AstraZeneca turned heads last week when its EVP of operations, David Smith, told the Times of London that the drugmaker is going to … stop making drugs. According to Smith, the firm intends to outsource all its manufacturing activities within the next decade, beginning with active pharmaceutical ingredients (the basic chemical in a pill that delivers the therapeutic effect) and proceeding to other elements of manufacturing. The usual suspects — India and China — would get most of this business, and AstraZeneca, meanwhile, would focus on creating new drugs and convincing you that you need them.
The announcement was welcome news to those who feel that the drug industry — due to historically sky-high profits and stringent regulation — has been behind the times when it comes to outsourcing. But shrinking profits and looming patent expirations, without new drugs to make up the difference, are forcing Big Pharma to rethink its hold on manufacturing.
A sharpened focus on R&D certainly wouldn’t hurt AstraZeneca, which has had a string of development failures, particularly in its once-strong oncology program. It may have some good news on its hands, though, with ZD4054, a prostate cancer treatment that is doing well in clinical trials. And it would like to generate more of those successes, by concentrating on “innovation and brand-building” as Smith says.
The thing is, almost as soon as Smith’s words were on paper, AstraZeneca began backtracking, releasing statements to select news organizations that indicate it was all a big misunderstanding: “Fully outsourcing supply and manufacturing activities, as implied in the article, is not part of the AstraZeneca strategy.” But the company is “currently exploring” the outsourcing of active pharmaceutical ingredients.
Uh huh. Ed Silverman at Pharmalot cries foul on this half-renunciation and wonders if AstraZeneca is just putting out fires that may have erupted over the phrase “outsourcing to China.” (Maybe you’ve noticed that the country’s manufacturers have had some quality control issues lately?) Silverman makes a pretty good case that AstraZeneca’s shift to outsourcing is actually old news and that Smith’s statements were, in essence, correct. I guess we’ll all just have to hope we don’t end up with lead paint in our aspirin.
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