In the current climate, it is not surprising that the top pharmaceutical companies are busily diversifying themselves of everything they can do without or get done for them by someone else. Meanwhile, the competitors gaze hungrily at them like alpha golden carp in a pool. Is this retrenchment sketching an early picture of the future of pharma?
Certainly, the explosive growth of outsourcing is not just a fashion. There’s a lot to be said for increasing your agility by reducing fixed costs and getting your variable costs into phase with the market. But is there any limit? If the brand isn’t dead (and the reports of its demise seem to have been greatly exaggerated) why not leave it all to the scientists and concentrate on marketing?
Outsourcing transformed the automotive and aerospace industries. Boeing and Airbus leveraged technical excellence in every aspect of aircraft and systems, nurturing a mature supply base and becoming designers and final assemblers. Nissan similarly built a mature supply base and concentrated on design, assembly and marketing. They improved quality while reducing costs year on year; and their financial performance became far less sensitive to sales volume.
So, what should we outsource?
The truth is, you can let almost anything go, except the special skills and knowledge that make you the particular success you are. These are the heart of your business and they will drive your business’s future value. Keep a tight grip on them.
How should we outsource?
When you use someone else’s capacity to smooth the peaks in demand, saving investment, that’s tactical outsourcing. It’s convenient, low‑commitment and pretty safe – it doesn’t touch that ‘essential you’. But the companies that have succeeded through extensive outsourcing have used it to enable them to be what they want to be, to reinforce that very essence, securing and developing their future value to the horizon and beyond. Never cling to activities that you can get others to do better. This is strategic outsourcing - where you get to be great through others’ greatness!
To read the article in full, please click on the pdf link below:
About Pharma Magazine
Aimed at the international pharmaceutical and bio-pharmaceutical community, Pharma magazine covers every aspect of manufacturing from R&D to finished product. With a worldwide circulation of more than 40,000 individuals, it is the first truly global magazine for the pharma industry, bringing together the disciplines of discovery and development, the drug manufacturing process and the resultant business and management issues. For further information visit the Pharma website at www.pharma-mag.com