(ILLUSTRATION BY M.MCEVOY. IMAGES: JOHN LAMB, ULTRA.F/GETTY IMAGES)

Key events were the importation of contaminated heparin supplied from a Chinese facility (see sidebar, "Post-Heparin: Baxter Responds") and incidents of melamine in food and pet food products and diethylene glycol in toothpaste from China (1-4). In September 2008, the US Food and Drug Administration issued warning letters and an import alert for products made at two facilities of Ranbaxy Laboratories (Gurgaon, Haryana), one of India's largest pharmaceut ical companies, for deviations in current good manufacturing practices (5). And recent terrorist attacks in Mumbai, India's capital, raised security concerns.

Assessing Asia's role

Figure 1. PricewaterhouseCoopers assessed the risk of outsourcing to the above 13 Asian territories based on three core factors. The factors were weighted as follows: Cost (33% total), which includes compensation and wages (15%), infrastructure (8%), tax and regulatory expenses (10%); General risks (37% total), including geopolitical (6%), human capital (10%), economic (7%), legal (8%), and infrastructure (6%); and Market opportunity (30% total), including healthcare needs of current and future population (15%), market size (7%), and market growth rate (8%). (FIGURE IS COURTESY OF PRICEWATERHOUSE COOPERS, 2008.)

Other Asian countries are gaining a foothold as viable pharmaceutical outsourcing contenders. Korea and Taiwan are just a few steps behind China and India, says Keech, and will soon be followed by Indonesia and Malaysia. Much farther down on the list of ideal outsourcing candidates is Thailand, which "looks interesting from a labor perspective and because of their worldclass set of intellectual property laws," says Keech, but whose "interpretation and enforcement are far from ideal."