Streamline Capital Projects through Engineering Partnerships

To speed expansions and new plant projects, pharmaceutical manufacturers are relying more heavily on engineering firms' expertise in risk mitigation and process innovation. Belts are tight, industry wide (Box 1), and drug company sponsors are becoming choosier. In addition, global competition is intensifying among engineering and construction (E&C) firms. As a result, E&C companies are becoming more proactive pharmaceutical business partners, seeking strategies that streamline project delivery and add value to traditional design-and-build services.

Flexibility and modularization are driving projects today, allowing pharmaceutical companies to accelerate project work and minimize risk. More companies are building modest "launch" facilities that can be expanded once a market is established for their products. This strategy is becoming increasingly important to smaller companies and in the biotech sector.

Plants are being planned and built with the future, and potential changes in demand, clearly in mind. Flexible production facilities, capable of making a variety of products, are one trend. Engineering firms like Lockwood Greene make clients aware of the stresses that unforeseen demand might impose on their facilities. "Many of our flexible designs utilize portable equipment, flexible layouts and expandable utility systems," explains Ron Jones, director of pharmaceuticals and biotech at Lockwood Greene (LG), Spartanburg, S.C.

LG also employs modularization. For example, the "baseline process module" it offers as the primary process train for biotech facilities greatly shortens schedules while lowering and design costs, according to Jones. LG ties all these innovations together with web-based project management to improve information-sharing among the design team and engineers.

Typically, larger companies do initial project work in-house before calling in contractors.

"They use in-house engineering to define basic parameters of a project, then bring in people like us to enhance the design," says Dave Goswami, principal at IPS, Lafayette Hill, Pa.

When a project involves new process or plant technologies, though, hired guns are brought in much earlier. "In-house engineers aren't always up to date on the latest innovations," Goswami adds, especially when a company plans to launch a new type of product---say, a traditional manufacturer decides to develop a biologic, a drug with a new delivery system or a new manufacturing process involving cell culture or fermentation. "In these cases we can help with technology development, scale up, equipment specification, validation, vendors, capacity analysis, human resource allocation and facility layout," Goswami says.

Risk related to product approvals plays mightily in all decisions, although differently at larger vs. smaller sponsors. "After they decide to move forward, larger firms plunge ahead because they want to be the first guy in," says Goswami. "Smaller companies must hedge their bets somewhat."

Building "launch" facilities is one strategy that companies, particularly smaller ones, are using to hedge their bets. "We try to get them into a facility that's functional and can be validated within their budgets. Risk minimization is one of the first discussions we have," Goswami says.

Flat capital spending and fewer new drug approvals have presented operating companies with a dichotomy. "Companies are eager to take advantage of supplier competition," says Patrick Hurley, principal consultant with the New York-based consultancy Cap Gemini Ernst & Young. "At the same time, they're interested in reducing long-term support costs through standardization." Long-term contracts help many to resolve this conundrum, and get both price and standardization, he says.

Assuming, of course, that companies can make products and services from disparate suppliers work together. Although this concept may seem obvious, it's surprising how many reputable companies still don't "get it," Hurley say.

Recently, Hurley was involved with a new, costly biologics facility for a large pharmaceutical client. When they were designing a new plant, he says, they decided to use a warehouse design with very narrow aisles for storage, but also specified that weigh-and-dispense functions be conducted within the warehouse.

Only after construction did the client realize how difficult this design made material movement and operations. In fact the layout affected not only operating procedures, but even the information systems related to weigh-and-dispense. "I'm sure they did everything right when it came to design, engineering and figuring construction costs per square foot. The problem was that everyone was doing their jobs independently, and engineering and design were out there ahead of business process planning," he says.

Today's economic realities have dramatically changed relationships between pharmaceutical companies and outside engineering firms, according to Tim Barba, principal at CRB Consulting Engineers, Kansas City, Mo. More and more "pure procurement" groups are choosing outside engineering firms based solely on costs, as opposed to the contractors' capabilities.

"Just two years ago companies focused on technical capability and resources," he adds. CRB has bucked this trend by playing and re-playing the value card, for example through its investment in a data system that delivers high-quality engineering documents at low cost. Barba believes that lowball procurement strategies will eventually backfire through lower quality, fewer deliverables and higher risk, noting that "the more you spend on design the more you will save in the field."