Outsourcing Your Business

Outsource Synergy

Outsource Synergy

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Guide To Outsourcing Profits

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Guide To Outsourcing Profits Summary


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Author: Richard Jablonski
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Outsourcing Implications On Validation

In recent years, outsourcing, in response to financial and time-to-market pressures, has greatly increased within the pharmaceutical industry. Today, third party providers are being used at a rate of 40-50 to supplement internal R&D, manufacturing, and sales and marketing activities. While the majority of outsourcing remains tactical (transactional), there is an increasing movement to strategic outsourcing characterized by partnerships and alliance relationships. In recent years, the International Conference on Harmonization (ICH) has published two documents that serve as expert guidance on analytical and related validation 53,54 . As part of the outsourcing process, the client and provider should review these and related regulatory guidances (e.g., cleaning validation) to ensure that there is a mutual understanding and agreement on the scientific basis of methods validation.

Introduction A Outsourcing

These changes have forced internal restructuring in the industry. In many pharmaceutical companies, executives have scrutinized the areas that have traditionally absorbed a high proportion of their budgets, and rationalization is becoming more common. Many companies recognize that they can no longer master the entire spectrum of skills and have focused on core competencies within the organization. Many areas of expertise are not required on a permanent basis, and instead may be contracted out by the company at a certain point in the long process of bringing a product to market. This has driven the growth in the outsourcing of nearly every service within the industry. Lately, there has also been movement within some major pharmaceutical companies to sell the manufacturing plants to an outsourcing organization and only concentrate on basic molecular research, development, and marketing. The other driving force that has propelled the outsourcing concept to the forefront is the formation...

Outsourcing And Contract Manufacture

With respect to the pharmaceutical industry, outsourcing and contract manufacture probably got its start with APIs, final and key intermediates, and other steps in the synthetic process because of the complexity of API manufacture. The advantages and disadvantages of outsourcing and contract manufacture are presented as follows Do not oppose outsourcing and contract manufacturing strategies. Point out to corporate management, however, that the ultimate responsibility for API manufacture rests with the internal operational functions of your company and not with those of the vendor or supplier.

Analytical Methods Validation

Outsourcing the development, validation, and performance of analytical methods in recent years has become a popular means to facilitate movement of product through the development process. A recent industry survey reported that the vast majority (86 ) of the companies responding say they outsource analytical methods development to contract laboratories. Twenty-five percent of the responding firms indicated that they often or always contract out stability testing on development compounds 37 . There are important criteria to follow in working with contract laboratories to ensure that their methods validation procedures yield results that are consistent with those of the client company 38 . This topic will be discussed later in this chapter.

Land and Wildlife Management in the Commercial Sector

One possibility to improve performance is specialization, with the landholder concentrating on producing good land and wildlife, and outsourcing the management of commercial activities to specialized operators. This has several advantages. It can reduce the direct risks to the landowners from short-term changes in the market if properly constituted, it can also reduce their risk by reducing their direct capital investment in the commercial activities. Interestingly, the practice of separating commercial activities from land and wildlife management is a model that has been extensively used by CBNRM programmes on communal land. It has also been used, albeit to a lesser extent, by state wildlife management agencies in protected areas. Indications from these other sectors are that the landholder can expect between 30 and 40 per cent of gross revenue from international trophy hunting operations and between 10 and 15 per cent of gross revenue from tourism-based activities (see Chapter 8)....

Technical Support Capability

The outsourcing organization receives the technology from the sponsor to manufacture the product. Any time such technology-transfer takes place at any given stage of the life cycle of the product, it is critical that the outsource organization has adequate resources to transfer the product from the parent organization. This includes the process know-how, analytical methods transfer, and so on. It is also imperative that the routine production problems can be solved by the outsource organization without requiring the sponsor organization's representative to fly to the plant or have a person stationed in the plant to solve the minor technical issues.

Business Considerations

An outsourcing relationship for commercial manufacturing requires that when a sponsor decides to bring the product to an outsource organization, a long-term relationship is anticipated. The fate of the product is literally in the hands of the outsource organization. Once the outsource plant site is registered with the FDA in an NDA or ANDA, it is very difficult, disruptive, and costly to relocate the product. Because of this, both parties should anticipate a long-term business relationship. The financial strength of a contract manufacture is crucial. A review of the company's annual report will reveal the financial strength of the company. If the company is not publicly traded but is owned by a parent company, then the parent's financial strength should be reviewed. If the parent company is also not publicly traded a report on the company from a financial institution such as Dunn and Bradstreet (D&B) can be obtained. Other sources of financial viability are the company's bank and...


Analytical methods validation is a critical component of the entire company validation program. A method is not declared acceptable until a collaborative crossover study is conducted between two development laboratories and at least one quality control laboratory to ensure proper precision, accuracy, and efficiency. In the new world of outsourcing, it is imperative that an analytical crossover study be conducted between the client and supplier before any work is begun on dosage form development.

Regional Experiences

Improved performance accountability will be related to increasing use of market tests and, where these are not possible, to the clarification of performance expectations through the setting and monitoring of goals. Achieving the latter will require considerable innovation in the design of performance management systems and agency structure, and a key issue will be the decentralization of management to cost profit centres. Too little emphasis has been placed on this aspect of commercialization (ie how to deliver more with less) and there is almost no analysis of management systems (Reed (2002) and the authors quoted by him are rare exceptions). Although commercialization includes structural and performance issues, it is more commonly perceived as increasing income by commoditizing park resources, and is sometimes associated with outsourcing. South Africa's National Parks Board was created in 1926, the first statutory board in South Africa. With a strong political imperative it was well...