Key problems of the foreign medicines contract production organization in developing countries

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Contract manufacturing is gaining momentum in the pharmaceutical industry. Many pharmaceutical companies that do not have enough time and financial resources to build a fullfledged drug development chain transfer some or all phases of development and production to outsourcing. Today, many even large pharmaceutical companies transfer production to developing countries on a contract basis in order to reduce costs. However, despite a number of advantages of outsourcing, it is worth considering the rather significant barriers to the organization of contract manufacturing of medicines in developing countries. The article discusses the main difficulties in organizing contract manufacturing, primarily on examples from other science-intensive and capital-intensive industries. The study shows the similarity of the difficulties that arise when transferring this practice to the pharmaceutical industry. It is also emphasized that in the world of pharmaceuticals there is a growing trend towards the use of generic drugs. One of the undeniable advantages of their production is their economic availability compared to the originals, however, it imposes increased requirements on the contract manufacturer due to the importance of not deviating too far from the original recipe. The research revealed that countries such as China, India and Japan occupy significant shares of the pharmaceutical contract manufacturing market, including generics - primarily due to various combinations of low labor costs, capital and overhead costs (compared to the United States and Europe), tax incentives and, as a result, underestimated production costs. This circumstance is extremely important for the current situation in the pharmaceutical industry in Russia, which must simultaneously make up for the dropped import volumes of finished drugs, and at the same time speed up the stalled import substitution of a number of the most critical products. As a result and purpose of the study, it is possible to identify the identified barriers to speeding up the organization of pharmaceutical contract manufacturing of drugs necessary for the domestic market, to take them into account in the process of developing appropriate government measures.

About the authors

Sergey U. Chernikov

Peoples’ Friendship University of Russia

Author for correspondence.
ORCID iD: 0000-0001-7524-4438

Candidate of Economic Sciences, Associate Professor of Marketing Department, Faculty of Economics

Miklukho-Maklaya St, 6, Moscow, 117198, Russian Federation

Alexander M. Zobov

Peoples’ Friendship University of Russia

ORCID iD: 0000-0002-8792-1990

Candidate of Economic Sciences, Head of the Marketing Department of the Faculty of Economics

Miklukho-Maklaya St, 6, Moscow, 117198, Russian Federation

Ekaterina A. Degtereva

Peoples’ Friendship University of Russia

ORCID iD: 0000-0002-8752-5840

Doctor of Economic Sciences, Associate Professor of Marketing Department, Faculty of Economics

Miklukho-Maklaya St, 6, Moscow, 117198, Russian Federation


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Copyright (c) 2023 Chernikov S.U., Zobov A.M., Degtereva E.A.

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This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.

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