Tefen’s Mathew: The Pharma Facility in the Future

Dec. 7, 2009

The World Health Organization estimates that the population will surpass nine billion by 2050, a 30 percent increase from 2009. Because of the perpetual creation of therapeutic drugs, life expectancy will continue to rise, thus, by 2050, there will be a large elderly population. By this statistic alone, the number, volume, and range of drugs must increase.

As the third world population and their middle-classes grow, so will the demand for medical attention, supplies, and medications. In addition, the pharmaceutical industry will face a lot of competition from drug producers in the East, since labor and supplies are cheaper, they will be able to manufacture drugs for less.   This will force pharma companies in the west to follow the same cost structure in making drugs less expensive, or else they face to stand a major loss of the market share both at home and in the global market.

According to the White House and President Obama, the new healthcare reform plan will not only offer medical insurance to those currently without, but it will also forgo the discrimination against pre-existing medical conditions. Should this proposition pass, this will mean that still more people will have access to physicians, lab testing, and medications. More people mean more specific and targeted drugs.

As R&D pipelines dry up, the “blockbuster” model is losing applicability. Pharma companies are now pursuing therapeutics that focuses on niche diseases, which intern means a smaller volume of patients.   That in itself heightens the need for cost-effective production.

The wealthier G7 and western countries have enjoyed a substantially better healthcare system.  As their populations gets older, and as the emerging countries’ populations become more prosperous, the more their hopes and expectations in healthcare will increase. People will demand more from the pharma companies.  This need will be more along the lines of “what’s for me.” This market force will drive pharma companies to focus on more customization, where fast and short term production for specific markets and groups of individuals will prevail.

As a result of all these driving factors, pharma companies will be producing more branded generic products, a wider range of previously ignored therapeutics, and more custom drugs to meet the requirements of the demanding population. Thus production must be more efficient. Flexibility in manufacturing drugs in smaller batches while reducing the overall cost of the product will be a must.

A proven way to ensure cost-effective, flexible production is the use of true Lean techniques. For example, something I would like to see happen is to break down the walls that separate the manufacturing suites that cause a lot of unknowns in terms of operations.  Having these walls in place obscures the visibility of the process. If we replace these walls with glass, it will help to see management to see the processes more clearly. In theory, this will help to clearly identify and eliminate waste- a key Lean principle.   This would be a step in the right direction of control and visibility, which could markedly increase effectiveness and production as it brings transparency to the operation.

With such a demanding and specific market there is a dire need for continuous flow in manufacturing.   As set up today, pharma manufacturing is primarily a large batch production.  Volume helps discount, but it also hides a tremendous amount of waste in the processes.  The drive for customization leads to a single piece flow.  This should and must translate to significantly smaller batches to quickly meet demand and reduce inventory, both in regards to cost and obsolescence.  Smaller batches, or single dose, production, leads to other complications such as how do we do Quality sampling or clinical testing.  This means an overall shift in the mindset and operations of the industry.

In order to support small batches and quick production, automation will play a key role. The recent innovation of Disposable Technology in biopharmaceutical will make production of small batches an easier and feasible process.  Eliminating the “in between” time allows for more time to be used producing product, hence flexibility.  Recent initiatives such as QbD and PAT, enables better use of time, by eliminating lost product due to either sampling or production loss.  The quality control lab as we know it today will become a need of the past.  Automation of any kind, at the end of the day is an enabler to ensure flexibility, reduced variability and speed of response.  The industry as a whole has to start investing in such capital to not only help realize gains from future demands, but to even stay viable in the industry.

Taking heed to Toyota’s manufacturing process warrants the need to work closely with suppliers. Supply chain is immensely important when considering rapid production of targeted drugs; more specifically is the actual proximity of suppliers to the physical manufacturing plant. Ideally, to ensure less inventory build-up and a successful cost-effective production, suppliers should be physically close to manufacturers. Proximity to the supplier would ensure amplified quality, speed and accuracy in product development and commercialization. The idea of proximity of suppliers will be a process to work toward, and will not happen overnight. If and when it is done, however, costs will be further cut and ROI will be greater.

The pharmaceutical industry is unique from other industries because it is chemistry-based and is heavily regulated. However despite its distinctiveness it still faces the same challenges, in terms of manufacturing and growth, which other non-chemical non-regulated facilities and industries face. We share common agents for change in terms of global competition, cost-effectiveness, production demand and quality. Understanding the need for a prolific change in our overall supply chain and manufacturing will make it easier to implement concepts and ideas from non-pharma companies.  Else we be an industry stuck defending our ways, until the one organization takes the bold step towards the customer being first, such as Toyota.

UN Department of Economic and Social Affairs, Population Division. (March 2009).  World Population Prospects. Retrieved from  http://www.who.int/pmnch/topics/2008_populationstats/en/

About the Author

Suraj Mathew | Tefen USA