The Domestic Advantage

PharmAgra Labs, Inc. is a privately held company that for twenty years has been providing contract R&D in organic and medicinal chemistry.

The main motivation for U.S. companies to work with offshore vendors is the perceived lower project cost due to lower personnel costs. For well-developed chemistries with flexible delivery dates, offshore collaborators may be an appropriate choice. (PharmAgra has used offshore vendors for manufacturing.)

However, there are two issues that are often overlooked when comparing domestic and offshore outsourcing companies:

1. Productivity. We have clients who have simultaneously worked with both PharmAgra Labs and “low-cost” offshore companies and found that we were the better value. Offshore does not necessarily mean lower project cost.

2. The impact of national infrastructure on project timelines. In many foreign countries, laboratory chemicals take 2 to 6 weeks to arrive, and product shipments to the U.S. are similarly delayed. This can dramatically delay projects and negatively impact the client’s internal program timeline. For example, a research project where raw materials have to be reordered several times (not unusual for longer, research based chemistries) can result in the project timeline being delayed 6 to 18 weeks from the initial projection.

The above factors become more significant as the number and complexity of projects increase. In general, we believe that more complex chemistries are better handled domestically.

Other significant domestic advantages include:

  • The U.S. legal system provides intellectual property (IP) protection to U.S. companies.
  • Company proximity enables real-time interaction with your R&D team during normal working hours.
  • There is a smaller chance of miscommunication due to language and cultural barriers.
  • The U.S. infrastructure enables rapid raw-material procurement and product delivery.
  • U.S. companies have a shared sense of urgency with regard to deadlines.
  • U.S. companies have a greater appreciation of and a longer history with quality control and documentation requirements.