Pharmaceutical Outsourcing, Essay Example

U.S. pharmaceutical companies outsource their production process to India in order to lower the production cost, including the cheaper labor cost and management cost. Hence, they can protect their profits in the competitive domestic market.

The U.S. pharmaceutical companies are outsourcing because the development cost and labor for a return after 20 years product life was not as profitable. The pharmaceutical drug process has become some expensive that the outsourcing provides a less expensive way to lower the production costs. In addition, with increasing complicated regulatory laws that make it difficult to bring certain drugs to market. The outsourcing allows the pharmaceutical companies the ability to reduce their regulatory problems by setting productions in foreign countries. There many advantages to outsourcing is the company  improve manufacturing processes, less money spent on facilities, and the overall improvement of net earnings and cash flow. The outcome is the consumers are able to receive lower prices for drugs and insurance cost.

The rivals of Indian pharmaceutical firms, such as Chinese pharmaceutical firms, would be the potential losers. Because the rise of foreign investment and cooperation in India makes Chinese pharmaceutical firms lose attractions relatively. Consequently, the Chinese firms lose profits.

The Indian pharmaceutical firms have found a niche in the market with cheaper labor, inexpensive products, and the rise of investments in the India infrastructure. The Chinese pharmaceutical have other barriers to overcome such as entry into the market that the Indian firm has record of accomplishment of success. In addition, the Chinese can match the Indian pharmaceutical products and the Indian firms can make the products cheaper per unit.

In India the trade barriers are must less that the Chinese because India trade agreement allows the Indian Pharmaceutical firms to export generic drugs called the India and European Union (EU).This trade agreement allows India the flexibility to export generic or off patent drugs. The Chinese can complete with trade agreement because the Chinese have more stringent trade agreements globally.

The ultimate outcome will be for India competing against Chinese will improve because India looks to prosper with business relations with the Chinese. The Indian pharmaceutical firms does have the advantage because the American dollar can go a lot further in India than China.