Pathway to Continuous Improvement

Back in the 1980s, other industries quickly adopted Lean, Six Sigma, and other basic operational excellence tools, but now pharmaceutical manufacturing is becoming a convert. Facing challenging profitability and revenue goals along with the twilight of the Blockbuster model, companies are now looking to enhance their manufacturing efficiencies.

Within the last 18-24 months, Avi Edelstein, a partner with the management consulting firm Tefen, has seen a dramatic shift in the commitment to cost reduction in pharmaceutical manufacturing. “With the Blockbusters of the past, you couldn’t make the drugs fast enough,” says Edelstein. “Improving operations meant keeping the equipment running. With patents running down, pharma companies are becoming very serious about efficiency.”

Pharmaceutical Manufacturing recently surveyed drug industry professionals to gain insights into manufacturers’ current operational excellence practices. The survey is still ongoing, and detailed results will be interpreted in June on PharmaManufacturing.com. But the 48 responses received so far indicate where the industry’s Op Ex programs are and where they’re going, highlighting accomplishments and areas for improvement.

Positive Findings

• Company goals are focused on increasing operating efficiency and reducing manufacturing costs.



• Facility strategies stress flexibility – both operational and manufacturing.



• Reducing cycle and setup times are recognized as two of the keys to improving manufacturing agility.



• More companies have bridged, or are bridging, the “islands of information” within their facilities



• Formal maintenance programs are in place and are being utilized.



• Most companies see the reduction of manufacturing setup times as a key goal of operational excellence.

Areas for Improvement

Other results suggest that there is still considerable room for progress:

• Companies are still struggling with on-time delivery.



• 60% of respondents say top management sees manufacturing as a cost center.



• About 40% of the equipment at many plants is over 10 years old and is manually operated.



• Elements in the operational excellence toolkit, such as Quality by Design, Process Analytical Technology and advanced process control, are being underutilized.



• Models are not yet flexible enough to adjust production capacities based on demand.



• Regulatory compliance and plant safety were lower on respondents’ priority list this year, which could be either good or bad news.

Why and How

“For operational excellence to work, somebody has to decide that it is important to do and believe in it,” says Jeffrey Liker, director of the Japan Technology Management Program and co-director of the Lean manufacturing program at the University of Michigan. Liker also is the author of the best-selling book, “The Toyota Way: 14 Management Principles from the World’s Greatest Manufacturer.”

Pharma manufacturers seem to be prioritizing their business goals with operational excellence in mind. They view their top priorities (“extremely important” or “somewhat important”) as: increasing operating efficiency (86%), reducing manufacturing costs (87%) and anticipating customer needs (71%).

According to Edelstein, these priorities have just changed in the last two years. “There is now a pure cost pressure on pharma companies. Volumes are going down and patents are running out. The benefits from these priorities are enerally realized with limited resources and without adding more equipment.”

However, if they want to realize the benefits, company leadership must make operational excellence a priority. Leadership, especially at the C-level, is critical, says Peg Pennington, director of continuous improvement for the Center for Operational Excellence at the The Ohio State University. Companies will still see benefits but will not get the overall savings without buy-in from top management.

Among survey respondents, 55% saw reducing product prices as less of a priority. Process innovation, a priority for 45%, was even lower on the list.

On the manufacturing side, respondents listed everyday goals (on a 1-5 scale with 1 being “extremely important”) as: improving operational flexibility (1.9), improving manufacturing flexibility (1.95), improving product quality (2.05) and accelerating production speed (2.1). Surprisingly, ranking lower on facilities’ priorities list are improving regulatory compliance (2.2), improving workplace safety (2.2) and integrating manufacturing more closely with other operations (2.4).

However, integrating manufacturing with other operations may result in the greatest benefits of operational excellence. “You need to work through these functional silos and look across the entire value stream in order to achieve value. Otherwise, optimization won’t happen,” says Pennington.