The infrastructure equation

There is a strong case for pharmaceutical companies outsourcing their infrastructure processes and concentrating on their core competency areas.

There are few industries that are as competitive as the pharmaceutical industry. It is not just about cutting edge research and development, but about trying to stay profitable in a sector where cost competitiveness is very high. With mounting pressures on margins, increasing competition, pharma companies are looking at cutting costs wherever they can. Outsourcing has come as a blessing for the sector. Also, a number of non-core processes, such as R&D, product development and clinical studies can be given to companies that excel in them. To control costs several pharma companies outsource the manufacturing and packaging to contract manufacturing organisations (CMOs). They also outsource functions such as supply and management of utilities, distribution, health management, HR and IT. Like any other partnership, this too needs to be built on absolute trust. Infrastructure processes may not be the core area of a pharma company, but the design and construction of manufacturing plants and clean rooms have a direct impact on the company’s bottomline. Any safety and sustainability glitch not only means putting the lives of the workers at risk, but also that quality of the medicines gets affected.

There are several aspects to infrastructure processes – construction of manufacturing and packaging plants and clean rooms, quality control in laboratories and production supply chain management, managing waste and warehousing, as well as IT and communications. Apart from this, the design of these areas should be such that it leaves scope for scalability, caters to the project flow of the industry and responds to the current market requirements. Highest quality standards are required for these functions, and thus a pharma company should look for an outsourcing partner that not only has experience but also the proactive outlook of today’s environment.
The construction of the plant itself is a humongous task, involving complex engineering and procurement processes. However, it isn’t just about the engineering process when it comes to infrastructure. It also falls on the outsourcing partner to choose a site that is not only well-connected, but is in a state that is industry-friendly. Additionally, it should be placed in a location that is safe from wind and water, has a healthy groundwater table, and can manage waste efficiently without impacting the environment.

There is also a question of complying with regulatory standards and pharma companies should choose partners who don’t cut costs when it comes to the integrity of the project. Good Manufacturing Practices (GMP) should be non-negotiable for these firms. According to the World Health Organisation, GMPs is “a system for ensuring that products are consistently produced and controlled according to quality standards. It is designed to minimize the risks involved in any pharmaceutical production that cannot be eliminated through testing the final product.” GMPs lay down the basic requirements that a pharma company needs to meet to ensure that its products are not just of high quality but don’t pose any risk to the consumer. These GMPs are overseen by regulatory bodies in most countries. GMPs are a reference point for pharma companies to choose a partner when it comes to outsourcing their infrastructure process.

As mentioned earlier, the binding factor that brings together a pharma company and an outsourcing partner is trust. Apart from that, it is important that the firm which is taking care of the infrastructure process looks at the alliance as a stakeholder in the business and its success. Many a times, the outsourcing companies behave like a vendor and act hard to get once they get the contract. It is not only detrimental to the growth of the pharma company, the outsourcing company too miss out on a chance to become a part of a success story. Thus, while pharma companies conduct their own R&D, it is important for outsourcing companies to conduct R&D in their own competency area, namely infrastructure processes. This will not only help them improve their own productivity, but also give them a chance to stand out in the crowd. Often, innovative measures employed by these companies lead to better costing, the benefits of which are passed on to a happy customer – the pharma company in this case.

To conclude, while pharma companies outsource research processes, clinical studies, and product development to contract research organisations (CROs), and engage with CMOs to manufacture & package drugs, it is now time for them to look at the options of outsourcing infrastructure processes, too. Not only will this result in cost saving, but will also help the pharma company concentrate more on its core competency and leave the non-core areas to be taken care of by the professionals in the field.

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