ABSTRACT
I. INTRODUCTION A. Outsourcing Within the last 10 years the pharmaceutical industry has faced a tremendous amount of pressure on dual fronts. The inventory of the new drug molecule is running low, and the health care marketplace is exerting pressure on the industry to contain the costs of medicine. The industry is struggling to replenish the dwindling drug molecule pipeline. The impact of these pressures on the pharmaceutical industry is evident in the mergers and acquisitions that have taken place in the last 10 years. Governments and managed care organizations in major pharmaceutical markets have imposed price restrictions on prescription drugs. In the United States, the use of managed health care not only has affected the way pharmaceutical companies approach the sales of products and pricing factors, but also has forced many of them to adopt a very different long-term strategy. As of the year 2000, 18 blockbuster drugs were scheduled to lose their patent protection within 5 years. This will affect $37 billion worth of the current $300 billion ethical pharmaceutical market. The increase in competition from generic products has been significant in many national markets. The effect of patent expiry for a particular product has become much more marked, with many products losing more than 65% of sales revenue with the onset of generic competition. As a result, pharmaceutical companies are under escalating pressure to significantly increase the number of new drugs that reach the market and to do so in a shorter period of time. For a projected $100 million product,
a 1-month delay in commercializing or launching can result in a sales loss of more than $8 million.
