Operational Excellence

A New Era of Operational Excellence

For the past 30 years, life sciences companies have been among the most profitable manufacturing entities in the world. Blockbuster drugs have delivered exceptional profits and, for a while, made these companies seemingly impervious to economic downturns.

But new challenges are facing the industry. By 2008, no fewer than 19 current blockbuster drugs are facing patent extinction, meaning they’ll face competition from generics. What’s more, government price controls and the counterfeiting and reimportation of drugs are cutting into potential profits. And the costs of research and discovery of new drugs go up with every passing year. To meet these challenges, life sciences enterprises are having to look at improving their manufacturing practices to increase efficiency, cut costs and use manufacturing as a competitive advantage.

Lock it Down: The Way It Was in Drug Manufacturing

Historically, pharmaceutical companies have excelled at one thing: discovering new drugs. More recently, marketing has become a second area of expertise. But the manufacture of those drugs was an afterthought, a secondary capability. Once the quality of the product was established, the successful process and technology were “locked down” and never changed. Because of intense oversight by the FDA, there was no incentive to improve the processes – any potential savings from improved productivity were far outweighed by the potential liabilities of an FDA citation or penalty that came as a result of a change.

Because of huge profits, enormous inefficiencies were tolerated. While the manufacture of a certain drug might require only one day, actual elapsed time with testing and waiting could take up to six weeks or more. Today sedentary inventory, including work-in-progress, amounts to billions of dollars in the industry. Long lead times, disconnected processes, slow changeovers, and low resource utilization – sometimes as low as 30% -- are the standard throughout the industry.

The FDA: Partnership for Operational Excellence

The Food and Drug Administration, which oversees the industry, recognized these problems, and saw that its traditional “catch-and-punish” relationship with companies was part of the problem. Beginning as early as 2000 it began looking at ways to help companies improve their manufacturing processes while remaining in compliance with regulations. The result was two guidance documents: PAT and cGMPs for the 21st Century. The life sciences industry has vigorously embraced these efforts by launching a number of initiatives to improve their processes. These include:

Through these efforts, the pharmaceutical industry is moving to match the efficiency found in other industries, and to achieve something they’d never had in their processes before: operational excellence.



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