Restructuring and Outsourcing

Government pressure on healthcare costs and Fourth hurdle for new drug approvals 

Big pharma companies have to foster two opposite cultures at the same time, namely creative, intellectually intensive research a la Hollywood on one hand and capital-intensive lean production a la Detroit on the other hand. 

Despite a high and rapidly raising R D expenditure, the number of NCE approvals dropped from an all-time high of 51 in 1997 to an all-time low of 15 in 2005 

The three main initiatives taken to curb the cost of healthcare are 

Obligation of physicians to prescribe generic equivalents to proprietary drugs after patent expiration. 

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Quinlan, M. (2000). Downsizing, Outsourcing, Organisational Restructuring and Occupational Health and Safety Evidence, Risk Factors and Remedies. Proceedings Mine safe International Conference, 4-8 September. Perth, Chamber of Minerals and Energy of Western Australia, 393 13. 

Restructuring e, e.g., personnel reductions and outsourcing Shifting R D focus away from new product discoveries toward shorter-term objectives, such as process improvement and customer service. 

To achieve this goal, MED restructured its operations, concentrating on manufacturing, work force, and internal group structures. The first step was to achieve a significant reduction of manufacturing capacity. To do this, the company reduced the scope of the activities that were handled internally. Many low-value-added steps - such as basic parts or cable manufacturing - were outsourced. 

Introducing new service concepts restructuring product ranges and production sites usually raises the issue of outsourcing. Many chemical firms bundle tasks such as power supply, maintenance, and logistics in independent companies with a pronounced service mentality. This allows the business units to concentrate on their core business (see also Chapter 20). 

While Anna s Linens and Nokia were able to restructure their supply chains successfully, others have failed. What differentiates a company in this context is the set of capabilities it possesses or can develop. These capabilities can be broadly categorized as customer management, procurement, production, outsourcing, and fulfillment. Each of these capabilities can be thought of as a grouping of the restructuring options similar to those shown in Table 1.1. A partial list of options for each category is shown in Table 1.2. 

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