Is Pharma Ready for the Future?
The way medicine is manufactured is about to be
radically transformed.
The pharmaceuticals industry — with its major investments in
research, reliance on complex chemistry, and sophisticated understanding of
human biology — is generally regarded as a technologically advanced sector.
When it comes to manufacturing, however, pharma is stuck in the past. The
current methods of making drugs, which are labor intensive and inefficient, are
based on batch processes that have been in place in this sector since the
mid-20th century. Worse still, the traditional manufacturing techniques make
pharmaceuticals prone to contamination.
But that’s about to change, thanks to production innovations. A
new approach called continuous manufacturing is on the verge of transforming
the pharmaceutical value chain. It will affect every company in this industry,
from giant multinationals to the third-party manufacturers that small startups
hire to make their products. This shift in production capability will rapidly
become “table stakes” for leading pharmaceutical firms. It has the potential to
make drug manufacturing more efficient, less expensive, and more
environmentally friendly. And it is not the only transformative innovation in
this space. Digital fabrication — the so-called 3D printing of drugs — is also
gaining traction as a viable technology for making small batches of medicines
that have been too costly and impractical to produce.
Embracing such developments will be vital if the industry is to
adapt to the pressures it faces today. The healthcare industry is in a state of
flux. Global spending on healthcare has been soaring, and several countries
have introduced initiatives intended to bring costs under control. The U.S. is
still learning how to deal with the changes brought about by the Affordable
Care Act. Around the world, reforms have unleashed numerous disruptive
innovations, and growth in emerging markets is creating a large pool of
prospective consumers.
In addition, pharma companies are struggling with challenges
specific to their industry. Patents for many drugs — some of them blockbusters,
which have created billions of dollars in revenue — have expired, and more will
do so in the coming years. Health systems are no longer willing (or able) to
pay what they used to for pharmaceuticals. Regulators and the public are asking
pharma companies to produce and deliver more complex product portfolios at a
lower cost, in more and more markets — while continuing to meet stringent
quality requirements.
Amid such pressures, the industry has been slow to change its
tried-and-true manufacturing methods. Why? Because chief operating officers
have generally focused on making sure their high-margin products remained in
stock and met quality requirements. So long as manufacturing costs were kept
within industry norms, operating chiefs didn’t give much thought to them.
Furthermore, changes in manufacturing processes often have regulatory
ramifications. In most countries, all material changes to the way drugs are
designed or produced need to be approved by the appropriate government
agencies.
Continuous Manufacturing
Takes Hold
Increasingly, however, the industry is being prodded to update its
manufacturing approach and adopt new paradigms, and COOs are more focused on
controlling costs. Drug companies are also under pressure to deliver a larger
number of products to a wider range of markets. That’s where continuous
manufacturing comes in.
In conventional pharma operations, drugs are produced in batches
(rather than in assembly-line fashion, as cars are). Ingredients are mixed in
large vats, in separate steps. Different parts of the process — the blending of
powder ingredients, formation of pellets, compression into tablets, and coating
— sometimes take place at different plants. Drugs are then packaged in a
separate multistep process. The operation is time consuming, asset intensive,
and expensive. The risk of contamination is always present because batches of
partially finished medicines must be moved from place to place.
Continuous manufacturing technology breaks completely with this
old methodology. It combines the segmented steps of batch manufacturing into
one cohesive process, with more streamlined product flows and faster production
times. Factories using this technology are designed for flexibility and for
rapid, high-quality throughput, with more open floor plans and smaller
footprints, and lower building and capital costs. The continuous model uses
inline quality control to perpetually monitor what is being produced (instead
of using traditional batch-based testing), which reduces the potential for contamination.
Continuous systems for pharma are still new, but they are showing
very promising results. Many industry observers expect the first products made
with this method to be introduced to the market in early 2016. Some of the
established industry leaders are taking heed. GlaxoSmithKline plans to open a
plant in Singapore in 2016 that will deploy a continuous manufacturing system,
and leaders expect to cut both costs and carbon footprint by half, compared
with those for a traditional manufacturing plant.
Novartis, a pioneer in such efforts, has partnered with the MIT
Center for Continuous Manufacturing, and is investing US$65 million in a joint
10-year research project. The two parties have already concluded that
continuous manufacturing will benefit patients, healthcare providers, and the
pharmaceuticals industry. This project has demonstrated, for example, that
continuous manufacturing can accelerate the introduction of new drugs through
efficient production. It also tends to minimize waste, energy consumption, and
raw material use, and to enhance companies’ flexibility in responding to market
needs.
Continuous manufacturing
has the capacity to allow pharma — which turns over inventory more slowly than
most other major sectors — to catch up to companies in other fields, such as
consumer products. With traditional batch manufacturing, production takes 200
to 300 days from the start of production to packaging and shipment to the
pharmacy. Optimization can sometimes get this time down to 100 days. Continuous
manufacturing, however, can produce a quantum leap, reducing throughput times
to less than 10 days. Combined with the smaller plant sizes, this approach
could reduce overall operating costs and capital expenditures by 25 to 60
percent, according to the researchers at the MIT-Novartis project (see
exhibit).
Performance Impact of Continuous Manufacturing
|
|
Traditional batch
production
|
Optimized batch
production
|
Continuous
manufacturing
|
|
Operational asset effectiveness
|
40–70%
|
>80%
|
15–35%
|
|
Production time
|
200–300 days
|
100–150 days
|
<10 days
|
Source: Novartis-MIT Center for Continuous Manufacturing,
Strategy& analysis
Printing Medicine
Although continuous manufacturing is the wave of the near future,
the advent of chemputing — what’s commonly called the 3D printing of drugs — is
not far behind. 3D printing is already altering many processes and sectors,
including the manufacture of clothing and toys and, in healthcare, the
development of custom prostheses for amputees.
The technology also has the potential to revolutionize the pharma
industry. Prototypes and projects have been in development for several years.
In 2012, Craig Venter, the scientist best known for sequencing the human
genome, unveiled a plan to develop 3D-printable vaccines. And University of
Glasgow professor Lee Cronin has already started two companies that aim to
develop and test processes for drug manufacture using 3D printing technology.
Cronin’s device uses gel-based “inks” — including carbon, hydrogen, oxygen,
vegetable oils, paraffin, and other ingredients — to create uniform molecules
that can be combined in different formulations.
And in August 2015, the Food and Drug Administration approved the
first ever 3D-printed prescription pill for consumer use, a treatment for
epilepsy called Spritam, sold by Aprecia Pharmaceuticals. The new formulation
dissolves significantly faster than a typical pill, which is a benefit to
epilepsy patients, who may have trouble swallowing medication.
Production using these methods is well suited to drugs aimed at
very small patient populations — those patients with “orphan diseases” or
specific cancer mutations. The methods will thus advance the development of
personalized medicine.
To stay current, pharmaceutical companies will need to embrace the
new technologies. Rather than supplanting continuous manufacturing, 3D printing
will likely work in tandem with it. This combination will give pharma companies
great flexibility to produce different drugs in different ways, depending on
their markets, their costs, and other specific requirements.
Davids and Goliaths
Big pharma companies are not the only ones that will feel the
impact of these new technologies. Continuous manufacturing and chemputing are
also game changers for relatively small pharmaceutical companies, including
startups. Small pharma companies have typically found themselves challenged by
manufacturing, with its high asset intensity and minimum efficient scale. But
if the barriers to entry and the operating costs fall significantly, these
companies will have a much easier time making their own drugs.
In the past, companies that couldn’t afford a global operations
network had to outsource the production of their drugs to third-party contract
manufacturers. The advent of cheaper, faster, safer drug manufacturing will
ripple out to this group. To avoid obsolescence, they will need to embrace
these innovations and enhance their own service offerings.
Supply chains will also evolve. With smaller factories and faster
production cycles, pharma companies will be able to produce drugs much closer
to where they’re needed. The industry can expect to see lower inventories,
corresponding reductions in warehouse costs, and shorter transportation routes.
For the “Goliaths” of big
pharma, this change comes not a moment too soon. Jonathan Rauch, a senior
fellow at the Brookings Institution, noted in a March 2015 paper that the industry’s
endemic “cost-no-object, value-no-concern approach,” as he calls it, has made
companies “seemingly impervious to disruptive innovations.” It has been
impossible for competitors to break past the barriers to entry that exist, in part
because of entrenched regulatory approaches and practices in the U.S., Europe,
and elsewhere. However, he added, a growing culture of disruptive
entrepreneurship is gaining a foothold, and manufacturing may be the most
likely place to start.
The operations sector of the pharmaceuticals industry is now
evidently willing and prepared to take the lead. And other observers agree that
the short- and long-term winners will be not only the drug companies, both
large and small, that smartly adapt, but also the patients whose medicines will
become more effective and cheaper.
Although the first product of this system, as MIT-Novartis
announced, could be out and approved soon, no one should expect that all drugs
will soon be produced with the new technology. The coming decade will likely
see a mix of traditional and continuous manufacturing techniques, as the older
methods are phased out and newer technologies ramp up.
Pharmaceuticals manufacturing is like the airline industry at the
beginning of the jet age in the mid-1950s. Companies may continue to function
for the near term without upgrading their manufacturing technologies, just as
many airlines kept flying propeller planes through the 1970s. But by 2025 (or
sooner), the most successful pharma companies will be those that embraced
today’s emerging manufacturing technologies.
by Marcus Ehrhardt
http://www.strategy-business.com/article/00363?gko=746a4
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