STRATEGIC FIT FOR OUTSOURCING OF PHARMACEUTICAL MANUFACTURING: A SCENARIO STUDY IN THAILAND

Abstract

Outsourcing is recognized as one of the critical factors for efficient execution of pharmaceutical supply chain management, many pharmaceutical companies engage in international outsourcing of services (IOS) to survive in global highly competitive business. Since the key success factors for both domestic & international alliances are partnership characteristics and strategic fit management, but there is no empirical research on this issue in Thai pharmaceutical partnership offshore outsourcing. Therefore, this survey of Thai and foreign companies, both contract providers (CPs) and contract manufacturers (CMs), seeks to indicate significant relationships among both outsourcing strategic fit type and partnership type, including outsourcing performance outcome. This research is two-fold. First, the partnership types (type I, II, & III), the strategic fit types (low fit, moderate fit, & good fit), and their correlations are analyzed. And second, their outsourcing performance (company revenues and growth rates) are presented. The results showed that most of the Thai pharmaceutical outsourcing manufacturing relationships are classified as the partnership type II, as well as the moderate strategic fit, and strongly support the relationship between these two models. However, it is not necessary that the most integrative type of partnership, Type III, will be always the best, because it depends also on the strategic fit between each pair of partners as well. The company revenue and growth rate could predict the company performance outcomes for each of partnership type and strategic fit type. In Thailand, the government policies and strategic goals are the key success factors in this industry.