Whelan Pharmacy
Executive Summary
In today’s business world, production cost was an increasing concern for companies working to stay competitive in the global marketplace. The top management must search for a global solution to drive down costs and reduce difficult activities associate with inventory management and production management. Global sourcing aimed to exploit global efficiencies in the delivery of services and goods across geopolitical boundaries, including low cost skilled labor, low cost raw materials, tax benefits, and price breaks. Whelan Pharmaceutical was the best example to illustrate how the company chose the best manufacturing site for global sourcing from different perspectives.
Whelan was an American multinational pharmaceutical corporation, headquartered in Maryland. The main goal of the case was to examine and analyze potential manufacturing sites for Whelan’s new product Varex®, which were Maryland, Puerto Rico, Ireland, and continental European. Varex® was a cardiovascular drug and was estimated to be the blockbuster when it hit the market, generating a satisfactory profit and increasing company’s global expansion. While the benefits of sourcing have proven to produce some initial cost saving, there were numerous pitfalls and challenges that could arise.
It had been approved that Whelan located all manufacturing stages at one site where products could be directly distributed domestically and internationally because this plan matched the corporate long-term strategies and provided economies of scale. The process of global site selection for sourcing was complicated. Tax used to be the key factor in sourcing decision-making process, however, with the development of globalization, several other factors had been increasing important, including marketing strategies, manufacturing strategies, government regulation, customs and duties. It was crucial for Whelan to analyze and calculate the trade-off among these factors in global site selection process.
In today’s business world, production cost was an increasing concern for companies working to stay competitive in the global marketplace. The top management must search for a global solution to drive down costs and reduce difficult activities associate with inventory management and production management. Global sourcing aimed to exploit global efficiencies in the delivery of services and goods across geopolitical boundaries, including low cost skilled labor, low cost raw materials, tax benefits, and price breaks. Whelan Pharmaceutical was the best example to illustrate how the company chose the best manufacturing site for global sourcing from different perspectives.
Whelan was an American multinational pharmaceutical corporation, headquartered in Maryland. The main goal of the case was to examine and analyze potential manufacturing sites for Whelan’s new product Varex®, which were Maryland, Puerto Rico, Ireland, and continental European. Varex® was a cardiovascular drug and was estimated to be the blockbuster when it hit the market, generating a satisfactory profit and increasing company’s global expansion. While the benefits of sourcing have proven to produce some initial cost saving, there were numerous pitfalls and challenges that could arise.
It had been approved that Whelan located all manufacturing stages at one site where products could be directly distributed domestically and internationally because this plan matched the corporate long-term strategies and provided economies of scale. The process of global site selection for sourcing was complicated. Tax used to be the key factor in sourcing decision-making process, however, with the development of globalization, several other factors had been increasing important, including marketing strategies, manufacturing strategies, government regulation, customs and duties. It was crucial for Whelan to analyze and calculate the trade-off among these factors in global site selection process.