Problems with the Pharmaceutical Industry

Historically, pharmaceutical companies have enjoyed a position of profitable stability secured by patents. In recent years the pharmaceutical space has undergone a paradigm shift, where Pharma companies have been forced to deal with a number of changes.

  • Expiring drug blockbuster patents
  • Rising R&D costs and dwindling drug pipelines
  • Health system no longer want to pay exuberate costs for drugs
  • Regulators and patients want more extensive and complex product ranges for the same price and to be available in more markets whilst still meeting the highest quality standards
  • Increased competition with the rise of generic manufacturers in small molecule and biosimilars in large molecule

With these changes came a realisation that focus needed to shift to ensure success in previously neglected areas, like manufacturing.

50 % of the total costs of a pharmaceutical company are accounted for by the manufacturing processes

University of St. Gallen ‘Operational Excellence’ Survey

How does pharma rank against other industries?

Significant variations in production cycle times of bulk API pharmaceutical manufacturing can exist. These variations are due to unforeseen events that result in downtime or losses to the manufacturing process. In comparison to other manufacturing industries, these levels of variation are atypical.

It is estimated that manufacturing waste in the industry exceeded $60 Billion in 2016

All the facts, huge industry waste and numerous pharmaceutical plants operating with efficiencies around 30% show that many biopharmaceutical companies are destined to fail if that is continued. A world leading pharmaceutical operation might operate closer to 70%, but they are few. In comparison with world-leading manufacturing operations in other industries that have efficiencies
over 90 %, the need for improvement is compelling.

Pharmaceutical manufacturing is going through a difficult time in keeping up with so many changes in its sector. We now need to look inward at manufacturing costs as an opportunity to generate greater margins to secure the future. Interviews of a cross section of operations personnel, from operators to vice presidents all tell of the countless Six Sigma improvement programs that have been rolled out, and the numerous amounts of time spent training on lean tools. Yet they are all still concerned as their manufacturing plants are not running to full efficiency, and some of their lines are capacity constrained. It is believed that pharma manufacturing plants who claim to have an efficiency of 80-85% are in reality closer to 50-55%. A basic inability for plant managers to record and trend downtimes is the reason for this disparity. This failure results in plant managers being oblivious to reoccurring issues and bottlenecks that are inhibiting their plants from achieving their true potential.

Biopharma is usually looked at as a progressive industry, with innovative companies pushing the envelope in pursuit of the next big drug or technology. There may be one area, however, where bio is lagging behind—operational excellence. Early results from surveys of biopharmaceutical professionals taken by the newly formed UC Berkeley Initiative for Research in Biopharmaceutical Operations suggest that biopharma is, for example, preoccupied with risk, but has not yet developed analytical, data- driven means to assess and manage that risk.

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