduction is being augmented and will gradually be eclipsed by ‘footprint growth’ as a key factor shaping decisions. Companies need to set their strategic sights on a future world where Asia is not just a market and manufacturing powerhouse for the pharma industry, but could make a key contribution to drug discoveries as well.

Outsourcing decisions have traditionally been driven by cost factors. However, with the wider global economic balance shifting from west to east, and with the growing importance of end-markets in Asia being matched with increasing Asian pharmaceutical expertise across the value chain, cost is just one of a range of factors that companies need to consider when making outsourcing decisions in Asia.

Increasingly, such decisions need to be informed by strategic as much as tactical considerations. The outsourcing steps that companies make today cannot be divorced from the footprint strides they will need to make over a 10-20 year time period (1). There are four clusters of factors that are relevant to the decisionmaking context faced by multinational pharmaceutical companies when they consider outsourcing in Asian territories (see Figure 1). Increasingly, these factors are also relevant to the outsourcing carried out by fast-growing Asia-based pharmaceutical companies.