From the Editor: A Culture of Arrogance

Analysts say that 2012 may prove to be pharma’s most challenging year ever.

By Agnes Shanley, Editor in Chief

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I recently visited a prominent figure in academia to write a commentary for this magazine on what the industry needs to do in the year ahead. He has been a leading advocate for manufacturing’s strategic importance, and for the need for improvement and change.

He declined, but his reasons were revealing. “I have to be careful about what I say, to avoid alienating leadership in the industry,” he said. Apparently, some previous writings had angered people at companies whose participation was critical to research.

This surprised me. Wouldn’t executives want constructive criticism from a neutral source? After all, isn’t the end goal continuous improvement? He is a professor and was discussing science, nothing more and nothing less. There was no political agenda.

This reaction has been around for a while. It started before and has continued long after the famous “potato chips and soap flakes” comment by former FDA commissioner McClellan. Sure, some pharma companies are embracing best practices from other industries. GSK, for instance, has formed a joint venture with the McLaren Group, of Formula One fame, with the goal of applying modeling, analytics, engineering and technology to drug development and manufacturing. But even with projects like this going on, and all the change of the past decade, the Not Invented Here syndrome is alive and well in the drug industry, we hear.

Apparently, back in the early days of Process Analytical Technology (PAT) and CDER’s Science Advisory meetings at FDA, at least one key executive at one of the world’s largest pharmaceutical firms openly questioned the need for the industry to change its practices or benchmark them against those of automotive, electronics or consumer goods manufacturers. “We could teach them about better manufacturing,” he reportedly said.

Now, I’m sure that drug companies could teach those industries everything about making drugs. But how about waste and cycle time reduction? In biotech ventures involving electronics giants Fuji and Samsung, we may see what happens when the best of both worlds collide.

Change is clearly coming. Fitch Ratings has predicted that 2012 will be the industry’s most challenging year ever. Can anyone afford to be arrogant, when R&D pipelines are so thin and drug manufacturing, as it is practiced today, has been acknowledged to waste over $50 billion per year?

According to Emory University professor Jagdish Sheth’s book, The Self-Destructive Habits of Good
Companies, highly successful companies lose their edge through complacency and arrogance. Perhaps the same holds true for entire industries. Sheth wrote, “The most dangerous competition comes from low-quality/low-price competitors. Utilizing price as their most tantalizing selling point, they establish a presence in the marketplace. Their upstream competitors generally malign them as easily dismissed peddlers of ‘junk’ or just ignore them. But if these ‘inferior’ competitors improve quality while maintaining their relative cost advantage, they become irresistible value propositions to customers.”

Sheth’s book came out four years ago, and this transformation has already begun within pharma. “Not Invented Here” needs to be torn out by its roots. The smartest companies are learning from every source possible. This new year, one of our resolutions is to include more practical benchmarking examples from outside of pharma that can be applied in your facilities. We also hope to get more case studies directly from you and from independent academic groups. We also promise to get more input from generics manufacturers, who face competitive margin pressures closer to those of other manufacturing industries.

The future belongs, not only to the agile, but to those who know how to learn.

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