PharmaceuticalOutsourcingQ42020 - 46


drugs, but those drugs only make up 10%
of total prescriptions dispensed, according
to data from health care analytics company
IQVIA.5 Additionally, because those
branded and innovative drugs generate the
majority of U.S. drug companies' revenues,
production is located domestically in order
to be close to the customer and to protect
the intellectual property. According to a
2015 study from Bloomberg, " 75% of U.S.
spending on drugs is for products that are
manufactured domestically, " and the top
five international sources (by value) were
Ireland, Germany, the U.K., Switzerland
and India.6 Other than India, these are
not low cost markets, but they are highly
skilled and have stable economies and
trade ties with the United States, making
them reliable partners in a diversified life
science ecosystem.

Legislators and industry watchdogs have
been critical of the lack of transparency
over the distribution of pharmaceutial
manufacturing facilities and what portions
of the finished product they are responsible
for. With the limited supply chain data
collected by the FDA, we have used
manufacturing sites as the best proxy for the
amount of manufacturing taking place in
the U.S. and other countries.
The opacity of information about drug
manufacturing operations also brings up
another point: As opposed to assuming
that companies need to reshore operations,
regulators need a clear view of where risk
and exposure are concentrated in order
to make decisions to support more secure
supply chains.
Generic drug production in China is often
cited as our largest area of supply chain

exposure and the primary motivation to
reshore life science manufacturing to the
United States. While the majority of drugs
prescribed in the United States finish
production domestically, the past two
decades have seen an almost universal
outsourcing of active pharmaceutical
ingredient (API) manufacturing to China
and India, which have a lower cost of
production and less restrictive labor and
environmental regulations. Because 90% of
U.S. prescriptions are for generics,8 which
have significantly lower margins than their
branded counterparts, the economic focus
is on decreasing cost and maximizing
efficiency, not on ensuring resiliency. As a
result of these pressures, approximately
80% of all API manufacturers are outside
of the United States, according to the most
recent FDA Regulated Products report.9 The
nation is currently able to cover only about
a quarter of global production capacity for
APIs, according to Janet Woodcock, director
of the FDA's Center for Drug Evaluation
and Research.10
In Teva Pharmaceuticals' Q2 earnings call,
President Kåre Schultz said, " It's also true that
there [have] been discussions about getting
API manufacturing ... back into the U.S. It's
a fact that it has basically all left the U.S.
within the last 30 years, so there is nothing
left, which means that getting it back for real
would take probably 10, 20 years and would
have to depend on major structural changes
in pricing and all these kind of elements, as
you can imagine. " 11
The pressure to manage margins while
facing greater competition of generics
and biosimilars is highlighted by the
relationship of spending to the number of
units prescribed. Reshoring generic and
API manufacturing would take a major
overhaul in EPA and FDA regulations,
production or disincentives for offshoring,
and an understanding from the public that
it would take years to ramp up capacity and
likely cause drug prices to rise. These may
be acceptable tradeoffs in the long run, but
it is a much more complex conversation
than what has currently been presented.

Pharmaceutical Outsourcing |


| October/November/December 2020



Table of Contents for the Digital Edition of PharmaceuticalOutsourcingQ42020

Editor's Message
Editorial Advisory Board
CN Perspectives
Social Media Connections
Insider Insight - Price
Insider Insight - Ventura
Contract Manufacturing
Supply Chain
Contract Manufacturing
Interview with Yourway
Supply Chain
Clinical Trials
Supply Chain
Analytical Testing
Supply Chain
Clinical Trials
Analytical Testing
Horizon Lines
Industry News
Advertiser's Index
PharmaceuticalOutsourcingQ42020 - Cover1
PharmaceuticalOutsourcingQ42020 - Cover2
PharmaceuticalOutsourcingQ42020 - 1
PharmaceuticalOutsourcingQ42020 - Editor's Message
PharmaceuticalOutsourcingQ42020 - 3
PharmaceuticalOutsourcingQ42020 - 4
PharmaceuticalOutsourcingQ42020 - 5
PharmaceuticalOutsourcingQ42020 - Editorial Advisory Board
PharmaceuticalOutsourcingQ42020 - 7
PharmaceuticalOutsourcingQ42020 - CN Perspectives
PharmaceuticalOutsourcingQ42020 - Social Media Connections
PharmaceuticalOutsourcingQ42020 - Insider Insight - Price
PharmaceuticalOutsourcingQ42020 - 11
PharmaceuticalOutsourcingQ42020 - Insider Insight - Ventura
PharmaceuticalOutsourcingQ42020 - 13
PharmaceuticalOutsourcingQ42020 - Contract Manufacturing
PharmaceuticalOutsourcingQ42020 - 15
PharmaceuticalOutsourcingQ42020 - 16
PharmaceuticalOutsourcingQ42020 - 17
PharmaceuticalOutsourcingQ42020 - Supply Chain
PharmaceuticalOutsourcingQ42020 - 19
PharmaceuticalOutsourcingQ42020 - Contract Manufacturing
PharmaceuticalOutsourcingQ42020 - 21
PharmaceuticalOutsourcingQ42020 - Interview with Yourway
PharmaceuticalOutsourcingQ42020 - 23
PharmaceuticalOutsourcingQ42020 - Supply Chain
PharmaceuticalOutsourcingQ42020 - 25
PharmaceuticalOutsourcingQ42020 - 26
PharmaceuticalOutsourcingQ42020 - 27
PharmaceuticalOutsourcingQ42020 - 28
PharmaceuticalOutsourcingQ42020 - 29
PharmaceuticalOutsourcingQ42020 - Clinical Trials
PharmaceuticalOutsourcingQ42020 - 31
PharmaceuticalOutsourcingQ42020 - 32
PharmaceuticalOutsourcingQ42020 - Roundtable
PharmaceuticalOutsourcingQ42020 - 34
PharmaceuticalOutsourcingQ42020 - 35
PharmaceuticalOutsourcingQ42020 - Supply Chain
PharmaceuticalOutsourcingQ42020 - 37
PharmaceuticalOutsourcingQ42020 - 38
PharmaceuticalOutsourcingQ42020 - 39
PharmaceuticalOutsourcingQ42020 - Analytical Testing
PharmaceuticalOutsourcingQ42020 - 41
PharmaceuticalOutsourcingQ42020 - 42
PharmaceuticalOutsourcingQ42020 - 43
PharmaceuticalOutsourcingQ42020 - Supply Chain
PharmaceuticalOutsourcingQ42020 - 45
PharmaceuticalOutsourcingQ42020 - 46
PharmaceuticalOutsourcingQ42020 - 47
PharmaceuticalOutsourcingQ42020 - Clinical Trials
PharmaceuticalOutsourcingQ42020 - 49
PharmaceuticalOutsourcingQ42020 - 50
PharmaceuticalOutsourcingQ42020 - Analytical Testing
PharmaceuticalOutsourcingQ42020 - 52
PharmaceuticalOutsourcingQ42020 - 53
PharmaceuticalOutsourcingQ42020 - Horizon Lines
PharmaceuticalOutsourcingQ42020 - 55
PharmaceuticalOutsourcingQ42020 - 56
PharmaceuticalOutsourcingQ42020 - 57
PharmaceuticalOutsourcingQ42020 - Industry News
PharmaceuticalOutsourcingQ42020 - 59
PharmaceuticalOutsourcingQ42020 - 60
PharmaceuticalOutsourcingQ42020 - 61
PharmaceuticalOutsourcingQ42020 - 62
PharmaceuticalOutsourcingQ42020 - 63
PharmaceuticalOutsourcingQ42020 - Advertiser's Index
PharmaceuticalOutsourcingQ42020 - Cover3
PharmaceuticalOutsourcingQ42020 - Cover4