Pharmaceutical value chain: opportunities for outsourcing

• Published in: Vestnik Rossiĭskogo universiteta druzhby narodov. Serii͡a︡ Ėkonomika Vol. 29; no. 1; pp. 150 - 163
• Main Author: Volgina, Natalia A.
• Format: Journal Article
• Language: English
• Published: Peoples’ Friendship University of Russia (RUDN University) 15.12.2021
• Subjects: big pharma; bottom - up outsourcing; contract development and manufacturing organizations; contract packaging organizations; contract research organizations; contract sales organizations; pharmaceutical value chain
• ISSN: 2313-2329; 2408-8986
• DOI: 10.22363/2313-2329-2021-29-1-150-163

Industry value chains take important place in the architecture of the global economy. In recent years, cross-border pharmaceutical value chains have been actively developing, the formation of which took place both through offshoring and outsourcing processes under the control of Big Pharma companies, which keep leading positions in the pharmaceutical markets. The study evaluates the possibilities of outsourcing, as well as identifies its features at various stages of the pharmaceutical chain. The multistage pharmaceutical chain, as well as its high degree of its modularity, have created favourable opportunities for outsourcing at every stage, from the lower stage of retail sales to the upper stage of RD. This is so-called bottom - up outsourcing. An increase in costs and a decrease in the efficiency of the entire pharmaceutical chain, caused by the complication of the development and production of drugs, led to a crisis in pharmaceutical innovation. Outsourcing allowed to partially solve arisen problems, increase the productivity of the chain and distribute financial risks, which has led to the emergence of contract organizations that have taken over the implementation of certain pharmaceutical services (contract development and manufacturing, sales, packaging, research organizations). The pharmaceutical RD market was one of the last to get involved in outsourcing processes, due to the fact, that Big Pharma, which manage outsourcing processes, on the one hand, strives to expand outsourcing in order to improve the efficiency of the pharmaceutical chain, and, on the other hand, are very wary of it, since they want to retain ownership and control over their key competencies, which in the case of outsourcing is not always possible.