Vertical integration and strategic sourcing in the biopharmaceutical industry

Biopharmaceutical companies are focusing on operational efficiency more than ever before due to cost pressures, generic competition, complex pricing, regulations, and globalization. Due to the low probabilities of success of drug development and achieving market penetration, it is critical for a company to optimize the sizing of a manufacturing facility to achieve maximum capacity utilization while avoiding or minimizing non-productive, idle capacity. In order to achieve high manufacturing efficiency and minimize capital risks, many firms elect to outsource various phases of the drug development value chain. This thesis investigates the major drivers for vertical integration and outsourcing in the biopharmaceutical industry. This work examines outsourcing and vertical integration decisions including their financial, organizational, and strategic effects on the organization. It presents a methodology and framework for strategic sourcing decisions and includes a set of quantitative tools for assessing outsourcing options and guidelines for selecting, implementing, and managing relationships with contract manufacturers. These frameworks are applied to case studies conducted at the Genzyme Corporation. The strategic sourcing decisions tools developed in this work are highly customizable and can be adopted by other companies in the biopharmaceutical industry.

Department dc:contributor.department

Leaders for Manufacturing Program at MIT

Grantor dc:publisher

Massachusetts Institute of Technology

Year dc:date.issued

2005

Author dc:creator

• Haupt, Lynne Felice

Advisor dc:contributor.advisor

• Charles L. Cooney and Donald B. Rosenfield.

• Mechanical Engineering.
• Sloan School of Management.
• Leaders for Manufacturing Program.

Statement dc:rights

• M.I.T. theses are protected by copyright. They may be viewed from this source for any purpose, but reproduction or distribution in any format is prohibited without written permission. See provided URL for inquiries about permission.

Licence dc:rights.uri

• http://dspace.mit.edu/handle/1721.1/7582

Language dc:language.iso

eng

Handle dc:identifier.uri

http://hdl.handle.net/1721.1/34827

OAI identifier oai:identifier

oai:dspace.mit.edu:1721.1/34827