“Health is Wealth.”

The words could not ring more true for the life science industry which includes pharmaceuticals, medical research and health product companies.

Companies in the West have been paving the way to wide-scale outsourcing of drug manufacturing and clinical research to Asia, potentially earning billions of dollars in savings.

India is helping reduce both time and costs in drug development, a process that would usually take several years and can cost hundreds of millions of dollars in the West. Pharmaceutical multinationals is acquiring the same virtues that made the subcontinent a giant in software and IT enabled services: low costs and large pool of talent.

In India, five chemists with Ph.D degrees can be hired for the salary of one in the West. India also offers a large population of willing patients to participate in clinical drug tests to confirm efficacy and safety.
India’s huge patient population is vastly diverse, an ideal source for participants in clinical trials.

Through the conduct of many drug experiments in low-cost Asia, the drug companies aim they can run more projects while keeping research and development costs low.

These research  research collaborations have yet to produce a single revolutionary drug, however many Western executives of pharmaceuticals say they’re stunned at how quickly the Indian industry is achieving targets set by these joint ventures.

In the same arena of medical research, China has extraordinary potential. The impact of research outsourcing will be amplified greatly as the Republic, with its even bigger pool of biochemists, expands its role through partnerships with major Western pharmaceuticals.

The Philippines also is making contributions to the health and medical industries in providing value-added but affordable services in medical transcription. The country is building partnerships abroad to address concerns on quality assurance, data protection and privacy, government support in policy making.

The archipelago is also home to a large ever-growing population of certified, medical professionals who usually migrate abroad for work but are now being wooed and opting to remain to ramp up the medical transcription and medical tourism potential of the country.

It will not be long when the Philippines will be also providing qualified but cost effective clinical research, facilities and personnel.

Asia is now becoming fertile ground for life science applications to bear fruits. To cultivate a fine crop of profit and progress, there are some key approaches suggested as to how pharmaceutical and medical companies can ensure they retain control of outsourcing arrangements [Ref. 2]:

I. Carefully consider appropriate forms of agreement. Initially consider how the outsourcing arrangements are likely to operate — if a long-term arrangement for the outsourcing of an entire business function is being planned, then an appropriately detailed agreement that sets out the responsibilities of both client and vendor as well as provisions for flexibility over a number of years could be the best option.

II. Determine your outsourcing services vendor competence with compliance with applicable laws and regulatory requirements.

The life science industry is highly regulated. There are laws that influence and impact the wider corporate structure, strategies and business operations of life science companies.

It is important your selected outsourcing services vendor can comply competently with all applicable laws, both during the request-for-proposals stage and in the eventual agreement. The outsourcing agreement must clearly allocate responsibilities between you and your service vendor, since your compliance personnel could be working on- site with your service vendor’s staff.

III. Ensure data protection and privacy. Access to personal data can come by a number of means, from clinical trials, drug safety reports and sales and marketing. The importance of all companies — and by extension their outsourcing service vendors— adhering to the applicable privacy and data protection laws that govern the use of personal information cannot be emphasized enough. Failure to do so can lead to hefty fines, law suits and criminal penalties in some jurisdictions.

IV. Carefully prepare a flexible governance structure.
In meeting your eventual changing strategic needs and to ensure your outsourcing services vendor can implement service changes to account for changes in applicable laws and regulatory requirements, a flexible governance structure is required to adapt to these changes.

You can begin with an evaluation of the current operating structure of those functions to be outsourced and careful consideration of your service vendor’s requirements to maintain the same consistency of work, levels of productivity and quality or improve on it. The development of an internal road map of the proposed functions to be outsourced can guide to achieve consistency or improvement. The road map should also provide a mechanism to address relationship issues between you and your service vendor.

V. Implement procedures for change management. The change management procedures in the agreement should set out a well-defined set of roles and responsibilities for the governance team to follow in order to adjust the services or the agreement. In typical outsourcing agreements, this will comprise one procedure for minor changes and another for major changes.

However, it is also worth considering whether a separate procedure should be included in the outsourcing agreement to quickly address changes required as a result of new or revised legal or regulatory requirements. It is not uncommon for companies in the industry to be given specific, time-restricted directions from a regulatory body or for changes requiring immediate action to be made to existing legal requirements.

VI. Perform Regular audits. Audit provisions are of crucial importance in any outsourcing agreement, and can be even more so in agreements within the life sciences industry. A formal audit or review process allows you and your governance team to assess and evaluate the outsourcing relationship, and specific factors including whether the service-level agreement objectives are being met, overall customer satisfaction, and compliance with laws, policies and procedures.

The trend for outsourcing in the life science industry is unlikely to slow down as more and more companies are relying on competent but cost-effective services in Asia to acquire savings and accelerate pharmaceutical breakthroughs which could lead to lower prices of new drugs.
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  1. Engardio, Pete and Weintraub, Arlene. “Outsourcing the Drug Industry.” 4 September 2008. Business Week. Accessed 9 September 2008. Link here
  2. Barratt, Richard and Kingston, Natalie. “IT/IP/Life Sciences: The science of outsourcing.” 15 November 2007. Legal Week. Accessed 9 September 2008. Link here
  3. Casiraya, Lawrence. “RP medical transcription execs forge ties with US group.” 25 May 2008. The Philippine Daily Inquirer. Accessed 9 September 2008. Link here
  4. Gallo, Nida. “Medical tourism plans for Cebu pushed.” 6 August 2008. Cebu Daily News. Accessed 9 September 2008. Link here
  5. Jaymalin, Mayen. “Nurses now opting to work in RP call centers, as medical transcriptionists.”  2 September 2008. The Philippine Star. Accessed 9 September 2008. Link here
  6. Rai, Saritha. “Drug Companies Cut Costs With Foreign Clinical Trials.” 24 February 2005. The New York Times. Accessed 9 September 2008.  Link here


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