Nearly 40 of clinical trials for new drugs are now

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The Legal Environment Today
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Chapter 3 / Exercise 08
The Legal Environment Today
Cross/Miller
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Nearly 40% of clinical trials for new drugs are now conducted in emerging markets such as China and Russia o Pfizer increasingly prefer emerging markets because of these advantages Lower costs for recruitment of physicians and patients Large potential patient populations Diversity of patient populations Less likelihood of patients taking other medicines that would interact with their study o Testing in emerging markets greatly reduces the costs o In a poor country with a bad medical system, patients consider the trials a way to medical treatment o Offshoring of clinical trials raises questions about ethics and oversight o Emerging markets lack the resources the FDA normally requires o Some drug trials do not receive adequate attention from ethics review committees o Pharmaceutical firms are increasing their outsourcing of drug trials Global Trend: China: India is the world’s leading offshoring destination o India is popular for software development and back office services o China’s history as a supplier to the world is longer o China is the center of manufacturing for many Western firms o China aims to surpass India in services outsourcing and the Chinese govt is making huge investments to upgrade worker training and the quality of its facilities o China’s three major advantages: Home to a large amount of skilled, low cost labor, graduates 350,000 engineers every year China has a huge domestic market with rapid and sustainable economic growth The attitude of the government, long an obstacle to foreign firms, is increasingly pro- business o Pitfalls are: Weak in intellectual property protection Language and culture that firms find challenging Lacks quality infrastructure
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The Legal Environment Today
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Chapter 3 / Exercise 08
The Legal Environment Today
Cross/Miller
Expert Verified
Terms and Lists: Outsourcing: The procurement of selected value-adding activities, including production of intermediate goods or finished products, from independent suppliers o Outsource those products that are peripheral to the firm’s main offerings o Outsource because firms are generally not superior at performing all primary and support activities o Outsource when offerings can be obtained at a lower cost, or can be provided by suppliers specialized in providing the specific offerings Business Process Outsourcing: The outsourcing of business functions to independent suppliers, such as accounting, payroll, human resource functions, IT services, customer service, and technical support o BPO can be divided into two categories: Back office activities: internal, upstream business functions such as payroll and billing Front office activities: downstream, customer related services such as marketing or technical support Captive Sourcing: Sourcing from the firm’s own production facilities located abroad o Production is carried out at a foreign facility that the focal firm owns through direct investment Exhibit 2 Value-adding activity is internalized Vallue-adding activity is outsourced Value-adding activity kept in home country A Keep production in house, in home country B Outsource production to third party provider at home

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