Q.1
The U.S pharmaceutical company benefited from the rise of India’s drug industry due to the advantages that they got as a result of outsourcing manufacturing and packaging activities to India. The cost of labor and the cost of production is always low when a company outsources its operations to a country where the cost of labor is cheaper. India also has an educated workforce that can perform the jobs efficiently. Another benefit that might have accrued to the pharmaceutical industry is fewer regulations and few taxes in India.
Furthermore, the U.S consumer benefitted from this since the cost of production for the drugs went down. Once the cost of production goes down then the prices for commodities also has to come down ("Reasons for Outsourcing in a Manufacturing Industry | Chron.com," n.d.). This implies that the U.S consumers acquired the drugs at a cheaper cost. Furthermore, lower prices for the drugs translate to lower insurance costs and lower out of pocket payments for the U.S consumers. Finally, U.S consumers paid smaller amounts as co-payments because the cost of drugs was down.
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Q.2
Outsourcing manufacturing operations to India resulted in the loss of employment in the US. Some of those who were employed in the pharmaceutical industry especially those in the manufacturing sector lost their jobs. This could have created hard times for such workers who lost their jobs and their families too. Besides, the U. S government also lost regarding revenue collection. The amount that the pharmaceutical companies used to pay to the government as taxes reduced once the companies transferred their manufacturing operations to India.
Reference
Reasons for Outsourcing in a Manufacturing Industry | Chron.com. (n.d.). Retrieved from http://smallbusiness.chron.com/reasons-outsourcing-manufacturing-industry-1292.html
