The PwC report, “The changing dynamics of pharma outsourcing in Asia: Are you readjusting your sights?”, ranks China slightly ahead of India as the best location to outsource to.
A table was drawn up by PwC based on the costs, risks and market opportunities in each region. These categories are sub-divided in an attempt to accurately asses the multitude of factors that affect a territory’s suitability as an outsourcing destination.
PwC believes the results reflect the changing nature of the industry and “the trend towards high end innovation” being outsourced.
The report states: “The dynamics of pharma outsourcing and location decisions in Asia are changing. Cost reduction is being augmented and will gradually be eclipsed by ‘footprint growth’ as a key factor shaping decisions.
“Companies need to set their strategic sights on a future world where Asia is not just a market and manufacturing powerhouse for the pharma industry, but could make a key contribution to drug discoveries as well.”
The significance of factors other than cost as a motivation in choosing an outsourcing destination is reflected in PwC’s report, with only one of its top four destinations overall being among the cheapest.
Cambodia and Vietnam were the two cheapest countries but high levels of risk and lack of market opportunities counted against them. Both countries finished in the bottom three overall.
Risk was calculated by considering the geopolitical, infrastructure, legal, economic and human capital risks that are present in each county.
The flipside of these countries are the established nations such as Australia, Singapore and Japan, which excelled in the risk category but were constrained by costs.
PwC believe that Japan presents the most significant market opportunity, owing to the size of its market currently and the future healthcare opportunities the nation presents.
Korea’s place as third overall is driven by PwC’s belief that it presents considerable market opportunities. This is underpinned by an impressive growth rate and the large market it already has.
PwC’s report also contains a detailed analysis of the outsourcing capacity of many of the nations in the region. The complete report can be downloaded here.