Now that the talk of the town is globalization, it was no surprise that I got to attend a panel discussion on "Creating a Global R&D Organization." And I must say that the panel members were pretty distinguished, as they like to describe them - Christopher de Souza of Novartis, Robert Gould of Merck, Vicki Sato of Vertex Pharmaceuticals, Phil Vickers of Pfizer, and the moderator was Anil Khurana of Access International Partners, a group of management consultants.
I think we are all convinced that the cost of bringing a pharmaceutical product into the market (currently estimated to be somewhere between $850 million to a billion dollars) is simply not sustainable. As the market for drugs and healthcare globalizes (which I am convinced is going to happen no matter how much the drug firms want to delay it), the cost pressures will simply be too much to do all the drug development work in the developed world. (Related article: Offshore outsourcing of Pharma R&D)
Another major driver of globalization is the fact that it is now possible to actually work more intimately with your colleagues scattered all over the world. In fact, it is now possible to speed up the process by having a 24 hour work day by dispersing your R&D resources. All participants in the panel discussion were active in drug development work in offshore locations, not just because of cost pressures but also to take advantage of rising demand for drugs in developing countries. And unlike software and information technology (IT), not all the work is going to China or India. In fact, there is no one country that is emerging as the preferred choice for pharma R&D at this time. Companies are making strategic decisions that work for them rather than shipping work to an offshore location without thinking about it. (Related article: How to reduce drug development cost in the United States?)
The experiences that were shared were mostly positive. In fact, I learned that Taiwan is an excellent choice to do drug development work because of the availability of excellent researchers - many of whom are US citizens but choose to live in Taiwan or commute.
What does it mean for you?
- Globalization is not limited to services or call-centers. There are many other industries that can take advantage of global sourcing.
- Pick your location carefully. Analyze your situation and make sure that it works for you. Just because your competitors are rushing to Taiwan, you don't have to.
- Start small. Drug development is a very delicate process and meticulous documentation is critical. So make sure that you can walk before you run.
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