Change agents always ask: "What's the burning platform?"
In the pharmaceutical industry today, our platform isn’t burning. It’s leaking, due to shoddy quality. In fact, it is under water!
Ben Venue Laboratories just entered into a consent decree after years of troubles, and after trying to install lean problem-solving systems in its facilities. One of the first observations that FDA inspectors noted on the company’s original 483 refers to the company’s failure to adequately align those systems.
Johnson & Johnson, and others as large and as, supposedly, lean (after all, J&J began its opex efforts back in the 1980s), have also failed to deliver on the initial hype.
Why? Did they, did we, underestimate the real investment required? Did they try to go too far, too fast? Or are we, as an industry, simply asking the wrong thing of "lean"?
Lean is the term given to the Toyota Production System by John Krafcik, now of Hyundai, then of the MIT team that tried to define the reasons for the growing chasm between the American automobile industry and Toyota way back in the 80s. Their work resulted in the ground-breaking tome, The Machine That Changed the World by James Womack and colleagues.
The Toyota Production System (TPS) is all about the eradication of anything that does not establish value for the customer. Any non-value-added effort or expense is defined as waste. This waste has come to mean “cost” to a large number of executives in the pharmaceutical industry, and many of them then extrapolate this reduction in cost to infer that lean will improve profits.
When properly inculcated in any organization, TPS radically accelerates operational cashflow by consistently generating flawless products.
The intent of all fundamental TPS tools, including 5S, Standard Work, Poka Yoke, and Kaizen, is improved quality of the working environment, quality of the processes, and quality of their measures. This must, and does, result in safer and more effective products. And there is no industry outside of biopharmaceuticals, pharmaceuticals, and medical devices where quality is so critically important.
But TPS requires certain adjustments if it is to work in pharma. Consider inventory turns, a key ratio for manufacturers in any industry. Biologics manufacturers make snails look like Olympic sprinters when it comes to inventory turns. Inventory turns of well below 10 per year are common in BioTech while Apple's 2009 turns were 69.6! When a harvest cycle fails, it just makes that lead time stretch in to eternity.
TPS dampens variability in the process, improves yields, and prevents deviations; yet, when a deviation has occurred, it also offers a wide array of elegant tools that allow a focused team to rapidly and definitively apply the appropriate immediate corrective action and then follow that up with robust, long-lasting, and system-wide preventive actions. These are embodied in Corrective and Preventive Actions (CAPA), a concept that pharma appears to struggle with, based on recent 483s and Warning Letters.
The freedoms allowed to the producers of some pharmaceuticals, most notably orphan drugs, include protection from competition (ever heard of the patent cliff?).
The very real economic impact is that the drugs are “supply constrained.” This rewards the producers and venture capitalists with higher prices, accelerating the return on their eye-watering investments.
The impact for the lean change agent is that some of the tools may have to be tweaked and reoriented towards the supply end of the value stream.
We don’t make cars! Perhaps some of pharma’s TPS installations have failed because change agents haven’t adequately understood the unsurpassed potential of TPS or its application within our industry.