The changing dynamics of pharma outsourcing in Asia: Are you readjusting your sights?

Transcription

1 The changing dynamics of pharma outsourcing in Asia: Are you readjusting your sights? Beatrijs Van Liedekerke Advisory Performance Improvement Associate Director PwC Slide 1

2 Agenda 1. Introduction 2. Strategic context of outsourcing and location decisions in Asia 3. Moving up the value chain: the changing nature of pharma outsourcing in Asia 4. Evaluating the landscape: the location context for outsourcing decisions 5. Looking ahead Slide 2

3 Introduction Changing dynamics => cost reduction evolution to key contribution to drug discoveries What are the strategic forces that are shaping outsourcing and other location decisions in the region? Outsourcing index: ranking individual territories against three key dimensions cost, risk and market opportunity Detailed review of territories: hot spots: China, India, Singapore mature markets: Japan, Australia other Asian territories: Korea, Taiwan, Malaysia, Thailand, Indonesia, Philippines Slide 3

4 Strategic context of outsourcing and location decisions in Asia the patent expiry time bomb the need for R&D productivity pricing pressuress in healthcare markets quest for improved margins and growth desired future R&D/ manufacturing model closing the gap between R&D, manufacturing and the patient company vision of core vs non- core activities networked business models Asia Outsourcing growthin Asian pharma markets growthin Asian pharma manufacturing capability growing Asian scientific base and capability patient pool IP and legal landscape clinical trials and pharma regulation east/west disease p rofiles labour and other overhead costs Slide 4

5 Moving up the value chain: the changing nature of pharma outsourcing in Asia The trend towards high end innovation: from late stage clinical trials and low cost manufacturing moving up the value chain: facilitated by the evolution in IP protection in-sourcing researched-based partnerships between pharma companies Slide 5

6 Moving up the value chain: the changing nature of pharma outsourcing in Asia Rapid expansion of clinical trials in Asia India 2003: clinical trials* 2007: 270 clinical trials* 2008: completed 737 clinical trials* China 2008: completed 870 clinical trials* Drivers: - cost - IPP improvement - treatment naïve patients - recruit more quickly from a smaller number of sites * Clinicaltrials.gov Slide 6

7 Moving up the value chain: the changing nature of pharma outsourcing in Asia Manufacturing scales up cost: India 50% cheaper than west large pool of qualified talent to run manufacturing plants - India: > 100 FDA approved facilities - China: > source of APIs shipped globally > first FDA approved site for finished drug > increased effort of SFDA Slide 7

8 Moving up the value chain: the changing nature of pharma outsourcing in Asia Manufacturing scales up David Brennan, CEO AstraZeneca: all active pharmaceutical ingredients will be produced externally within a decade as part of the strategy of maximising the efficiency of our supply chain while maintaining the highest possible standards of quality and security of supply. * AstraZeneca plans to increase its outsourcing drastically from China and India. The firm has set up a dedicated sourcing centre in Shanghai. *Financial Times, 16 April 2008 Slide 8

9 Evaluating the landscape: the location context for outsourcing decisions Slide 9

10 Evaluating the landscape: the location context for outsourcing decisions Outsourcing index ranking of Asian territories across all factors Slide 10

11 Evaluating the landscape: the location context for outsourcing decisions Cost ranking of Asian territories Cambodia Vietnam India Indonesia China Thailand Malaysia Taiwan Philippines Korea Singapore Japan Australia Tax and Regulatory Costs Infrastructure Costs Compensation and Wage Slide 11

12 Evaluating the landscape: the location context for outsourcing decisions Risk ranking of Asian territories Australia Singapore Japan Taiwan Korea Malaysia India Thailand China Philippines Indonesia Vietnam Cambodia Infrastructure Risks Human Capital Risks Legal Risks Geopolitical Risks Economic Risks Slide 12

13 Evaluating the landscape: the location context for outsourcing decisions Market opportunity ranking of Asian territories Japan Korea China Australia Taiwan India Indonesia Malaysia Thailand Singapore Philippines Vietnam 12.2 Cambodia Pharmaceutical Market Growth Rate Current and Future Needs of Healthcare Current Pharmaceutical Market Size Slide 13

14 Looking ahead China & India spearhead growth in Asian pharma Singapore will maintain position as centre for research and innovation China, India and Singapore remain hotspots with Korea and Taiwan becoming increasingly significant Outsourcing will continue to move up the value chain As pharma investments in Asia grow: high end drug discovery in Asia more important role Insourcing preferred model for higher end activities, complemented by strategic partnerships No one size fits all => mixed approach Slide 14

15 Looking ahead For us, China is not about outsourcing and cheap labour It s about different science Within 5 to 10 years we will be moving from 'made in China to discovered in China Moncef Slaoui Chairman of Research and Development, GlaxoSmithKline Slide 15

16 Thank you All rights reserved. "" refers to the China firm of or, as the context requires, the network of member firms of International Limited, each of which is a separate and independent legal entity. PwC