Lean Comes to Pharma - Pharmaceutical Executive


Lean Comes to Pharma

Pharmaceutical Executive

The New System Blueprint

Before embarking on a Lean program, pharma companies must take to heart a critical lesson from Toyota: Start with a clearly defined business system, including distinct customer segments and their needs, processes for sourcing, developing, producing, marketing, and delivering products, and a well-designed support organization. Designing the blueprint for this system is the responsibility of senior management, not front-line employees. Once this system is in place, Lean programs can optimize it; without it, the full potential of Lean programs will never be realized.

Case Study: Clinical Supplies MANAGEMENT
Although the industry has made progress in shaking free from last century's blockbuster business model, most companies are still struggling to define themselves in new, more rational terms. Unlike Toyota, which was operating within a sharply defined framework, the global drug industry is fast-changing and far-flung—and only growing more so with new customer segments, new markets in emerging economies (such as China, India, and Eastern Europe), differing regulatory requirements, customer needs, and market potential. This daunting complexity can lead to Lean programs that are poorly targeted and deliver little strategic impact.

Before applying Lean techniques, senior management should ask whether a function or activity should exist at all. Does it have value to the customer? Is it on a critical path? Projects that aren't aligned with customer needs or business strategy may eliminate waste or improve cycle times, but the lasting effects will be minimal. For instance, if the goal is to speed up product development, reducing the cycle time of certain toxicology studies won't make much of an impact. Nor will improving operations at a manufacturing plant that's about to lose patent protection on its major products. If capacity utilization is poor, overhead costs are high, cycle times are long, and factor costs are misaligned, the first step should be to analyze whether it would even be possible to match competitors' pricing after patent expiry and a likely loss of volume. And if the answer is no, the right decision might be to make structural changes such as outsourcing or off-shoring production—not launching an intensive Lean effort.

Lean can also transform critical "systems" such as product development. By looking at the end-to-end process and fundamentally rethinking everything from funds allocation to new product introduction, pharma companies can drive major improvements in cost, cycle time, and quality. It took GSK-Bio's one-roof vaccine-development experiment only two or three years to prove its value.


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