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Feb 1, 2009 (Vol. 29, No. 3)

Chinese Outsourcing Nears Full Service

Integrated Service Is on the Horizon Due to Multinational CROs and Consolidation of Firms

  • Major Limitations

    Largely due to its short history, the capability of the Chinese pharma outsourcing industry is quite segmented at this time. No single company is able to provide a full scope of services covering all technical areas of R&D and manufacturing. 

    As a result, companies that wish to outsource projects must break them into fragements and separately outsource the pieces to several vendors. Even though many China-based service providers have the ability to develop robust and scalable chemical processes for any complex compounds, their strong service capabilities are eclipsed by the fact that they can’t provide additional services such as manufacturing of APIs under FDA or EMEA-certified cGMP conditions.

    Today, many Western pharma/biotech companies, in particular the small- to medium-sized ones, prefer integrated service from a CRO or a CMO. They expect the service provider to not only be able to develop a robust production process, but also to manufacture the API on a large enough scale to support drug candidates in preclinical and/or clinical development.

  • Future Development

    The Chinese pharma outsourcing industry has become a major force. Although, at present, not many China-based service providers are in the position to make acquisitions or mergers abroad, having a business operation closer to customers is a model many Chinese service providers are considering.

    As more experience is accumulated, it is likely that the service capabilities of many China-based service providers will be enhanced. In addition to vertical growth, more consolidations will occur in the near future, which will go a long way toward providing integrated services.

    In the not so distant future, Chinese companies will expand their services to include biology- and molecular biology-related areas. These service providers will be rewarded by small-sized pharma/biotech companies that prefer one-stop shopping. In addition, small but well-established China-based CROs/CMOs will further strengthen their service capabilities by developing new technologies in niche areas, thus becoming favored partners for large pharma or biotech companies.

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