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Newspaper report on full outsourcing strategy incorrect, says AZ

By Emilie Reymond, 18-Sep-2007

Related topics: Materials & Formulation

AstraZeneca said that fully outsourcing supply and manufacturing activities is not part of its strategy, in contrast to what a UK media report implied yesterday.

The British drug maker said it will use outsourcing "where there is a sound business case" but had no intention to rely on outsourcing for its entire manufacturing activities.

The firm was responding to an article published in The Times yesterday based on an interview with David Smith, AstraZeneca's executive vice president of global operations.

According to the article, AstraZeneca is planning to outsource "all its drug manufacturing activities within ten years".

Smith was quoted in the article saying his company "aimed to become a pure research, development and marketing organisation".

"Manufacturing for AstraZeneca is not a core activity," the newspaper reported Smith saying. "AstraZeneca is about innovation and brand-building… There are lots of people and organisations that can manufacture better than we can."

In fact, the company plans to outsourcing some areas of the manufacturing processes, in particular the production of drug ingredients.

"For example, we are currently exploring the manufacture of active pharmaceutical ingredients (APIs) - the basic chemicals used to formulate conventional medicines," said a statement released by the company today.

This is in line with in line with what Outsourcing-Pharma.com reported back in July , following an interview with an AstraZeneca spokesperson.

At the time, the UK's second-biggest pharma company indeed said it was planning to gradually withdraw from making its own APIs and would use China as the key player in its new outsourcing plans.

The firm will increase its API outsourcing, following "the general trend within the pharma sector," Marc Jones, VP Global External Sourcing, AstraZeneca, told Outsourcing-Pharma.com.

China is set to play a starring role in this strategy, as the company pushes forward its current "in China for China" strategy towards an "in China for global" strategy. As part of these plans AstraZeneca intends to make its sourcing centre in China eventually account for 90 per cent of all its global purchases.

Currently, AstraZeneca produces 85 per cent of its APIs at its own manufacturing sites and outsources the remainder, however, as part of its new strategy, the firm will is now "moving to exit making APIs in our own plants over the next 5 to 10 years," said Jones.

The firm set up a dedicated sourcing centre in Shanghai at the beginning of this year, which will source APIs and chemical intermediates, along with other outsourcing products and services (e.g. packaging materials, contract R&D services, laboratory equipment and chemicals, contract formulation and packing) for the firm's global business.