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

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