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In many ways, the global market is a place for big names and large players. After all, they're the ones with the economic puissance to be able to develop the deals, relationships, technology, and logistic pathways that are required to reach further and further afield. Big business breeds bigger business, and over the last few decades we've seen international pharmaceutical companies grow to fill the market demand.
On the other hand, we've recently seen a tendency for pharmaceutical firms to outsource a number of packaging-related tasks to smaller, more agile companies that service a limited geographic region.
Let's consider a specific example, in this case the mass production of vaccines in underdeveloped markets. In 2009, the H1N1 virus surfaced and made it patently clear that large scale, factory-oriented vaccine production was simply too slow to be able to cope with outbreaks. The virus was first detected in April but it wasn't until October that vaccines began shipping. The net result was that the virus spread to 208 countries and resulted in over 12,000 fatalities. The requirements for developing, producing, and distributing vaccines simply wound up being too much for the industry. Hence, a new tactic had to be considered, with large operations farming out influenza vaccine production to companies with the ability to move quickly within a specific area.
These smaller firms can rapidly fill pre-vetted packaging and offer the ability to use smaller filling lines to their advantage. Lead times are shorter and offer greater manufacturing flexibility, something large firms find difficult to manage. In the case of flu vaccines, production has shifted toward local production and the use of single-use packaging as the preferred paradigm. Local vaccine production has become synonymous with increased safety and cost effectiveness.
It comes as no surprise that smaller companies tend to move more quickly than larger ones. It's not always the case, but small, agile firms tend to get things done more rapidly, with faster reaction times to market shifts. This is one of the primary reasons centralized manufacturing doesn't make much sense these days, with regard to outbreaks at least.
The closer a production facility is to an area where a product is required, the fewer steps will be needed in the supply chain. Further, serialization will have to take into account fewer exchanges. Every time a product changes hands, there is a possible point of failure.
Every country has its own way of doing things, its own infrastructure, and its own cultural perspective. Understanding the rules of a certain area, some of which may be unwritten, can ensure that things get done efficiently. Cutting through red tape is critical when lives are on the line.
It's easier to steer a speedboat than an ocean liner. If new information makes it necessary to make changes or recalibrations on a production line, smaller lines can be modified much more quickly than larger ones.
The result is that pharmaceutical firms are moving away from centralized, large-scale manufacturing of products and looking to invest in smaller, regional companies that can service their needs at a moment's notice. By engaging in local investment, multinational pharmaceutical companies also help to stimulate local economic growth which could eventually lead to those areas being less subject to widespread health problems. Local firms are also more apt to comprehend the regional requirements and regulations associated with the development and distribution of pharmaceuticals. It's a value added service that's highly prized by multinationals: having excellent local knowledge goes a long way to ensuring there are no mishaps. When you combine this tendency to produce, fill, and distribute locally with contemporary serialization techniques and excellent, certified clean room conditions, you have a combination of factors that are going to lead to more and more small firms either receiving investment from large partners or outright purchases and takeovers. Watch this space to see new lines drawn in the sand representing a better way to do international pharmaceutical business.