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  • Just Other Articles - Outsourcing in China: Five Basics for Reducing Risk

    Many small and medium sized companies that engage in OEM manufacturing/outsourcing in China fail to take the steps necessary to protect themselves. When problems aris
    According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product
    e, they can do little or nothing to protect themselves because they have no legal basis for protection. The fact is that outsourcing disputes must be resolved in China
    ; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.

    Examples of combination products may in
    , under the Chinese legal system. The Chinese legal system has improved greatly over the past ten years and taking a few basic legal steps can greatly reduce your risk
    lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.

    The cost of such protection is modest compared to the protection it will provide.

    The following five basic steps will greatly reduce your problems with Chinese manu
    here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe
    facturers, while improving your chances of recovering should any problems arise.

    1. Create and properly register your intellectual property rights in the United Stat
    d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.

    Combination pro
    es. If you do not have a firm basis for your IP rights under U.S. law, you will have nothing to protect in China. Before you go to China, be sure your intellectual pr
    ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc
    perty is protected under U.S. law. Protect your brand identity by creating and registering your trademark, slogan and logo with the U.S. Patent and Trademark Office.
    easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi
    Register your important copyrights with the U.S. Copyright Office. Carefully identify and protect your trade secrets, proprietary information and know how.

    2. Regist
    nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically
    er your trademarks in China. Registration can protect your future access to the Chinese market, prevent the export of counterfeit goods from China, and prevent a comp
    and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ
    titor from registering your mark in China, which would prohibit you from exporting your own product from China.

    3. Use a written agreement to protect your know how an
    ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi
    d trade secrets in China. Small and medium companies usually do not have an extensive portfolio of patents. Their most valuable intangible assets typically are their
    ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.

    Following aspects would a
    know how and trade secrets, which cannot be protected by formal registration. Chinese law, however, permits companies to contractually protect their know how and tra
    dd to the challenges in developing combination products:

    Which markets to tap where the combination products can do fairly well?
    Which combination prod
    e secrets by contract. Such agreements may also address issues such as non-competition and confidentiality. Without such a written agreement, no such protection is ava
    cts are meaningful and rational?
    Which therapeutic categories to select?
    Which Combinations can address unmet needs of the patients?
    Do combin
    ilable.

    4. Product Quality and Payment Terms. The rule here is simple. Do not make final payment to your Chinese manufacturer until you are confident you will be get
    tions increase the patient compliance?
    What would be the developing cost?
    How to tackle the risks encountered during combination product developmen
    ting an on time shipment of the correct items and quantities at the quality standards you require. This usually means you must incur inspection costs in China and pr
    t?

    As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel
    vide for a clear procedure for dealing with these problems as they arise. You must take the lead on this. You cannot depend on the OEM manufacturer to do this for you
    ping new procedures for reviewing their safety, efficacy and quality.

    Professional from academic institutions, pharmaceutical industries, health care indust
    .

    5. Use comprehensive OEM Agreements with each manufacturer. Small and medium sized businesses often enter into OEM manufacturing transactions with a simple purchas
    y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products
    e order. This is a mistake. The purchase order will protect the Chinese manufacturer, not you. Your protection depends on your securing a written OEM manufacturing ag
    .

    As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de
    eement with each Chinese manufacturer with which you deal. The ideal OEM agreement will address all of the issues discussed above while also addressing other basic le
    elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.

    Companies that provide selfless information through particip
    gal issues such as jurisdiction and dispute resolution. This agreement should be in both Chinese and English, since the Chinese language version will control in China


    tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products

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