Therapeutic Dose: Why Waste Time and Money on PAT? A Modest Proposal

The globalization of business and the labor market provides a tempting trap for pharma companies.

By Emil Ciurczak, Contributing Editor

The train of thought behind this proposal took off during a drive home from Maryland to New York, when we noticed the old Carter-Wallace building, now up for lease. I remember demonstrating NIR as a raw material tool in 1990 at that very site, and they bought one. Whether or not it was used is still in question.
Then, after seeing a notice that there was heavy traffic at the George Washington Bridge, I decided to show my wife the Lincoln Tunnel. During the approach, I pointed to a group of condos where the U.S. Steel shipyard once stood. The last trigger for my line of thought was the recent surge — in the stock market, not Iraq.

A “talking head” was explaining that the top companies on the Dow Jones Index were multinationals that were experiencing a surge in profits due to the rapid growth in other countries. Well, that news certainly will make all the engineers working at McDonald’s feel better about their situation. It seems the 14% growth in China (and 4% in the EU) is offsetting the 2% growth in the U.S. The multinationals are making money hand-over-fist, it would seem.

Keeping this in mind, allow me to make an historical observation. The reason that the North was able to win the Civil War was its industrial base (among other factors, but let’s not get bogged down in details). The “Rust Belt” was created, in large part, by another technological advance: air conditioning. When factories in the South could be made livable in the warmer months, industry could move south to a cheaper labor market.

All was well, until NAFTA, when it occurred to these same companies that Mexico would be cheaper yet. So, Nike and others migrated further south, making the cities more attractive than farms. Now, everyone is a factory worker and the standard of living is getting better…or it was, until these “loyal American” companies discovered how little pay Chinese workers would accept. Exeunt stage left! [It wouldn’t fit on a bumper sticker, but maybe this is why so many Mexicans are now coming to the U.S.???]

Back to U.S. Steel and other domestic steel makers. Since they weren’t leveled by bombs in WWII, they were using turn-of-the-century technology. To make a long story short, “they ain’t no mo.” The Japanese and German mills took over the market. Since all the steel producers were national, not multinational, this was bad news.

What does this all have to do with PAT (and QbD)? We have a situation where the cost of goods and capital expenditures are overshadowed by the cost of production. In the U.S., that often reduces to taxes and labor costs. FDA has been tasked with lowering the cost of drugs while keeping up the purity and effectiveness of these products. Since we don’t want all our AARP members running to Canada for their drugs, the cost at home must be reduced.

How can we do this? Well, a few short years ago, I would have said PAT/QbD was the answer. Now, we have been given an alternative. If we wish to keep making products the old-fashioned cGMP way, there is a great labor pool in China, just waiting to do the long, drawn-out procedures. One billion people, with no cable TV to distract them, are a wonderful source for multinational drug companies. Yes, boys and girls, while we were sleeping, mergers were happening. The mean old antitrust spirit has been quelled again and bigger is now better (or “greed is good,” as Gordon Gekko said in “Wall Street”).

The good old “national” drug companies have given way to borderless multinationals that can make their profits wherever they exist. Close down country A? No problem; we still manufacture in B, C and D, as well as X, Y, and Z. What about the population of country A? They can be re-trained.

So, to the “modest proposal” (apologies to Jonathan Swift) I mentioned above: don’t bother with these new-fangled ideas of designing processes and moving from 2.5 to 5 sigma manufacturing. Why not just pack your bags and move on (much like Wal-Mart does when business is lower than expected)? China will welcome you with open arms. Think of all the money you could save not bothering with retooling and placing pricey instruments on line. You could keep making products in the same old way! If it was good enough for my dad, it should be good enough now!

Now, in the interest of full disclosure, I am a multinational consultant, so I would merely have to spend more time on airplanes. As for where all these former U.S. pharma employees would work, perhaps they could sneak into Canada and take the jobs Canadians won’t do. As a bonus, they’d get to enjoy Canada’s cooler climate during the global warming trend we are experiencing. [Gee; even the weather is undergoing globalization now!]

Wasn’t that simple? It may sound sarcastic, but we are rapidly approaching that time of “put up or shut down.” If we do not change, we go the way of the dinosaurs — not to mention textile companies, steel companies and the auto industry.

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