A survey of eleven production plants of major drugmakers has revealed considerable variation in capacity utilisation, with the top performers being those who embrace automation and spend little on non-core activities.
The study, carried out by research firm Best Practices, looked at plants owned by nine prominent players in the industry, Pfizer, Wyeth, Bayer, DSM and Patheon being some of them, and included those with small lot sizes, considerable lot variety, no active pharmaceutical ingredient (API) production and no biological production.
It found that capacity utilisation is a key driver in cost management and production efficiency, so those facilities getting the most out of their equipment tend to perform better, while adopting a high degree of automation is important in reducing headcount, overtime performance and maintenance costs.
In the face of ever-challenging profitability and revenue goals, pharmaceutical companies are striving to improve and enhance their manufacturing and laboratory efficiency which can have direct effects on cash flow, balance sheet, product quality, and customer satisfaction.
Focusing on one type of manufacturing process, or a limited line of products, yields significant efficiencies, economies of scale and a fine-tuned operational excellence, according to the report.
On the other hand, such specialisation can lead to vulnerabilities to market whims, product termination decisions and other forces, thus, a diversity of products being made could smooth out marketplace vulnerabilities, albeit at higher costs, since product diversity requires larger facility footprints and systems to ensure cross-contamination is avoided while diluting personnel expertise and management focus.
Considerable spending and staffing on non-value added activities plagues several of the manufacturers Best Practices surveyed, with many reporting either high staffing or high relative costs in areas such as consumables, utilities and overhead.
In addition, contract manufacturers and those facilities that do some contract manufacturing or zero-profit product transfers demonstrate considerably higher conversion costs.
Equipment utilisation is a key issue for such facilities, with over-capacity built in to maintain a high degree of production flexibility, but with understandable cost penalties.
Looking at specific operational activities, in validation a low percentage of people generally indicates one of two scenarios; either the facility is ahead of the curve, with much of its validation efforts behind it, or it could mean it is behind the curve, with more validation activity ahead of it.
Generally speaking, being on the far end of any measure should warrant further study to assure management the facility is indeed on top of all the relevant issues, the report warns.
Moreover, QA and QC staffing levels are generally not dependent on the number of shifts run at facilities, though low staffing here may indicate future quality problems and should be closely evaluated, the report recommends.
Relative production headcount clearly is affected by the number of shifts in operation and greater utilisation via shift work reduces the conversion costs as a proportion of total sales.
For companies with similar shift strategies, relative production headcount should be similar and, if values are too high, production staffing should be evaluated further.
The survey also found that most companies have a span of control of about ten employees per manager and that contract manufacturers generally have higher supervision ratios.
It is interesting that most of the injectable companies reported a higher than average percentage of supervisors due, in part, to production complexity.
Companies with high product complexity, such as injectables, also tend to have the lowest number of annual batches per QC employee.
Three tiers of performers were identified, those at about 15 batches per QC person, those at about 35 batches per QC person and those at more than 65 batches per QC person.
The report suggests that those in the lower two tiers should further evaluate their QC assignments and productivity as further study of the quality department's activities, roles, and responsibilities will shed more light on this productivity shortcoming.
Managers however should be careful - while a low number of batches per employee may indicate some consolidation opportunities, increasing the number of batches per quality person is dependent on process complexity and QC personnel training.
As far as testing is concerned, three general tiers of retesting performance again emerged from the data, those 0.5 per cent or less, those about 1 per cent to 2 per cent, and those in excess of 5 per cent.
Those facilities with repeats in excess of 0.5 per cent clearly should evaluate the drivers for their sub-optimal performance and one viable reason, according to the report, could be capsule production, which generally has a higher production failure rate and testing failure rate than tablets.
Other drivers for performance on retesting include test complexity, lab worker training and productivity, sample management, documentation systems, laboratory information management systems (LIMS), and the like. Any use of contract testing, or lack thereof, might also drive this performance.
The report concludes by stressing that manufacturers who seek a leading position in the industry should strive for a high degree of automation, as they will benefit from low maintenance costs, relatively low maintenance headcount and low overtime percentages.