Manufacturing overseas is a popular trend in business today because it saves companies tons of money. Businesses choose to outsource in order to increase savings and cut costs. Outsourcing is an extremely appealing work method especially for those businesses that are on a tight budget. Not only will they be saving money through having their manufacturing facility in a foreign location but they also do not have to pay their outsourced employees as high of a salary as they would if they were domestic employees. The point is, anywhere businesses see opportunity to save money and increase profits they will, which is why even players within the pharmaceutical and biotechnical industry take part in manufacturing overseas.
One example of a pharmaceutical company that manufactures overseas is Pfizer. Pfizer is a multinational pharmaceutical company that is big on manufacturing overseas. Since Pfizer purchased the pharmaceutical company Wyeth in 2009, its number of manufacturing facilities multiplied. According to Laura Bush, the Editor in Chief of BioPharm International, Pfizer has 79 manufacturing plants around the world, 43 of the plants from Pfizer and 36 from Wyeth. But among the multiple plants Pfizer has, they also have relationships with 250 contract manufacturers. The number of plants is too high especially when one considers that these plants might come in close location to one another or overlaps each other. Either way, Pfizer is looking to shut down 8 of these plants by 2015. The downside of shutting down these plants though is that about 6,000 jobs will be lost. The locations in which these plants are looking to be shut down in are Ireland, Puerto Rico, and the US.
Another example of a biotechnical company that manufactures overseas is Amgen. In fact in recent news, Amgen and Pfizer announced their agreement in Pfizer sale of the manufacturing facility in Dun Laoghaire, Ireland to Amgen (the location mentioned in the previous paragraph that Pfizer is shutting down). Amgen has 3 overseas manufacturing facilities: Juncos, Puerto Rico, Breda, The Netherlands, and Dun Laoghaire, Ireland. According to their website their locations all of specific functions and facilities. Their location in Juncos, Puerto Rico is a biotechnology campus for mass manufacturing. It contains labs, warehouses, process development facilities, administrative and training buildings and more. Their location in Breda, The Netherlands is commercial operations site that deals with assembling, packaging, labels, and delivering to countries such as Europe, Africa, and the Middle East. Their location in Dun Laoghaire, Ireland has a warehouse and a bioprocessing suite among many other facilities.
Another example of a pharmaceutical company that manufactures outside of the US is Johnson & Johnson. Johnson & Johnson calls their form of outsourcing “near-shore outsourcing” because most of their manufacturing facilities are located in Latin America. Julia Santos, Worldwide Strategic Outsourcing Director for Johnson & Johnson, claims that because of J & J’s plants within Latin America, they have created a better economy for the citizens there. Latin America seems to be the future for outsourcing, and according to Bush, “the Latin American region, primarily Brazil, Colombia, Chile, and Peru will see tremendous growth in nearshore outsourcing. As multinationals face difficulties in China, companies will be looking to Latin America (i.e., Brazil and Colombia) as an alternative.” It will be interesting to see if this in fact happens because this will only help to grow the Latin America economy. If more companies decide to outsource in Latin America then their GDP will increase causing them to rise out of being an underdeveloped country.
Outsourcing is a popular trend in the pharmaceutical industry. It is something that saves these companies money and helps the foreign countries in which their manufacturing facilities are to grow. The most popular countries that companies normally outsource in are China and India. The fact that such a successful company such as Johnson & Johnson does near-shore outsourcing in Latin America raises curiosity for the future of Latin America and how other companies will respond to Johnson & Johnson’s success and if they will follow suit and set up facilities in Latin America as well. Anyhow, outsourcing is a business strategy that will remain popular due to the fact that it saves companies tons of money a year.
~ Zenas Wilson
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Johnson and Johnson's strategy here is really interesting to me. Their whole approach to business seems to mainly focus on being the best possible company for their employees and their patients, yet they still do some outsourcing in order to cut costs. I suppose that this can be looked at in two distinct ways. Because they are outsourcing to Latin America, they are providing jobs for some of our closest global economic allies, and yet, they are still producing medications outside of the US in order to reduce their bottom line. Do you think this is a good example of good corporate citizenship or simply an excuse to outsource while following their principles?
ReplyDeleteIt is difficult to tell Spencer because as any company would, Johnson & Johnson is looking out for their own interest by choosing to outsource and cut their costs in order to increase their profits, but at the same time they are helping to grow an underdeveloped country by providing them with a greater income and increasing their GDP. So yes, one could say this is good corporate citizenship but then at the same time, one could argue otherwise because they are taking away jobs from American citizens.
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