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The pharmaceutical industry, including drug companies and contract manufacturers, is under pressure to bring down costs, particularly in manufacturing, due to an increased focus on emerging markets, "genericization" of pharmaceutical products, and indirect consequences of the global economic downturn, industry experts say. Companies are introducing "green" technologies and processes, and expanding the outsourcing of production, as part of the cost-cutting effort. "Pharmaceutical companies around the world are pressured to lower costs, not only due to the current global economic slowdown, but also due to continuing pricing pressure, the pro-generic agenda, and the drying research and development pipeline," says Supratim Majurndar, industry analyst/healthcare practice, South Asia and Middle East at Frost & Sullivan (Kolkata, India).
The pharmaceutical industry has not been directly hit by the global recession, but "governments across the globe are under pressure to reduce healthcare costs and are therefore promoting generics," says Enrico Polastro, v.p. and senior industry specialist at Arthur D. Little Benelux (Brussels). "Pharmaceutical companies are discovering emerging markets and there is much more emphasis now on these markets, where people cannot afford to pay high prices for drugs."
Recent examples of the growing focus on emerging markets include Pfizer's decision last May to enter into licensing agreements with two pharma companies in India, which also significantly expanded Pfizer's portfolio of generic medicines. GlaxoSmithKline formed an alliance with Dr. Reddy's Laboratories (Hyderabad, India) last June to develop, manufacture, and sell selected products in several emerging markets.
Developed markets face stagnant or negative growth, but major emerging markets such as Russia, India, China, and Brazil, as well as other Latin American countries, are seeing strong growth, Frost & Sullivan says. "Based on the strong emphasis by global pharma companies on emerging markets, it is evident that the future of the industry now lies in these markets," Majumdar says.
Saitigo, the custom synthesis and manufacturing services subsidiary of Lanxess, says there …