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. GMP consultants have however recently announced that more ingredient manufacturing is returning to the US. 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. Pharmaceutical companies thought that these low costs would be enough but there are hidden costs which are making outsourcing more expensive than expected.

Problems With Quality
After the deaths and illnesses caused by contaminated Heparin that has been produced in China made its way onto the US market, the quality of drugs made in Asia has been under question. 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. The costs of this are now hitting home. 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. You are looking at very expensive additions when you factor these in to the standards costs of outsourcing.

Communication
Translation is often the most difficult factor to overcome when you use a foreign company to produce ingredients. It is hard to convey technical messages in foreign languages never mind everyday conversations. 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.

The massive Asian outsource that pharmaceutical companies have undertaken over the past decade has not proved as financially profitable as first thought. It seems that by producing quality products in the US can be more profitable as your customers will trust the quality of your products more.