Chemical industry outsourcing

One can also say that the merchant value corresponds to the actual aggregated sales revenues of the fine-chemical industry, whereas the total value is the theoretically achievable revenue, if all fine-chemical requirements were outsourced. 

Custom manufacturing (CM) signifies the Konigsdisziplin, that is, the most prominent activity of the fine-chemical industry. Because of their long experience in safeguarding the intellectual property interests of its customers, it is the stronghold of the Western companies. CM is the antonym of outsourcing. 

The first two entries listed in the table, namely, Obsolescence of the big pharma business model and Slump in R D productivity, are of particular relevance to the fine-chemical industry and are dealt with in more detail in the following two sections. They impact the outsourcing policy and consequently the demand for new PFCs. 

In the last decades, the chemical industry and its customers have had to cope with a massive expansion of their reach and scale as globalization took effect, coupled with a need to comply with ever more stringent and varied QSHE regulations. To improve operational efficiency in this vast and complex environment, these companies have turned more and more to outsourcing so that they can concentrate on their core competences. The changing market environment offers major opportunities to the distribution companies ... 

Globalization has been a key trend in the chemical industry for many years, with regard not only to business with suppliers and customers on all continents, but also to operations. The shift of production to the Far East and business process outsourcing to India or Eastern Europe are only the latest examples of this trend. 

Commodity services and non-core technologies. These are suitable for outsourcing. And there is a whole consulting industry to provide most, if not all, of those required by the chemical industry. 

In the area of engineering in the chemical industry there is a general trend towards outsourcing, as this is no longer regarded as a key function and can be purchased on the open market. However, this only applies where the core competencies of a company are not affected. Particularly with regard to so-called front-end engineering,... 

U.S. domestic chemical industrial R D spending (excluding pharmaceuticals) began declining in 1994, but has recovered in 2005 to the level it had in 2000. It is true that some R D has been outsourced by companies, but, more often than not, this has been kept within the U.S. at contract research firms and imiversities. More recently, however, some large firms appear to be expanding their R D activities in offshore locations rather than in the U.S. For example. 

In Europe, German chemical industry R D has also been declining, since 1987, but funding remains greater than in the U.S. as a percent of sales, 4.0% vs. 2.5% (these data include pharmaceutical companies). Unlike U.S. firms, German corporations that outsource R D appear to favor contract research companies more often than universities. (32, 33) Data on overseas vs. in-country spending are unavailable. 

Chemical industry R D funding in the United Kingdom rose to 2.5% of sales in 1990 and has since tracked U.S. levels through 2003. Forty percent of UK chemical industry R D is performed overseas, while overseas sources fund over 25% of R D performed within the UK. (34) Thus, the UK has more net outsourcing of R D to be concerned about than does the U.S. 

This guideline describes methods to help the chemical processing industry apply the CCPS chemical process safety concepts to outsourced manufacturing operations, specifically the tolling vendor-client relationship. In addition to the focus on process safety, information and examples provided in this text foster good practices relative to community and worker health, and environmental responsibility. 

This sale and back-lease model is applied by many other pharmaceutical companies. It enables the company to dispose of assets without being forced to lay off employees. The net effect for the industry as a whole is that statistically, the share of outsourcing is increasing. However, the problem of underutilized capacity persists. For a hne-chemical company, the acquisition of an API plant from a pharma company is problematic. Once the supply contract, offered by the pharma company as an incentive for the acquisition, expires, the problem arises as to what the capacity should be used for. This is all the more the case as the plants usually are designed to manufacture just one product and therefore are not truly multipurpose. Last but not least, the plants have been run as cost centers and the implementation of a lean production... 

---