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Decision Framework for Localization of Pharmaceutical Manufacture with Applications in Malaysia and Indonesia
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A pharmaceutical company, Global Pharma (fictitious name), has strong presence in the western
markets of Europe and the US, where the major manufacturing base is also located. With the shift in
growth from these developed markets to the emerging markets of Asia, Latin America, Eastern
Europe and Middle East Africa, there is a resulting increase in transportation of goods and hence cost
and carbon footprint. At the same time, the company has opportunities to reduce these costs because
localizing manufacturing in emerging markets will reduce the transportation costs and the carbon
footprint, where localization means establishing one or more of a company’s functions such as
manufacturing in a country. However, it requires significant investment and long-term planning for a
pharmaceutical company to determine the viability to localize its manufacture in emerging markets.
These functions include and not limited to, manufacturing, research and development, warehousing,
and procurement. In this study, we develop a framework to assist a pharmaceutical company in the
localization decision-making, where a comprehensive list of key external factors are obtained and
analyzed for their impact on localization in a particular market. Those factors are also grouped into
pertinent categories that are arranged into logical levels according to their importance and the degree
of the company’s control over them. We apply the framework for the localization decisions in
Malaysia and Indonesia and the application of this framework infers that the atmosphere in the two
countries is positive for localization.
NONE
electronic file
MALAYSIA INSTITUTE FOR SUPPLY CHAIN INNOVATION
2016
Malaysia
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