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The threat of overseas competition

An article in this issue paints an optimistic picture of the growth prospects for contract packaging for products involving rapidly advancing technologies. In many cases, it makes sense for marketers of these products to focus on core development functions and leave the rest—including package development—to external vendors.

Pharmaceutical products are one of these areas.

On its surface, this trend appears to be another rosy opportunity for growth among U.S. contract packagers and manufacturers. But the competition for these co-packing jobs may be stiffening. Packagers overseas are working diligently to qualify for these projects.

Datamonitor has been tracking these developments. The market analysis firm says that, for example, pharma companies historically have been reluctant to outsource functions requiring strong intellectual protection in areas such as active pharmaceutical ingredients manufacturing and drug discovery to overseas companies. The drug makers reasoned that these outsourcing firms’ relatively weak intellectual property (IP) rights systems and infrastructure could compromise sensitive projects.

This situation has been improving over the past five years, Datamonitor’s analysis shows. China and India are two countries that have revised their IP laws to walk in step with international standards and to meet World Trade Organization member requirements. These developments are providing opportunities for U.S. product manufacturers to leverage overseas outsourcing firms’ relatively low cost base. In addition, some drug manufacturers are further integrating global outsourcing of core functions, including product and package development, to enhance the value of outsourcing in their business strategies.

What that means is the playing field appears to be leveling a bit. But U.S. contract packagers and manufacturers still have plenty of pluses to offer, including extensive quality-control measures, flexible workforces, and integrated operations.

Videos from Universal Labeling Systems, Inc.
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