CPhI Pharma Insights Manufacturing Report examines the current trends in continuous process improvements and evaluation of practices that have been implemented across the industry to drive increased product qualities and greater cost efficiencies. The results show that industry hopes to see more continuous improvement models implemented over the next few years, to mirror the growing need to drive greater manufacturing efficiencies and cost reductions.

In the current landscape, expectation from the pharmaceutical industry is rising; demand is higher, capabilities and resources must expand to accommodate diverse and multifaceted customer needs and standards must be met at varying levels- products that may  meet standards for one regulatory body may not necessarily match those of another.

Ensuring product quality, monitoring and improving safety within the supply chain and enhancing efficiencies are just some of the manufacturing puzzles yet to be solved.

As costs increase and budgets become squeezed, pharma must constantly adapt its business model to mirror the shifts and trends that the marketplace is enduring. Looking ahead, there will be a need for more open collaborations between pharma, their suppliers and regulatory bodies to ensure that consistently high product quality is maintained and enhanced and manufacturing costs are lowered. Pharma may have to shift its model to become more patient-centric.

Improving product quality and reducing costs vital for industry
Organizations identified improving product quality and reducing manufacturing costs as their most important goal. In light of the recently exposed product quality issues within some pharmaceutical, it is no surprise this is a main area of concern that the industry will increasingly focus on preventing.

Reducing manufacturing costs is a key goal and one that unites Western manufacturers in particular. Manufacturers in the West are progressively challenged by China and India and must compete with their comparatively lower manufacturing costs.

However, CPhI expert industry panel member Girish Malhotra, President at EPCOT International, heeds caution in our findings and has doubts as to whether the industry is actively following these goals through into manufactured products:

“Industry simply has not walked the talk. Reducing manufacturing costs is a goal we all have, and most of the industry claims to aspire to but as far as big pharma is concerned, profitability over the patent life means it’s not worth the time and money spent to make the reductions. The Industry is content with current levels and has not made an effort to further improve the profits. Generics also have cost reduction opportunities.”

Improving time on delivery, improving responsiveness to customers and reducing product prices were all identified as notable goals, whilst improving product supply and increasing innovation ranked the lowest.

The quest to improve product quality
It is somewhat surprising, therefore, when taking into consideration the primary goal of increasing product quality that is shared amongst pharmaceutical manufacturers that 11 per cent of respondents stated they do not test all incoming raw materials sourced to their facilities, despite almost half of all respondents claiming they connect with suppliers weekly.

Is the lack of testing due to trust and communication between manufacturers and their suppliers? These results suggest there is an industry-wide need for increased supplier auditing (either in-house or via a third party). The importance of auditing, particularly third party, has been previously highlighted in our ‘Formulation and Ingredients’ report- however it was also identified that, although 55 per cent of industry stated that the use of third-party audits was ‘extremely important’, 75.6 per cent of representatives remarked they were not working with any third-party auditors.

Going forward, if manufacturers want to improve product quality, they must find a supplier that aligns with their own GMP compliance expectations to ultimately achieve this goal.

Of the 89 per cent that are testing raw materials sourced to their facilities, compendial testing was an unrivalled method of choice (81per cent) and one which is likely to remain the principal approach over the next few years, whilst other methods (including gas chromatography, liquid chromatography and mass spectrometry) are being used by 15 per cent of the industry to test sourced raw materials. Just four per cent of the industry identified NIR as their chosen method of testing.

What methods do you use? Top manufacturing goals
The top manufacturing goals identified by the pharmaceutical industry were improving efficiency and improving safety (both ranked at number one). Reducing cycle time, reducing setup time and reducing waste were all considered to be slightly less important (ranked second), and increasing agility and reducing inventory were both deemed to be the least important goals (ranked third). Although companies are quite rightly acknowledging the need to improve efficiency, there seems to be oversight and a missed connection in the goals ranked second. If manufacturers were to prioritise achieving solutions to reduce cycle time, reduce setup time and reduce waste- would this not consequently improve efficiency?

Outsourcing
Responses suggest that outsourcing is becoming a more important strategy in manufacturing, as the industry is progressively acknowledging the need to leverage and expand resources and expertise that they may not have in-house. 41per cent said that they are outsourcing more of their manufacturing to other organizations.

Is the manufacturing sector growing?
Of the companies surveyed, 59 per cent said that they were hiring more people this year. 37 per cent stated that they were keeping the same headcount, whereas just four per cent admitted that they would be reducing headcount. Overall, the results suggest that, if not growing, the remaining majority of companies are in equilibrium.

Further, almost half of all respondents (48 per cent) stated that one to three new products were introduced at their facilities last year, whilst a further 41 per cent introduced more than three products.

When asked if companies were investing in manufacturing this year, 70 per cent acknowledged that they were, whilst nearly 20 per cent stated that they were not investing. A further 11per cent also stated that they are cutting investments and consolidating. Looking ahead, it is likely that this figure will rise over the coming years, especially when considering the heavy market fragmentation currently in the industry. Mergers and acquisitions are growing even with big pharma, evidenced by major mergers between Roche-Genentech, Sanofi-Aventis and Pfizer-Wyeth. It may be the case that consolidation will become a necessary action for companies to survive and thrive within the pharmaceutical industry, particularly as the use of newer technology will become necessary to further drive efficiency improvements. In the case of some manufacturers, equipment can be 20 years old; however, in the current market place, there is no incentive to upgrade.

Continuous improvements
Industry has acknowledged the importance of adopting processes and mechanisms in order to improve efficiency and streamline manufacturing processes to improve product quality. For real change to be seen across the board however, a major player within pharma will have to take the lead and exceed the regulators’ minimal expectations- that so many have difficulty following. We are seeing a desire by industry to increasingly adopt tools and methods to quantify the value and quality of their work and, consequently, adapt their manufacturing techniques to enable continuous improvement and improve product quality.

However, the drive to cut corners without proper processes in place has been the cause of some quality issues that have been surfacing across the industry. Girish Malhotra believes that if “companies had the complete command of the process from inception, quality might not become an issue and overall costs would be lowered.”

In contrast, the problem with patented products is that due to little incentive to reduce costs we regularly see price control policies and healthcare payers questioning the value of new drugs entering the market. A solution whereby pharma finds an approach that marries the cost efficiencies of generics with the quality of branded products would produce increased access to drugs and a far more sustainable model.

In the medium to long term, it is likely we will see a cross-pollination of efficiency improvements stemming from generics, through to CMOs, which ultimately could, and should, permeate through to big pharma’s patented products. Lower cost patented drugs with bigger potential sales markets would provide the added benefit of reduced infringements and counterfeit products.

This will become even more vital as budgets continue to diminish and western hegemony is challenge by India and China, alongside an increasing global demand for reasonably priced drugs

Girish Malhotra added, “process improvements could save billions in cost, lowering the price of drugs and opening up newer markets to pharma. This has to be the short and long term goal”. Process improvements to be made in the existing approved products have to be approved by the regulatory bodies. Uncertainties of costs and time are an impediment for the industry to incorporate continuous improvements for the existing products. They give the industry a good reason to do nothing”.

Emphasizing this general trend Statistical Process Control and Process Capability Analysis, as tools for quality control, are increasingly being used by the manufacturing sector, at 26 per cent and 21 per cent respectively. The rise of Quality by Design (QbD) and Process Analytical Technology (PAT) is also evident as critical tools for continuous improvements, being utilised by 16 per cent and 11per cent of respondents. 6 sigma, Lean and Kaizen and 5S are also being used by 12, 11 and 7 percent of respondents, and we may see a growing uptake of 6 sigma and Lean which have both been shown to be effective in waste reduction- a vital objective for manufacturers.

Taking all findings into account, manufacturers will need to be more committed and willing to work more closely with both suppliers and regulatory bodies, particularly as the regulatory environment alters, in order to efficiently improve product quality and safety for their patients. On the whole, the majority of the industry vets it’s suppliers and tests all materials sourced to their facilities, as well as conducting regular regulatory inspections- 70% of respondents have had five over the last five years, with the remaining having more. Further, as more continuous improvement models are implemented over the next few years, we are likely to witness improved efficiencies and significant cost reductions, which in turn should enable drugs to be more accessible across the globe.

Malhotra concludes, “the current manufacturing model is also an obstacle. Regulatory bodies cannot drive excellence in companies. It is my hope that the industry will review the model and drive itself to excellence. Unless this happens regulatory bodies through additional regulations will force the industry to drive to excellence. This will only increase osts.”  

The report concludes that the above improvements are all predicated on the industry being willing to implement process perfection from initial process development through to  commercialisation for all new products- otherwise we may still be talking about how these changes could revolutionise manufacturing in five or even 10 years time.