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A Pharmaceutical Industry Perspective on Investing in U.S. Manufacturing

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In conjunction with our unveiling of our Supply Chain Matters 2013 prediction #3 of a continued renaissance in U. S. based manufacturing, we call reader attention to a very articulate and well written commentary published on the Xconomy web portal; Build it in the Back Yard, Why We need American Manufacturing.

The commentary is jointly authored by five individuals of Boston area based, Vertex Pharmaceuticals. They jointly provide powerful insightful arguments that while offshore manufacturing options may offer a lower price, that considerations for rigorous regulatory compliance, concerns for intellectual property protection, and the critical aspects of co-innovation among product development and manufacturing are often offsetting factors.  In the pharmaceutical and perhaps other innovation focused industries, manufacturing presence and capability is often a high-precision, highly skilled process.  The authors provide a powerful argument for concentrating research and development in the shadow of manufacturing, and for viewing a diversified supply chain as a strategic advantage. The provide an example of how Vertex was compelled to move from a traditional industry “batch processing” to a more innovative “continuous processing” production process by co-locating its manufacturing facility close to corporate research in the Boston area.

At the same time, these authors recognize realities that today, perhaps the bulk of high volume pharmaceutical manufacturing is sourced in lower cost regions. However, an argument for locating pilot manufacturing close to U.S. based product innovation is articulated.

We found the most important takeaway from this commentary was a reminder as to the real economic benefits that accrue from a vibrant manufacturing, and might we add, supply chain capability.  To quote: “Real economic and wealth creation, accrue during the scale-up, commercialization, and manufacture of products that emerge from research and development.” That the authors argue, is the real benefit that legislators and private industry need to fully understand.

 

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  1. Bruce E. Spurgeon says:

    This fits in very well with my recent experience in the pharma supply chain. I was tasked with building the bio-medical supply chain for Osspray Ltd. The direction from the UK based board of directors was to build a robust supply chain that was 100% in the USA and/or western Europe. They wanted low risk much more than lowest cost. This was especially true as the company was a start up that could easily be “killed” by 1 supply chain glitch. I think this will continue to be a trend in this and other industries.