Quality manufacturing
A blockbuster opportunity for
pharmaceuticals
An Economist Intelligence Unit white paper
written in co-operation with Oracle
Quality manufacturing
A blockbuster opportunity for pharmaceuticals
Preface
Quality manufacturing: a blockbuster opportunity for
pharmaceuticals is an Economist Intelligence Unit
white paper, sponsored by Oracle.
The Economist Intelligence Unit bears sole
responsibility for this report. The Economist
Intelligence Unit’s editorial team conducted the
interviews, wrote and edited the report. The findings
and views expressed in this report do not necessarily
reflect the views of the sponsor. John du Pre Gauntt is
the author of the report.
Our research drew on desk research and in-depth
interviews with senior executives and government
officials in the field of pharmaceuticals. Our thanks are
due to the interviewees for their time and insights.
September 2005
© The Economist Intelligence Unit 2005
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Quality manufacturing
A blockbuster opportunity for pharmaceuticals
Abstract
Pharmaceutical manufacturing is shedding its “poor
cousin” image and gaining in importance relative to
R&D and marketing. Decades of regulatory and
industry standard practice in manufacturing are being
reworked to help push operating efficiency in pharma
closer to other “normal” industries such as
semiconductors, industrial chemicals and even
consumer packaged goods. Early reports from the field
suggest that progress will require massive change
across organisations beyond the factory floor.
However, the potential improvements in efficiency and
regulatory oversight are too great to ignore.
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© The Economist Intelligence Unit 2005
Quality manufacturing
A blockbuster opportunity for pharmaceuticals
Introduction
T
he pharmaceutical industry is transforming the
mass production of drugs. More complex
compounds, impatient regulators and increased
market pressures leave little doubt that manufacturing
will no longer be viewed as a standalone activity, but
will join with research, clinical trials and marketing as
the most important business processes executed by a
drug company.
Such an overhaul is sorely needed if the drug
industry is to become efficient again. The
uncomfortable truth about pharmaceuticals is that
despite warning letters, consent decrees, and fines
totalling in the hundreds of millions of dollars,
product quality at an industrial scale remains variable
for many of the world’s top drugmakers. This situation
was highlighted in a September 2003 front-page
article in The Wall Street Journal, in which
pharmaceutical manufacturing techniques were shown
to lag far behind those of potato-chip and laundrysoap manufacturers, not to mention those of the
electronics industry.
Efficiently industrialising lab discoveries has
become critically important for many of the world’s
leading pharma companies. Best practices in
manufacturing such as Lean Manufacturing (“Lean”)
and Six Sigma from industries such as automobiles,
petrochemicals and consumer packaged goods are
being studied and applied across the drug industry.
Recognition of the problem is a necessary but not
sufficient condition for improved efficiency among
drugmakers. For a start, pharma is one of the most
heavily regulated industries. In the United States, the
world’s largest pharmaceutical market by far, the Food
and Drug Administration (FDA) is in the midst of
changing how it intends to approve pharmaceutical
manufacturing applications by emphasising a “quality
by design” model of regulatory approval compared
with a “quality by test results” orientation that it used
until recently. This change is likely to have an
extremely significant effect on the entire industry,
because every global pharmaceutical player runs
substantial operations in America.
Another factor that is affecting manufacturing
techniques is changes to the “blockbuster” business
model that has sustained the industry to date.
Pipelines of new, patented compounds are thinning as
large pharmaceutical manufacturers face growing
competition from generic-drug manufacturers, who
are matching and even exceeding the technical
sophistication of their larger brethren. In the US drug
market, generics account for more than one-half of all
prescriptions filled, up from one-third in 1990.
In addition to shifts in the regulatory and economic
environments for drug companies, the scientific pace
of discovery continues to run at breakneck speed. In
the past decade alone, the biological science
revolution has opened significant opportunities to
reach smaller, albeit more lucrative, markets through
targeted treatments (Targeted treatments and the
prospects for pharmaceuticals, Economist Intelligence
Unit white paper, January 2005). However, the move
towards biologics requires mastery of completely new
fabrication techniques that have more in common with
food and beverage manufacturing than classic
chemical production.
As a result of these regulatory, commercial and
scientific changes, pharma manufacturing is in a state
of flux. New technologies, methodologies and
regulatory regimes are being introduced, while
previously sacrosanct practices and models are being
re-evaluated. How the industry and regulators
respond to these challenges will determine whether
drugmaking catches up with other manufacturers in
the 21st century.
© The Economist Intelligence Unit 2005
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Quality manufacturing
A blockbuster opportunity for pharmaceuticals
A cottage industry
G
iven the exotic names of pharmaceuticals and
popular images of technicians in lab coats, it is
difficult to imagine that pharmaceutical
manufacture is unsophisticated. Yet compared with
other industrial sectors such as petrochemicals or
semiconductors, there has been a very slow rate of
introduction into pharmaceuticals of modern process
design principles, measurement and control
technologies, and knowledge management systems.
Many current production techniques and some
technologies are decades-old, with some standard
procedures dating back to the 19th century. “If you
look at a lot of our blending technologies, they are
little better than a giant KitchenAid”, notes a
production executive at an international generic-drug
manufacturer. “So from a technical standpoint, the
capital equipment technologies have not evolved at
the rate they have in other industries.”
There are several reasons for this situation. From an
industry perspective, the very high profit margins (in
some cases exceeding 90%) on branded drugs largely
obscured the financial impact of low manufacturing
efficiency. Regulators focused more on improving
clinical trials than on delving into the state of
pharma’s manufacturing infrastructure. But this has
changed in the past few years, owing to a large
number of product recalls and reports of drug
shortages. According to Dr Ajaz Hussain, deputy
director of the Office of Pharmaceutical Science at the
FDA, the sheer number of warning letters and the fact
that nearly every major company was operating under
some sort of consent decree prompted the FDA to act.
In 2001 the agency began to try to pinpoint some of
the causes of the high error rates and low efficiency
levels in pharma manufacturing.
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© The Economist Intelligence Unit 2005
As part of its efforts, the agency’s Science Board
held meetings with industry representatives, where it
discovered that many of the factory processes used for
drug manufacture made little sense. “One of the
largest drug companies discussed with us an informal
company policy they called ‘Don’t Use Don’t Tell’ with
respect to anything innovative in manufacturing”,
recalls Dr Hussain. “The ‘Don’t Use’ policy implied that
they were so reluctant to alter production processes
because of regulatory uncertainty that they would
stick with old technologies and processes that were
clearly obsolete. The ‘Don’t Tell’ policy covered those
situations where they changed something to improve
production but decided not to tell the FDA because
they didn’t want to incur the cost of seeking a
supplemental approval.”
The Science Board meetings combined with
benchmarking studies by Massachusetts Institute of
Technology and PricewaterhouseCoopers uncovered
problems on a large scale. The studies revealed that
the total cost of the current manufacturing
infrastructure exceeded that of research and
development (R&D) by two- or threefold. Equally
disturbing were reports of equipment utilisation rates
in the range of 15-20% for manufacturing. According
to a report by the FDA’s manufacturing science
working group entitled Innovation and Continuous
Improvement in Pharmaceutical Manufacturing, worldwide cost savings from raising manufacturing
efficiency could run as high as US$90bn annually, the
equivalent of the current cost of developing 80-90 new
drugs. “That means that the pharmaceutical
manufacturing infrastructure we have is a significant
drain on the economy and has a bearing on the high
cost of drugs”, concludes Dr Hussain.
Pharma’s low manufacturing productivity is not
entirely caused by regulations and industry practices.
The reality is more complex. Follow-up discussions at
FDA’s Science Board, scientific workshops and
conferences uncovered the following factors:
Quality manufacturing
A blockbuster opportunity for pharmaceuticals
Pharmaceutical Manufacturing 101
Most pharmaceutical plants are relatively small compared with the sprawling installations common to automotive, semiconductor or food-processing industries.
Nearly all pharmaceutical products are made using batch
operations, meaning that the compound typically starts
and finishes at the same facility. Although rare, a facility
may be dedicated to producing a single compound. More
common is a facility that makes multiple compounds
using the same equipment. Whether a plant makes one
compound or several, the general production activities
can be divided into the following categories:
● Chemical synthesis—mixing chemicals to produce a
desired compound.
● Fermentation—production and separation of medicinal chemicals such as vitamins and antibiotics from
micro-organisms.
● Routine pharmaceutical production
(“Pharmaceutical Manufacturing 101”) is conducted
by running a plant at rigidly defined operating
conditions described in Standard Operating
Procedures (SOPs), which are descriptions and
supporting information that become regulatory
commitments. Any change generally requires
regulatory notification and, in certain cases, prior
approval. Plant managers are therefore expected
always to reproduce the exact set of conditions
specified in approved SOPs with little or no room for
experimentation and/or optimisation.
● Controlling manufacturing processes consequently
becomes an exercise in providing documentation of
how well a company adheres to SOPs filed with a
regulator. This evidence generally involves laboratory
testing of materials and products that occurs outside
of the production line. The variable nature of raw
materials and the difficulty of exact replication of
conditions make it hard to document quality
● Extraction—producing pharmaceutical products by
extracting organic chemicals from plant or animal tissues.
● Formulation and packaging—transforming the bulk
pharmaceutical product into various dosage forms,
such as tablets, capsules, injectable solutions and
ointments, that can be administered and in the accurate amount.
These manufacturing steps are performed on production
lines consisting of raw material dispensers, chemical
reactors, filters, centrifuges, distillers, dryers, process
tanks, crystallisers, and formulation equipment that
measures out dosage, that all eventually connect to
equipment that packages the drug for release. A very
small plant may have only a few pieces of equipment,
whereas larger installations may contain hundreds of
pieces.
assurance. This leads to the frequent deviation from
SOPs and the rejection of batches.
● Continuous improvements have been made difficult
by the lack of a formalised scientific and engineering
foundation of manufacturing processes for
pharmaceuticals. The most common method of
industrialising drug discoveries has been to reproduce
on a larger scale what happened in the lab through
trial and error rather than repeatable engineering
principles.
● Pharmaceutical quality as a result relies heavily on
inspecting finished lots of drug compound as opposed
to the inspection and adjustment of the
manufacturing process.
Drug manufacturing data are often contained in
numerous information technology (IT) systems,
making it difficult to lift efficiency. The FDA discovered
that pharma companies were freezing their
© The Economist Intelligence Unit 2005
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Quality manufacturing
A blockbuster opportunity for pharmaceuticals
manufacturing processes based on approved SOPs on
the assumption that they could control the quality of
raw materials at the front-end and catch any defects
through inspection at the back-end. However, this
method of controlling quality doesn’t take into
account the day-to-day variation in raw materials, the
ageing of manufacturing equipment or the
institutional knowledge of staff. Too often the attitude
is, “We’ve always done it this way”.
Dependence by drug companies on “quality by
inspection” runs counter to decades of improvements
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© The Economist Intelligence Unit 2005
through “quality by design” among other manufacturers.
In 1950, W.E. Deming, one of the architects of modern
quality concepts, criticised the use of inspection as a way
of enhancing production efficiency: “Depending on
inspection is like treating a symptom while the disease is
killing you. The need for inspection results from
excessive variability in processes. The disease is
variability. Ceasing dependence on inspection means you
must understand your processes so well that you can
predict the quality of their output from upstream
activities and measurements.”
Quality manufacturing
A blockbuster opportunity for pharmaceuticals
Lean and mean
I
t is true that drugmakers are waiting to see what
changes regulators make to the rules for
approvals, inspections and oversight. But the
more sophisticated drugmakers are adopting proven
best practices such as Six Sigma and Lean
Manufacturing. They are also conducting research into
process analytic technologies (PAT). These frameworks
complement each other: Lean and Six Sigma (see
“Going after waste”) provide a strategic view of how a
business can create value through manufacturing; PAT
(see “Designer quality”) provides a process and
technical toolkit for building in quality improvements
on the factory floor.
Lean/Six Sigma and PAT are being grafted onto
quality initiatives already under way in many
pharmaceutical companies. Baxter International, a
US-based healthcare provider, embarked on a quality
leadership process (QLP) in the mid-1980s as the most
important method for improving efficiency. According
to John Martinho, business excellence manager at
Baxter, the quality efforts did not focus on a given
production facility or product family as much as it did
the manufacturing and regulatory compliance
functions themselves. “The areas where we looked
revolved around time, raw material usage, space, and
any type of resource in which we feel that we can
improve release times”, he explains.
Reducing the time it takes to go from production to
release in the market is perhaps one of the biggest
efficiency hurdles for pharmaceutical manufacturing.
According to an international generic-drug
manufacturer, the standard batching process entails
numerous trips to and from the warehouse, as raw
materials are weighed to create a “kit” of ingredients
that will be used to create a batch. However, if a given
manufacturing step is not ready for the kit (e.g., a
mixing vessel must be cleaned out from a previous
batch), the entire kit is moved back to the warehouse.
Likewise, if a piece of compression equipment for
turning out tablets is tied up for some reason, all of
the mixed product will be sent back into the stockpile.
“That is the traditional batching process in
pharmaceuticals and is a real problem in the industry”,
reckons Mr Martinho.
Attacking this problem can lead to significant
efficiency gains for manufacturers. A Baxter plant in
North Carolina that used Lean principles such as justin-time (JIT) for manufacturing intravenous (IV)
solutions saw a reduction in the time between
production and release of 74%, according to Mr
Martinho. An additional benefit for adopting Lean
principles is better customer service. “Because of JIT
and other Lean initiatives, we’re able to reduce
inventory but also have the product available to
customers in a timelier manner”, he says.
Optimising the time spent waiting for physical
product on the factory floor is only one side of the
coin. Working in parallel is the flow of regulatory and
corporate paperwork. In batch operations, the
paperwork required to release a product to the market
usually includes documentation of the ingredients,
the approved manufacturing and packaging steps
done, along with a snapshot of the audit trail of raw
materials and other contributions from the supply
chain. According to David Stokes, life sciences
industry manager for Mi Services, an IT and
management consultancy based in Britain, at some
stage all of that documentation from different sources
must come together. “We’re talking about a pile of
paper an inch or two inches thick for a single batch for
some products”, he says. “Somebody will sit down and
work through all of that quality analysis
documentation before the batch will be released,
which means that just sorting paper can add days to
the release cycle in some organisations.”
Another problem is a lack of visibility into the
© The Economist Intelligence Unit 2005
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Quality manufacturing
A blockbuster opportunity for pharmaceuticals
Designer quality
Pharmaceuticals regularly top the list of
R&D-intensive industries. However, the
industry as a whole lags behind other highly
complex manufacturing activities such as
semiconductors in its understanding of the
science and engineering behind quality
manufacturing.
The classic approach to ensuring product
quality in pharmaceutical manufacturing
consists of a laboratory analysis of the
finished product. This model grew out of
pharma’s regulatory reporting systems,
industry traditions and a general reticence to
change something that “worked”. The
disadvantages of testing finished products for
quality include a high number of rejected
product lots, limited adoption of new
technologies and a stop-and-go production
line.
To help remedy the high cost of ensuring
product quality, in 2002 the US Food and
Drug Administration (FDA) launched an
initiative to promote process analytic
technologies (PAT). PAT is not a collection of
specific technologies and techniques as
much as it is a framework for manufacturers
to understand the effects of the chemical
and physical properties of raw materials and
to use that information to improve
formulation and processing. PAT is a
combination of analytical chemistry and
process engineering. The premise is that
quality cannot be “tested” into finished
products but must be introduced by design
at the front-end.
According to Dr Ajaz Hussain, deputy
director of the FDA’s Office of
Pharmaceutical Science, the key idea within
PAT is process understanding. Process
understanding means that a company
understands the scientific basis behind the
sources of variability in its manufacturing
operations and that such variability can be
managed by measurement and actions to
ensure that the quality of the finished
product is more or less uniform. “You’ve got
to remember that PAT is not about just
throwing in-line sensors at a production
line. It is more about understanding the
sources of product variability during
production and controlling your processes in
a flexible way to allow you always to produce
a quality product”, he explains.
Understanding the sources of variability
is of little use if there are no technologies to
measure in-process materials and aid a
manufacturer in taking the necessary action.
PAT infrastructure typically is comprised of
three families of monitoring devices:
● In-line sensors and probes: these are in
direct contact with the materials inside a
reactor and transmit information outside.
status of a batch as it moves through various
manufacturing steps. Internal, regulatory and
operations data are often fragmented. It is not
unusual for pharmaceutical companies to have
separate data files for products and customers sitting
on different IT systems at different sites. Thus, trying
to get a comprehensive view of the customer—a major
prerequisite for Lean—is a significant challenge.
“What did they buy? Where was it shipped and why did
they call to complain? This information is typically
scattered across a lot of systems”, notes Doug Souza,
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© The Economist Intelligence Unit 2005
● On-line analytical tools: these divert a
sample of material to a connected
analyser that tests it, and then returns
the sample to the mix.
● At-line measurement tools: these systems employ more traditional laboratory
analysis devices that occasionally
require human intervention.
Combining process understanding with
technology to ensure consistent quality on
the front-end is the overarching goal of the
PAT initiative, according to the FDA. The
agency has not endorsed any specific technologies to date. It has concentrated
instead on training its reviewers and inspectors in PAT philosophy and practice, drawing
on the experience of other industries such
as petrochemicals, which have employed
PAT for decades. The main regulatory incentive for companies that embrace PAT is the
promise of fewer supplemental filings
should a company decide to alter its manufacturing processes. “If your knowledge
base about product variability is sound, you
can alter your processes accordingly and
achieve the same results without filing a
supplement to the FDA”, contends Dr Janet
Woodcock, chief operating officer at the
FDA. “So this is a way to allow manufacturers to build in quality by design instead of
quality by testing.”
vice-president for process manufacturing
development at Oracle. “Companies are trying to get a
single view of the customer beyond just order size and
geography. In order to make business decisions
regarding a customer, you must have consolidated
information.”
Often referred to as a “single source of truth”, this
consolidated view of production and distribution
offers more than simply keeping a customer happy. It
is a way of providing an audit trail in the event that a
regulator raises a product safety issue. According to
Quality manufacturing
A blockbuster opportunity for pharmaceuticals
Going after waste
In order to improve efficiency, drugmakers
have focused on two main methods, Lean
Manufacturing (“Lean”) and Six Sigma.
These models for efficiency and quality control are being updated and adopted for the
unique conditions of pharma, namely its
regulatory overhead and the fact that most
pharmaceutical plants produce several
types of product in a “high mix” environment rather than a single product line.
The Japanese, who invented many of its
concepts under the Toyota Production
System (TPS), pioneered lean manufacturing
in the automotive industry. The underlying
principles of Lean revolve around
eliminating waste, reducing cycle time and
scheduling production based upon the pull
of customer demand rather than pushing
excess inventory.
Lean has a very specific definition of what
is meant by the term “waste” (muda in
Japanese). Waste is anything that adds to
the time and cost of making a product but
does not add value from the customer’s
point of view. Much like the Seven Deadly
Sins, Toyota famously documented what it
considered to be the Seven Wastes in
Manufacturing:
1. Overproduction—producing more
material than is needed before it is
needed is the fundamental waste
attacked by lean production.
2. Producing defective products—defective
products impede the flow of product
through the factor and lead to wasteful
handling, time and effort.
3. Inventories—stockpiles take up space,
tying up working capital and requiring
protection and financing.
4. Motion—any movement of the product
that does not add value from the
customer’s perspective is waste.
5. Processing—extra processing not
essential to value-added activities is
waste.
6. Transport—moving materials does not
enhance the product’s value to the customer.
7. Waiting—material waiting to be
processed is not material flowing through
a value-added operation.
Regardless of the specific implementation,
all Lean technologies and tools are
designed to attack the Seven Wastes.
Whereas Lean Manufacturing looks to
curtail waste in the production system, the
Six Sigma model attacks variability, which
has a direct impact on quality. First used at
Motorola in the 1980s, the methodology is
based upon the number of standard
deviations (“sigmas”) from specified quality
that occur during production.
Mathematically, assuming that defects occur
according to a standard normal
distribution—a bell curve—six standard
deviations would correspond to
approximately two quality failures per
billion parts manufactured. In practice, Six
Sigma reliability is defined as 3.4 quality
failures per million parts manufactured.
More than an academic exercise, the
figures below illustrate the impact on the
bottom line of reducing manufacturing
variability by one or two Sigmas. Aside from
the fact that they cannot be sold, defective
units are expensive because somebody has
to spend time trying to track down the root
cause of quality failures. In the case of
pharmaceuticals, that cost is compounded
by potential regulatory actions that are
triggered by an out of specification incident.
Consequently, many pharmaceutical
companies are employing both Lean and Six
Sigma. The good news is that drug
companies can learn much from the outside.
“Whether it’s Lean or Six Sigma, the
important point about pharma adoption is
that they are benchmarking against other
industries like automotive or consumer
packaged goods that have been employing
these techniques for years”, explains Doug
Souza, vice-president for process
manufacturing development at Oracle.
Sigma
Defects
(ppm)
Yield
Cost of
quality
2
308,537
69.2%
25–35%
3
66,807
93.3%
20–25%
4
6,210
99.4%
4–8%
5
233
99.96
4–8%
6
3.4
99.99966%
1–3%
Pharmaceutical
Semiconductor
Source: Pharmaceutical Technology Electronic Edition, June 2005.
Mr Souza, if a bad lot of drug compound makes it into
the market, a pharmaceutical company must quickly
establish where the lot was manufactured, on which
equipment, using which vendor’s ingredients and so
forth. Being able to establish what went wrong at what
particular time is critical. “They need to be able to
trace the production of lots back to the level of raw
materials”, stresses Mr Souza.
© The Economist Intelligence Unit 2005
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Quality manufacturing
A blockbuster opportunity for pharmaceuticals
Pulled not pushed
O
ne of the greatest potential impacts on
drugmaking efficiency has little to do with
improving chemical or biological reactions.
Early pioneers are discovering that lessons learned in
manufacture can be applied to other corporate
processes that can raise the overall operating
efficiency of a drug company.
Mr Martinho believes that once incubated in the
production environment, efficiency strategies such as
Lean Manufacturing can be applied to a host of other
functions. “Along with direct production, we’re using
Lean techniques to impact other areas of the plant
environment to include chemical laboratories, microbiology laboratories, even accounting areas”, he
explains. “I tell people to take out the word
manufacturing and just use the word Lean. If you have
a supplier, a customer and a process, you can apply
Lean principles anywhere in the corporation.”
Along with regulatory oversight for drug safety,
pharmaceutical companies also deal with significant
environmental issues related to manufacture. Drug
production often creates hazardous chemicals by
using solvents to extract or separate desired
compounds at various manufacturing steps. Better
Right first time
Pharmaceutical companies are embarking
on numerous manufacturing improvement
initiatives for one of the best reasons—
enlightened self-interest. Early reports
show substantial efficiency gains from
adopting predictive rather than reactive
quality control. That said, these programmes are complex undertakings that
need consistent buy-in and support from
the top.
In 2003, Pfizer announced a new
program called Right First Time (RFT) to
migrate its manufacturing organisation
towards a more predictive approach to
manufacturing and quality control. Focused
heavily on PAT and Six Sigma concepts, the
premise behind RFT was to improve Pfizer’s
scientific understanding of its process
steps, identify the critical variables to
quality and monitor them on the idea of
eventually replacing traditional quality
assurance methods with real-time
monitoring.
In practice, RFT programs combine
measurement with notifications to people
on the production line. For example, if a
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manufacturing specification called for a
chemical blender to rotate at a certain
number of revolutions per minute (say 50),
and the measuring technology determined
that the actual number was different, both
the operator and a supervisor would be
alerted before the compound progressed to
the next step. Whether a supervisor decided
to continue production, shut it down or reroute the batch to a different part of the
factory is not nearly as important as the fact
that in-process alerts provide a means of
pinpointing where quality breakdowns are
happening as they happen.
A significant challenge for Pfizer will be
what to do with all of the data generated by
the PAT systems. Because these
technologies and techniques will enable the
company to look at its production steps in
greater detail, they will generate alerts
about deviation that have probably not been
experienced before. The key skill, therefore,
will be the ability of Pfizer line operators and
supervisors to generate sustainable insights
from information the manufacturing line is
providing.
© The Economist Intelligence Unit 2005
While Pfizer’s RFT program focused
mainly on quality, Baxter International has
used concepts from Lean Manufacturing to
raise efficiency in how it produces
intravenous (IV) solutions. According to
Lean champion John Martinho, business
excellence manager at Baxter, the reduced
cycle time realised from bringing together
teams responsible for plastics, packaging,
sterilisation and quality labs into a single
value “stream” has allowed the company to
increase daily shipments by over 100%,
while reducing wasted material by half.
Impressive as these results are, Mr
Martinho stresses that it is the predictability
of processes that are the main focus of the
Baxter Lean initiative. “We’re not fixed
solely on the results”, he says. “We’re
looking at the processes themselves and
asking people to do everything they possibly
can to eliminate anything wasteful as well as
take out any variations in the process. So it’s
not just Lean that we’re applying at this
point. We’re integrating Lean and Six Sigma
together as part of our continuous
improvement.”
Quality manufacturing
A blockbuster opportunity for pharmaceuticals
manufacturing efficiency through Lean/Six Sigma or
PAT not only cuts down cycle time between production
steps, it can also significantly reduce the
environmental cost of pharmaceutical manufacturing
by minimising the use of raw materials.
However, efforts to improve pharmaceutical
production efficiency have concentrated mainly on
what happens within a given factory. Regulators and
industry observers admit that cultural changes within
drug companies on the role of manufacturing will be
necessary for extending these early wins into industrylevel trends.
The first aspect to solidify the shift towards Lean is
integrating demand information into manufacturing
processes so that product is “pulled” only when it’s
needed rather than “pushed” to buffer an inventory.
“A lot of this will come from combining manufacturing
philosophies such as Lean with planning and
manufacturing tools that allow you to build towards
customer demand as opposed to a made-for-stock
environment”, says Mr Souza.
Moving towards a more demand-driven production
process—a prerequisite for Lean—will require drug
companies to take proactive steps to understand their
manufacturing processes and adjust them in order to
sustain quality in an environment of continuous rather
than batch production. Many observers note this is
easier said than done given the need for drug
companies to file supplementary approval applications
with the regulator for significant changes in
manufacturing process.
However, regulators are starting to challenge the
notion that every single production step must be
documented and frozen in time. “Supplements are a
consequence of empiricism and a testing mentality”,
notes Dr Woodcock. “If you are doing something
because you understand the science and engineering
behind product variation, you can have a good quality
system that offers good change control. We don’t
think the regulator should be the agent of change
control on the factory floor. Right now, we are and
that’s just not a modern concept.”
© The Economist Intelligence Unit 2005
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Quality manufacturing
A blockbuster opportunity for pharmaceuticals
Continuous improvements
needed
N
otwithstanding a veritable alphabet soup of new
acronyms, regulatory initiatives and industry
conferences devoted to improving
manufacturing efficiency, all roads will eventually lead
to the bottom line. If the figures presented to the FDA’s
Science Board are correct, manufacturing accounts for
25% of total cost based on a 15-20% utilisation rate of
factory equipment. Clearly, there is plenty of room for
improvement, all the more so because of pressure on
other divisions. “People need to take a hard look at
their books and see how much it is costing them to
make a product,” declares Dr Woodcock. “Where else
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© The Economist Intelligence Unit 2005
are they going to economise? Are they going to cut
R&D? Are they going to cut clinical trials?”
The regulators have published their findings and
declared their objectives. Within three to five years,
those efforts will be judged on the quality of execution
rather than original intent. Likewise, drug companies
have publicly embraced the call for greater
manufacturing efficiency and demonstrated in
selected areas that they can punch their weight.
Within three to five years, it will be clear whether the
early results in the factory constitute low-hanging
fruit or if they indicate the start of continuous
improvement across the entire industry.
Regardless of the outcome, it is clear that
manufacturing will no longer be considered the “poor
cousin” among pharmaceutical divisions. Lessons
learned on the factory floor can be expected to
percolate throughout pharmaceutical organisations.
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