The U.S. has long dominated the Active Pharmaceutical Ingredients (API), New Chemical Entities (NCE) and medical device manufacturing market. While manufacturing firms and governments across Europe and Asia have aggressively worked to bring manufacturing overseas by offering tax incentives, increased government research funding and improved Intellectual Property (IP) protection, growth has not been stifled in the U.S. In fact, the U.S. continues to be a hotbed for research, manufacturing and innovation.
Despite this U.S. lead, we now live in a global world and there’s enough industry and opportunities to go around. Today’s life sciences and pharma manufacturing firms must work together to find the best route to bringing safe and effective products to market.
This article explores the reasons for the continued growth in U.S. pharma manufacturing markets, as well as issues to consider when doing business abroad.
According to an article in European Pharmaceutical Manufacturer magazine, “the US is already a key market for pharmaceutical manufacturing, and will gain even more importance in the next five to 10 years. The largest number of biotech companies worldwide can be found in the US, investing more than $75 billion per year.” And, it’s not just U.S. companies continuing to invest locally, but also overseas companies that are looking to open manufacturing plants here in the U.S.
So, what’s driving the growth in the U.S.? Three key factors include:
While there are clear benefits that explain why manufacturing pharmaceuticals and medical devices in the U.S. is growing, many companies still find value in working with Contract Manufacturing Organizations (CMOs) overseas because of the cost savings that can often be realized.
One thing that needs to be considered is if they can easily pass FDA inspections. For many years the facilities of manufacturers in India and China developing APIs for sale in the U.S. were not inspected. But the advent of stricter inspection policies increased the FDA’s ability to fully inspect offshore facilities more closely. This closer scrutiny has often resulted in failed inspections and subsequently banned imports. While costs can most certainly be cut when inspections go right, failed inspections often result in costs doubling or tripling when production needs to begin all over again in Western facilities.
Another issue has been the difference in time zones, language and cultural barriers. Most API or medical device projects are complicated, with lots of moving parts and regulatory activity. This type of complexity requires a close partnership and regular, open dialogue between a sponsor and its CMO. Working around the communication and language barriers can make regular meetings and reporting difficult.
Despite these challenges, many sponsors find good value working with CMOs overseas, and U.S. CMOs can find good suppliers in these locations as well. Yet, it’s important to ask key questions, such as how do they address project management; what types of redundancies do they have in place for when problems arise; can they provide references; or how much experience do they have working with U.S. companies?
The U.S. continues to enjoy a stronghold on the market for pharmaceutical and medical device manufacturing, yet regional barriers continue to be erased as business becomes more global. The key is understanding the importance of global collaboration and fostering environments of quality-controlled, soundly regulated and innovative life sciences businesses – wherever they may reside.
For more insights check out our articles about global outsourcing issues, including: “Should You Use an Overseas Partner When Manufacturing Controlled Substances,” Outsourcing API Manufacturing to Asia: Pros, Cons, & Considerations Four key questions to ask to get the most out of a CMO relationship” and “Best practices in following International Conference of Harmonization (ICH), guidelines for APIs a brief look at the origins of the and the implications of a unified regulatory framework” and “Setting Comprehensive Specifications in API Manufacturing since setting specifications has undergone significant change, due to new international ICH Guidelines.” Or call us at (978) 462-5555.