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Taking Business Overseas: Why Pharma Is Staying in Asia

Maria Thompson on August 29, 2013

In a recent case study by Scientist, Joe Payne told us of this rule of thumb. “If you need the compound in 3 hours, make it in house; 3 days, near-source it (i.e. outsource it locally); 3 weeks, outsource it including overseas”. However, in the past decade, there has been a lot of hand-wringing about jobs moving overseas. Detractors attacked companies for forsaking local communities in favor of lower labor costs. Despite the many benefits to working with local companies, there is now compelling reason for pharma to keep key sites in Asia: the market is growing quickly. Pharma may have started out by moving to Asia to cut costs, but now it’s staying for the rising demand for pharmaceutical products.

The healthcare market in Asia is growing rapidly, giving good reason for Pharma to expand operations in the region.

Asia Rising

How big is the growth in Asia? The healthcare market is expected to “maintain a healthy growth of about 8% a year… to reach approximately $333 billion by 2015 [and]… will be the single largest contributor to global pharmaceutical market growth, accounting for approximately 46% of value growth.”1 The market growth is driven by due to increasing life spans and rising wages, both of which result in a greater demand for healthcare.2

Jobs in demand

Considering the market opportunity, pharma has a vested interest in keeping it’s foothold in Asian countries. “Developing products in China, and having as deep and close an understanding of how to work within and develop that market, can only be helped by being in the market itself.”1 R&D, clinical trials, and marketing are growing, particularly in China, where the most growth is anticipated. It appears that near-sourcing is beginning to work in favor of keeping jobs in Asia, as businesses and customers grow in the emerging Asian countries. In fact some wonder that we might one day be reading about Asia outsourcing R&D and services to North America and Europe!