Yesterday, at BioContact 2010 in Quebec City in a panel discussion on CMO outsourcing, Dalton Founder and CEO Peter Pekos presented his insights on the upheaval in the pharmaceutical industry caused by the massive shift of R&D from North America to China and India. “What we are seeing now”, he commented, “is the aftermath of an experiment of monumental proportions.
The prospect of getting more for their R&D dollar has led to consequences that were unintended and unforeseen at the beginning”, he continued. “The loss of hundreds of thousands of direct and indirect jobs in North America, mainly in the northeastern US, has cost the industry a great deal of political capital at a time when they really need all they can get. The dislocation of programs and people, and the difficulty in managing off shore work, has been expensive. I have yet to see a convincing metric that shows any net benefit in terms of reduced cost or time.
Mr. Pekos shared his deep concerns over the shifting of manufacturing jobs from North America to China and India. “Loss of manufacturing jobs means loss of manufacturing expertise, which will be very hard to recapture on a large scale if changing economies and other factors turn the tide back here”, he warned. “We must always remember that investment in foreign economies has the potential to create very powerful competitors.
Industry executives now have to deal with the reality that low price comes at a high cost, and chart the best course for the future that they can”, he said. “The experiment in offshore outsourcing will undoubtedly continue. Most of us expect that Russia will emerge as a major player, followed by Brazil and Eastern Europe. Big pharma has, however, been improving offshore outsourcing practices. Changes include increased measures to control quality and increased vigilance over the supply chain of raw materials. Some companies have already started to bring some R&D and clinical work back to North America, especially in the case of early stage development. Rather than re-building their own infrastructure, companies bringing work back are more likely to engage premium CROs here.
Dalton Pharma Services is an established North American premium vendor”, he concluded, “and will continue to add new business that comes as a result of offshore experiment re-structuring.
About Dalton
Dalton Chemical Laboratories Inc. o/a Dalton Pharma Services is a Health Canada approved contract pharmaceutical manufacturer that supplies chemistry, analytical and formulation development services to the biotechnology and pharmaceutical industries in the areas of chemistry, medicinal chemistry and fine chemical manufacture. Dalton provides cGMP manufacturing of solid dosage forms and aseptic filling services to its customers at any stage of the regulatory process (Phase I, II, III or commercial). In its state of the art cGMP facilities, Dalton produces active pharmaceutical ingredients at the gram or kilogram scale. Dalton conducts sterille fills to produce batches of finished drug product in vials or syringes, either aseptically filled or terminally sterilized, under fully validated conditions. In addition, Dalton’s analytical chemistry laboratory offers method development, validation and ICH stability programs to its clients. Further information can be found at http://www.dalton.com.
