I was just getting ready for our 6th Annual Contracting & Outsourcing Conference & Exhibition (see pages 110-111 of the print edition for our wrapup), when I opened my RSS feed and noticed a post from Pharmalot with the title, “AstraZeneca Doesn’t Want To Make Drugs.”

The post linked to a London Times story in which David Smith, AZ’s executive vice president of operations explained, “Manufacturing for AstraZeneca is not a core activity.” Mr. Smith went on to outline a plan to outsource all manufacturing operations — beginning with APIs — within the next 10 years, so that AZ could focus on what it does best: R&D and marketing.

CMOs and other providers marveled over the AZ news as it spread around our Exhibitor Reception that evening. Was it the mark of a new era in pharma outsourcing?

By the next morning, we learned the answer was, “No.” AZ issued a statement saying that Mr. Smith’s statements were ‘taken out of context’:

“The purpose of the interview was to speak with David about how the pharmaceutical industry is looking to other industries for Supply Chain practices and philosophies. . . . Fully outsourcing supply and manufacturing activities, as implied in the article, is not part of the AstraZeneca strategy.”

Color me disappointed. Since we launched this magazine in 1999 — this issue is our eight-year anniversary, so stop by and congratulate us, if you’re at AAPS! — I’ve been hoping that we’ll see at least one major drug company “virtualize” itself and radically divorce manufacturing operations from those core areas that Mr. Smith mentioned: R&D and marketing. (Of course, there are plenty of people who would argue that neither of those are core competencies for major pharma companies either. . .)

The common element between me and Mr. Smith appears to be that neither of us had a background in pharma before our current roles. To outsiders, business operations in the drug industry have plenty of Byzantine aspects. I’d wager that every industry has them: basic, legacy elements that would strike a layman as silly, but are integral to operations.

In this case, closing or selling off a global manufacturing infrastructure would require payoffs beyond all reckoning, especially for sites located in western Europe. Meanwhile, the PR hit of announcing that a drug supply is being outsourced to certain regions — you know who you are — is too great, especially since much of the American public equates the word “outsource” with “sent to the far east,” as opposed to “not done in-house.”

Fortunately, the AZ news came and went by the time our conference began. Among the speakers, we had illuminating presentations from Pfizer and Merck on how their outsourcing approaches are evolving, as well as a discussion of integrating a CMO  supply chain, courtesy of Ocera Therapeutics, a virtual pharma. I thought all three made interesting points, from an operational level on up, about the changing importance of outsourcing to their health.

I suppose eight years qualifies me as some sort of veteran when it comes to observing the industry and its trends — after all, when we started out, Schering-Plough steadfastly contended that Claritin was too dangerous to go OTC — to know that we’re not going to see a major pharma company “devolve” into virtual status.

That said, we are seeing some interesting changes at major pharma companies. For example, under its new leadership, Bristol-Myers Squibb has been treating itself more like a well-financed biopharma than a top-12 pharma, “partnering out” some programs while acquiring others that suit its biologics initiative. Roche, meanwhile, looks to be taking the drugs/diagnostics matrix more seriously than anyone in the business.

May we continue to live in interesting times.

Gil Roth has been the editor of Contract Pharma since its inception in 1999.