The giant US-based pharmaceutical company Pfizer has announced that they are considering a major shift of their manufacturing processes to India and China. At present, the plans are just on the drawing board, but as the exploration of these ideas has been made public to investors it is clear that it is more a case of when and where, rather than if.

The proposals suggest that at least 30 per cent of their drugs could be contract produced in offshore locations, up from about 15 per cent that is presently outsourced. Pfizer is seeking to rein in costs at present as they are also reducing the size of its workforce as well as announcing this intention to increase the scale of their outsourced manufacturing operations.

The only real question is why they don’t just go for an almost entirely offshore manufacturing operation? The real value in a company like Pfizer lies in their ability to research and develop new drugs that improve medical treatment or enhance quality of life in some way. If they can’t go on achieving success by researching and creating new drugs then they will cease to exist.

The process of manufacturing the pills is pretty mundane in comparison to the R&D operation, so if the company is in need of some financial prudence at present then why not fire all the big guns at research and get the manufacturing up to 95 per cent outsourced?