Globalization in Biotechnology, Ernst & Young report (cont)

As promised here is the post on globalization, one of the three major trends driving the biotechnology industry to reinvent itself, according to Ernst and Young 2008 biotechnology report. Pharma and biotech companies are taking advantage of the ‘flattenning world,’ as described by Colin Powel in his keynote speech, and jumping into the globalization trend in the hopes of finding new opportunities for cutting costs and for increasing profits by selling to underserved markets.

In order to cut costs but not production, many Western biotechnology and pharma companies are laying off domestic workers, but also hiring new workers in emerging markets due to their willingness to work for significantly lower salaries without compromising education and/or productivity levels. The convention’s panel on the EO 2008 global biotechnology report highlights this hiring practice as a temporary solution for cost cutting and for the need to expand globally, predicting that the workers from current emerging markets will eventually raise their salaries as competition for their work increases.

From the perspective of the current emerging markets, the new hiring trend is also only a temporary fix for their desire and need to grow internationally. As new markets continue to emerge competition within the emerging markets will increase. The West will have an ever-growing pool of highly trained employees willing to work for potentially even lower salaries, making a relationship based solely on this factor somewhat unsustainable. In an effort to forge more sustainable relationships, emerging markets are moving beyond offering ‘cheaper labor’ and large bodies of “clinically naïve patient populations” to “acquiring assets from, or allying with, western companies.” Ultimately, this will then challenge and increase competition for western markets. It is worth noting that being tempted by ‘clinically naïve patient populations,’ may not be the most ethical of temptations, particularly since one of the big challenges in pharmaceutical R&D is obtaining a quality informed consent. Balancing the need and desire for innovation and for respecting individuals and communities is a continuous challenge. Even NASA struggles with finding the balance between its drive for scientific advancement and its responsibilities to its employees and communities.

A more sustainable and obvious approach regarding globalization for the biotechnology industry, involves western markets seeing emerging markets not solely as opportunities for ‘cheaper labor’ but as emerging consumer-bases, according to the report. Since these emerging consumer bases cannot yet afford to pay western prices for products, the report suggests that western companies “work collaboratively with innovative companies in emerging markets to develop products designed specifically for local conditions.”

As you can see the convention was filled with information and inspiration for professionals from all niches within the biotechnology field, from the scientists to the executive and the salesmen to a bioethicist. It was wonderful to see Vertex Pharmaceuticals taking the lead in creating awareness of the ethical challenges facing the biotech industry and courageously attempting to meet those challenges, by sponsoring the convention’s bioethics track! Thank you to Navigant Consulting, CRT-Tanaka and Nicole Ruediger at BIO for making my participation possible. The experience was fantastic and I am already looking forward to next year’s convention!

Sponsored by:

Ernst & Young 2008 global biotechnology report “Beyond Borders”.

Ibid pg. 8


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