Drug manufacturing comprises disparate businesses.
A large proportion of the ex-US drug manufacturing for drugs sold in the US relates to API (active pharmaceutical ingredients), which are synthesized organic compounds used as starter material in the production of small-molecule drugs. API production is a commodity business that is best suited to countries like China and India where wages are comparatively low.
Manufacturing of biologics, on the other had, is highly specialized—the polar opposite of a commodity business. A few foreign countries, such as South Korea and Singapore, have focused on this business; however, for biologics sold in the US, most of the manufacturing is done in the US.
For companies who make biologics, owning and managing the manufacturing assets is a strategic advantage that’s beneficial in terms of quality control and protection of trade secrets. This applies even to small pre-commercial companies such as RVNC and ADXS, two companies I follow who own their manufacturing assets.
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