Offshoring surely has to be counted among the most covered business issues in 2004. No industry appears immune to the trend, not even those that are considered the U.S.'s most technically advanced businesses. Drug manufacturing is among these sophisticated sectors, and even with regulatory requirements hampering rapid operational transformations, it too is seeing its share of offshoring.
As it has in most of these stories, China has been receiving a lot of attention with respect to the drug industry. Large pharmaceutical companies, including Novartis (NYSE:NVS) and Eli Lilly (NYSE:LLY), are moving clinical trials to China, according to Forbes.com. Still, China's failure to rigorously enforce intellectual property rights remains a sticking point for many firms.
However, plenty of other countries are stepping in to offer sophisticated outsourcing services for the drug segment, particularly for the biotechnology industry. India is reportedly aiming to attract massive investments in the field in coming years. A more concrete example, though, recently surfaced in a press release from PAREXEL International (NASDAQ:PRXL). The provider of clinical research and consulting services recently disclosed that it will help validate South Korea's first contract biomanufacturing facility designed to comply with U.S. and European regulations covering good manufacturing practices.
The new facility marks a milestone in biomanufacturing. Biomanufacturing is a notoriously complicated activity that until now has been centered in Europe and the U.S. But more companies are interested in conducting clinical trials in Asia since studies there are typically cheaper to run than those conducted in Europe or the U.S. The Korean site, while not large enough to produce sizable commercial quantities of biologics, is well-suited to supply medicines for clinical studies in Asia. As a result, the new site could be a catalyst for biotech companies like Amgen (NASDAQ:AMGN) and Genentech (NYSE:DNA) to expand their research activities in the region. For biotech companies, the cost savings could be substantial.
Fool contributor Brian Gorman is a freelance writer living in Chicago. He does not own shares of any companies mentioned here.
