Contract Manufacture is utilizing third party manufacturing facilities to make products. This is more popular strategic practice among pharmaceutical giants. Drug manufacturing facilities are utilized mostly in third World countries like India to manufacturer company owned drugs.
In pharmaceutical industry as well as in other industries this a business strategy. The multinationals gain from the low cost of manufacture due to cheap man power. Sometimes hazardous chemicals and drugs are also manufactured in this manner.
The organizations that broker deals for contract manufacturing are also instrumental in feasibility study. The development concern offers large number of related services besides manufacture. In case of pharma industry clinical trials at all stages, method development pre-formulation and formulation and commercial production is included in the contract. Most of the contract manufacturers in India are able to gain from this business strategy. For some it works in a way by utilization of their spare capacities.
Indian companies have become main pharmaceutical outsourcing for API and key intermediates for US and European concerns. The country has a strong manufacturing base and technical competency besides cheap manpower. These are the right ingredients that parent companies in developed countries seek.
Global pharmaceutical giants gain most from cost cutting and by not investing in infrastructure. Buy outsourcing pharma projects companies can remain lean and thin. They are able to focus on core activities and mega projects.
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