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Outsourcing seen as 'strategic competitive weapon' in pharmaceutical market

New report points to increasing price and cost pressures, regulatory changes, and patent expiries for 9.1% CAGR projection through 2018.
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“Outsourcing has become a viable and a beneficial business strategy that is enabling firms to transfer non-core activities to external partners in order to restructure their distribution networks, leverage resources, spread risk, focus on issues imperative to survival, competitive advantage, and future growth.”
That’s according to Global Markets for Contract Pharmaceutical Manufacturing, Research and Packaging, a new technical market research report from BCC Research.

The report says, “Outsourcing, once considered as a cost-saving initiative, is now viewed as a ‘strategic competitive weapon’ that offers flexibility in production, satisfies end users' growing demands, and enhances a company's competitive advantage.”

BCC Research states that the global market for pharmaceutical and biopharmaceutical contract manufacturing, research, and packaging was valued at $219.9 billion in 2012, expecting that market to reach $242.2 billion this year. BCC Research projects the market to ascend to nearly $374.8 billion by 2018, registering a compound annual growth rate (CAGR) of 9.1%.

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Behind this growth, says BCC, are “increasing price and cost pressures, regulatory changes, and patent expiries leading to shrinking margins in the pharmaceutical industry. Contract manufacturing, research, and packaging are advantageous to both parties to the contract as it provides the manufacturing company with financial stability for the duration of the contract and the hiring company the benefit of cost savings, time saved in operating and managing a production facility, and research. Moreover, outsourcing can be important in overcoming the trade barriers and at times is used to gain entry into to a foreign market where the government works to secure local employment through local production. Many industries have now begun to explore the advantages of contracting their research, production and packaging, leading to a steady market for these services.

“Factors such as cost control, R&D spend, new technologies, increasing competition, and patent expiries for generic drugs are moving this industry in a new direction. BCC Research expects new advancements, product launches, and changing technologies to drive the market growth in the foreseeable future.”

Source and publisher BCC Research LLC is located at 49 Walnut Park, Building 2, Wellesley, MA; Phone: 866-285-7215.

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