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AstraZeneca Hands Production to Far East in Effort to Cut Costs (Asia)

This article was originally published in PharmAsia News

Executive Summary

AstraZeneca has begun to outsource production of some of its top selling drugs to low-cost manufacturers in the Far East. As part of a restructuring drive designed to cut $900 million of the drugs group's costs by 2010, the pharmaceutical firm is to begin the purchase of Lactam, a key chemical ingredient used to make Seroquel, its blockbuster schizophrenia drug, from contract manufacturers in China. Seroquel, which had sales of $3.4 billion in 2006, is AstraZeneca's second top-selling product after Nexium, its $5.2 billion-selling stomach acid treatment. The move is part of a broader strategy to outsource key manufacturing activities and focus on drug development and marketing. The shift toward outsourced manufacturing could prove controversial amid recent questions about quality control in China. A spokeswoman said "there are still many steps involved, including internal assurance that standards are met, followed by submissions to appropriate regulatory agencies for approval." AstraZeneca has opened a new Chinese sourcing center near Shanghai to help it to identify low-cost producers and to manage the transition from in-house to outsourced production. It operates another sourcing office in Bangalore, India. Contract manufacturers in both countries are expected to play a growing role in the years ahead. Other pharmaceutical firms, such as Pfizer, Merck, and Novartis, are mulling over similar actions as they try and improve efficiency. (Click here for more

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