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AZ to outsource drug manufacturing

AstraZeneca will outsource its drug manufacturing operations over the next 10 years, according to a report in The Times

According to a 17 September report in the UK newspaper The Times, the UK's second-largest pharmaceutical company AstraZeneca (AZ) has said it will outsource its drug manufacturing operations over the next 10 years.

In an interview with The Times, AZ's executive vice-president of operations, David Smith, said: "Manufacturing for AstraZeneca is not a core activity. AstraZeneca is about innovation and brand-building ... There are lots of people and organisations that can manufacture better than we can."

Smith is heading up a restructuring move which will cut costs and augment profits in anticipation of a number of high-profile patent expiries of a number of AZ's top-selling products.

He added that the company will reposition itself as a pure research, development and marketing concern.

The company's priority, according to Smith is to outsource all manufacturing of active pharmaceutical ingredients (API), which are the basic chemicals used in the formulation of ethical medicines, says the times.

In July 2007, AZ and IBM signed a USD 1.4bn, seven-year global strategic IT outsourcing agreement.

The deal renewed and expanded on the scope of an existing contract and covered the provision of IT infrastructure services to 60 countries. It included services to additional functions within AZ.

IBM will provide a single global technical infrastructure, managing IT services for AZ across its global organisation. The deal includes server and storage hosting, service desks, PC management, network and communications services, including e-mail, and computer operations support.

AZ will retain control of its overall IT strategy and the development and support of its application systems.

17th September 2007

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