International Business Practice.

    International Business Practice.

    In reference to the attached, analyse Four reasons contributing to the increase in the adoption of this business practice in the pharmaceutical industry or any other industry of your choice since 2005.

    Assess the potential risks and benefits inherent in this type of business practice in your chosen industry.
    Contract manufacturing is a process that established a working agreement between two companies. As part of the agreement, one company will custom produce parts or other materials on behalf of their client. In most cases, the manufacturer will also handle the ordering and shipment processes for the client. As a result, the client does not have to maintain manufacturing facilities, purchase raw materials, or hire labour in order to produce the finished goods.

    Contract manufacturing or Outsourcing can also be viewed as a generic term used when companies contract non-critical, but essential, business processes and services to third-party vendors, either domestically or offshore. Over the past several decades the world’s economies have become increasingly interdependent, and many CEOs have come under increasing pressure to raise productivity and profitability while lowering operational costs. Outsourcing has emerged as a popular competitive strategy for large and small companies that believe they must perform their business processes offshore in order to survive in the domestic and international marketplace.

    The contract manufacturing (CMO) industry is forecast to show strong growth, with total revenues rising by 13.0% per year, on average. In 2005, the market was worth $31.5bn but by 2010 will account for just under $50bn.

    The growth of biologics is at the heart of CMO growth. Unlike pharma-derived NCEs, material used in Phase III studies for biopharmaceuticals must generally be produced using the final manufacturing process that will be employed in commercial production, including the site of manufacture. This requirement makes outsourced manufacturing even more attractive for biotech drugs than conventional pharmaceuticals, since drug developers risk major capital investment before an investigational compound has demonstrated safety and efficacy. Accordingly, in 2005 survey 40% of biotech scientists believed GMP manufacturing should be outsourced.

     

    A second major driver of growth in CMO is in bio-similars, with many high selling biologic drugs reaching patent expiry in the next few years. In addition, the approval process for bio similar drugs is making progress with regulations established in the EU and US soon to follow.

    With the regulations for bioequivalent drug approval imminent there is a need for more efficient and cheaper methods for manufacturing, which is also helping drive investment in CMOs.
    Source: PHARMACEUTICAL OUTSOURCING SERIES.

     
    BCM, the contract manufacturing business of Alliance Boots, is one of the largest contract manufacturers in Western Europe operating a range of different technologies.
    BCM manufactures consumer health and beauty products for internal supply and third party brands, and also produces special prescription medicines for individual use. In total, it manufactures more than 400 million units annually.
    In addition to operations in Nottingham, in the UK, BCM has two other manufacturing facilities in Europe: BCM Cosmetique which is based in France and specialises in the manufacture of skincare and cosmetic brands; and BCM Kosmetik in Germany which produces colour cosmetics.
    BCM Specials manufactures sterile and non-sterile bespoke unlicensed medicines for patients in the UK, producing around 70,000 formulations.
    BCM, 31 March 2012.

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