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Über dieses Buch

Achieving operational excellence is a challenge for the pharmaceutical industry, with many companies setting successful examples time and again. This book presents such leading practices for managing operational excellence throughout the pharmaceutical industry. Based on the St.Gallen OPEX Model the authors describe the current status of OPEX and the future challenges that have to be dealt with. The ample theoretical background is complemented hand-in-hand by case studies contributed by authors from leading pharmaceutical companies.​





Chapter 1. Introduction to Leading Operational Excellence: Making OPEX a Competitive Weapon

In our second book on Operational Excellence in the Pharmaceutical Industry titled “The Pathway to Operational Excellence”, published in 2010, we had undertaken an imaginary journey to develop the framework and structure of the book. It gave us the opportunity to describe our experiences from working with dozens of different pharmaceutical manufacturers in the US and Europe. We suggested a sequence starting with preparing for the journey and finishing with the re-definition of the destination leading to the selection of the next destination so that the journey will be an on-going one. Two years later, we have decided to write another book. The main reason for doing this is the positive feedback we have received on the first two books. The other reason is our conviction that despite the renewed enthusiasm for outsourcing in the industry, manufacturing will remain a critical activity for every major pharmaceutical company, and the continuous improvement of manufacturing will not just be an option, but a necessity.
Thomas Friedli, Prabir Basu

Chapter 2. OPEX: A Definition

There is no clear-cut definition of Operational Excellence (OPEX) in theory or practice. Especially the inflationary use of the term for almost every launched improvement activity rather obscured than clarified its meaning. In some companies it has been used synonymously for cost-cutting, in others similar to Six Sigma or lean production. This chapter explains our understanding of, and our philosophy behind, OPEX. Based on this understanding we discuss the benefits of striving for OPEX in the Pharmaceutical Industry. We start with a short story from a completely different field, the management of a major airline’s baggage handling department. This will foster the understanding of hindrances to excellence in today’s companies. We proceed with examining existing excellence models, and derive common elements. This sets the stage for the introduction and the explanation of the St. Gallen OPEX Model. We then conclude this chapter with our definition of Operational Excellence.
Thomas Friedli, Daniel Bellm

Chapter 3. The History of OPEX in the Pharmaceutical Industry

The History of Operational Excellence in the Pharmaceutical Industry is still short. Serious initiatives were only launched around 10 years ago. This chapter provides some background on how and why OPEX became a topic of serious interest in this industry.
Thomas Friedli, Jürgen Werani

Chapter 4. The Current State of Operational Excellence Implementation: 10 Years of Benchmarking

This chapter reviews the current state of Operational Excellence (OPEX) in the pharmaceutical industry. Based on the St.Gallen OPEX Benchmarking data, the level of implementation of OPEX practices and tools as well as the development of selected Key Performer Indicators (KPI) is discussed.
Thomas Friedli, Nikolaus Lembke, Uli Schneider, Saskia Gütter

Chapter 5. Leading the Advance in Regulatory Science

That the pharmaceutical industry is undergoing a period of great transformation can be in little doubt, with so many industry reports highlighting the magnitude of the impact of the patent cliff on big pharma revenues and share prices.
Nuala Calnan

Chapter 6. A Look to the Environment and the Impact on OPEX

With a glimpse to global stock markets, the pharmaceutical industry has performed poorly compared to other industries over the last 10 years. Positive influencing factors like the strong growth in emerging markets (see Fig. 6.1), the aging population and influenza pandemics seem to be counterbalanced by other factors like increasing competition, the global financial and debt crisis, the patent cliff, an increasing complexity and a declining R&D productivity.
Thomas Friedli, Daniel Bellm

Chapter 7. Barriers and Success Factors in Managing Operational Excellence

In our previous book, “The pathway to Operational Excellence in the Pharmaceutical Industry”, we developed a model that aimed at the sustainable implementation of Operational Excellence (OPEX) initiatives. Over the last 10 years, we have witnessed and examined several more OPEX programs, and this chapter will tie in these insights with our previous work. Knowing success factors and barriers in managing OPEX can provide guidelines as to how to design, review and adapt an excellence program. Thus, the first part of this chapter will discuss aspects that should be taken into consideration when launching an OPEX initiative. The subsequent part provides insights into challenges OPEX managers of more mature initiatives are likely to face. At the same time, this section serves as a bridge to parts II and III of the book by giving insights into practical applications in the industry, mostly written by industry leaders themselves.
Thomas Friedli, Daniel Bellm

Leading Operational Excellence: Outstanding Practices


Chapter 8. From Process Stabilization to Plant Network Performance: Pfizer’s Journey to Operational Excellence

Pfizer is one of the world’s leading research-based pharmaceutical companies; discovering, developing, manufacturing and marketing innovative medicines. The company was founded in 1849, and by 2012 it had grown into a $59 billion global enterprise with more than 88,000 employees and an annual R&D spending of $7.9 billion.
Colin Seller, Richard Davis

Chapter 9. Ten Years with OPEX as a Brand: cLEAN© in Novo Nordisk Product Supply

In the period around 2000 Novo Nordisk Product Supply experienced challenges which occasionally required emergency intervention caused by cases of back orders, long delivery times, low operational efficiency, delayed investments and budget overrun. During that period, forecast precision was limited and new product launches were delayed. But in 2003 PS was characterized by relative stability and deliveries, investments and budgets all met the targets. From that perspective, the timing was optimal for defining a long term strategic goal and to invest in long term measures and solutions for the organization to get ahead of the game.
Kasper Mejlvang

Chapter 10. Lean in Novartis Pharma: Sustainability Through a Five Step Deployment Methodology

Novartis Pharma began its most recent chapter in Operational Excellence in 2004 achieving tremendous results in productivity, cycle time reduction and working capital optimisation. Much of these achievements have been sustained since the inception of the Innovation Quality & Productivity program which began back then. This journey was described in the first book “Operational Excellence in the Pharmaceutical Industry”, with a description of the balanced approach in addressing waste through Lean, and variation through Six Sigma. The approach to Lean was developed and piloted in response to the business imperatives of the time, to drive improvements along the extended value streams of the strategic brands running through the API and Finished Product manufacturing network.
Steve Dreamer, Pav Niewiarowski

Chapter 11. Abbott Pharmaceuticals Journey of Business Excellence Standards

Abbott is a global healthcare company devoted to improving life through the development of products and technologies that span the breadth of healthcare. With a portfolio of leading, science-based offerings in diagnostics, medical devices, nutritionals and branded generic pharmaceuticals, Abbott serves people in more than 150 countries and employs approximately 70,000 people.
Valentin Starke, Joseph Kumor

Chapter 12. Structuring and Implementing an Operational Excellence Program from Scratch in the Biotech Industry

Amgen discovers, develops, manufactures, and delivers innovative human therapeutics. A leader in biotechnology since 1980, Amgen was one of the first companies to realize the new science’s promise by bringing safe, effective medicines from lab, to manufacturing plant, to patient. Amgen therapeutics have changed the practice of medicine, helping millions of people around the world in the fight against cancer, kidney disease, rheumatoid arthritis, bone disease, and other serious illnesses.
Wright Troy

Chapter 13. Implementing an OE Strategy on Plant Level

Hameln Pharma is a well-established contract manufacturer for sterile drug products. The aim was to develop Hameln Pharma into a modern, market-oriented, flexible and high-performing company which intends to be the first choice for its customers in the market for filling sterile liquids and related services. Hameln Pharma’s mission is to be a strategic business partner for its customers, to supply them in a fast, safe and flexible way and offer them FDA-level quality products at fair market prices. The company maintains its competitive edge by
Jürgen Werani, Volker Pfahlert, Kai Reimers, Gert Diederich

Chapter 14. Winning the “Facility of the Year” - Award with an Indian Plant

Eisai Knowledge Centre
The Indian economy has undergone several structural changes in the last decades. Beginning with the 1950s, India faced excessive regulation that characterized its industrial development policy for the next four decades. These regulations, set up to govern manufacturing capacity, products, technology etc. had the objective to prevent the developing and capital-scarce economy from costly over capacity. With the opening of India’s economy in the late 1980s inflows of knowledge, foreign technology, and capital has started. Local manufacturers expanded their production and the country became a center of interest for foreign competitors. Moreover, a lack of sufficient import regulations evoked the structural change of the Indian economy. In 1991, India introduced a new set of reforms that substantially reshaped the competitive environment for both domestic and foreign companies. Due to the abolition of India’s license regime, protectionism and control measures came to an end and brought the manufacturing sector at a critical juncture (Dangayachy and Deshmukh 2001). However, although the perception of manufacturing in India as a support activity for marketing and finance rather than the vital value creation of a company is gradually changing, today’s manufacturing still lacks attention of senior management (Chandra and Sastry 1998). Therefore, it’s no wonder, that most companies in India are still far from practices summarized under the umbrella of world class manufacturing (Dangayachy and Deshmukh 2001). Meanwhile, international competitors improve their manufacturing functions continuously, market new products in the country, and thus increase the flexibility and responsiveness of the entire Indian manufacturing sector. As such, the domestic Indian economy experiences rising competition from both multinationals entering the market and from imported goods. This new competition is characterized by the simultaneous combination of a wider range of products – mostly coming with higher performance, reduced cost, improved quality, and better services (Chandra and Sastry 1998; Dangayachy and Deshmukh 2001).
Sanjit Singh Lamba

Chapter 15. Succeeding at the ‘Harder’ Side of Change: The ‘ABCs’ of High-Performance Behavior

It was an increasingly familiar story. A well-established and successful biopharma production site, accustomed to large, relatively stable production volumes for blockbuster products, was starting to see the effects of wider changes in the industry: products going off patent, fewer products coming through the R&D pipeline, and a shift from churning out blockbusters to ramping up new smaller products and supporting increasingly competitive post-loss of exclusivity products. These macro trends were creating new pressures for the manufacturing site such as reduced and more volatile demand, less certainty about future volumes, much more intense cost pressure, and even more of a need to deliver the highest possible levels of quality and safety.
Ned Morse, Nick South, Gideon Walter

Chapter 16. Structures of Operational Excellence Initiatives

One of the most differentiating factors comparing Operational Excellence (OPEX) initiatives from one company to the other is the way how they are organizationally embedded into the respective global and local organizations. There is a lack of evidence about the right structure and the optimal amount of trained people to successfully launch and maintain an excellence initiative. Some companies launched the initiative with the intention to suspend it as soon as the final objective, to make it part of the daily work, would have been reached, others believed in very decentralized structures or contrary invested in quite big central offices. We will try to clarify some aspects of this discussion, not only by relying on evidence from pharmaceutical OPEX programs, but also by reviewing evidence from other industries, especially the automotive industry. We will start with a basic consideration of what the general task of a structure is, than we will specify the objective an OPEX structure has to fulfill, followed by an overview of typical dimensions of an organizational structure. We will then discuss if the structure should change over the lifecycle of an OPEX Initiative and will conclude with a suggestion for an ideal OPEX structure.
Thomas Friedli, Nikolaus Lembke

Chapter 17. Preventive Process Stabilization by Integrated Process Development

Compared to other industries, pharmaceutical companies still work as an assembly of functions rather than as a seamlessly integrated operation. Co-existing functions and departments do not, or only to a small extent, collaborate. This especially applies to pharma’s central value stream of research – development – production. Although there are often clear interfaces between these major functions, they usually are rather narrow. Since projects from research through development to commercial manufacturing have a long lifespan, they are rarely overseen from beginning to end, but instead are independently assessed during these three distinct phases. This results in an overall lack of dedication to the success of a project; the goal is mainly to get a project successfully through one’s own phase, without much consideration of subsequent requirements and specifics.
Thomas Friedli, Reto Ziegler

Chapter 18. Matching Problems with Tools

In order to provide a profound understanding of the use of tools, it is necessary to discuss them in the context of objectives that can be reached by their application. A tool and its mere application are not just self-contained. This becomes apparent when looking at the further development of Deming’s famous PDCA cycle by Kaoru Ishikawa. He expanded the two steps “Plan” and “Do” by an extra step each, making six steps out of the four: Determine goals and targets, determine methods of reaching goals, engage in education and training, implement work, check the effects of implementation and take appropriate action. These kinds of cycles are typical for many approaches in quality management/improvement. It is a pragmatic step-by-step approach for collecting data, analyzing them and deriving solutions (Fig. 18.1).
Thomas Friedli, Christian Mänder, Daniel Bellm

Chapter 19. Introducing Complexity in the Equation: How Pfizer Made Complexity on a Plant Level Transparent

Managing complexity induced by product variety represents a major challenge for every industrial company in this world. In the Pharmaceutical Industry the regulatory requirements make the situation even more challenging. Companies are especially concerned with the assessment of variety-induced complexity at production plants and its impact on operational performance. This chapter describes how Pfizer examined the connection between Complexity and Operational Excellence on the plant level and the potential for using the model for identification of operational improvements on the plant, as well as the broader manufacturing network level. The chapter follows a methodical combination of qualitative and quantitative approaches and presents a complexity index consisting of 20 indicators. Taking the index as a basis, the relationship between complexity and operational plant performance is investigated. Finally, two clusters, built on plant performance level and ability to transfer high external complexity into low internal complexity, are compared in detail. In the concluding part, the benefit for Pfizer from taking this perspective and approach on plant performance and on OPEX is described.
Colin Seller, Richard Davis, Matthias Götzfried, Thomas Friedli

Chapter 20. Knowledge Exchange in Production Networks: Operational Excellence Multiplied

Ikujiro Nonaka, one of the most influential researchers in knowledge management, once stated that “[i]n an economy where the only certainty is uncertainty, the one sure source of lasting competitive advantage is knowledge. When markets shift, technologies proliferate, competitors multiply, and products become obsolete almost overnight, successful companies are those that consistently create new knowledge, disseminate it widely throughout the organization, and quickly embody it in new technologies and products.” (Nonaka 1991, p. 96) Thus, manufacturing network managers have to focus their attention not only on the management of the physical flow of goods but also on the management of the intangible flow of knowledge (Chew et al. 1990). This applies to all kinds of industries: The strength of an international manufacturing company today is to a large degree dependent on its ability to exploit the knowledge that is available somewhere within its network or in its boundaries. To achieve this, network management has to be aware of the knowledge available at each site, generated, e.g., through Operational Excellence programs. It further has to trigger the distribution of process innovations and successful practices within the network (De Meyer and Vereecke 2009). However, many attempts to foster the exchange of knowledge in the network fall short of expectations. Popular examples are idle databases or lacking exchange of successful practices. Competition between manufacturing sites adds further barriers to the sharing of knowledge.
Simone Thomas, Fabian Liebetrau, Thomas Friedli

Leading Operational Excellence: Outstanding Leadership


Chapter 21. Leadership Principles & Operational Excellence

For a long time, pharmaceutical companies mostly laid stress on the training of specialists and technical aspects in their pursuit of Operational Excellence. This focus on methods and tools somewhat distracted from one of the most important success factors for a sustainable implementation: leadership. The importance of leadership has been notoriously underestimated. We will start this chapter with a short introduction to leadership, and then highlight the importance of leading the “right way” at all levels of an organization: from the OPEX specialists, over the OPEX leader in a plant and the plant leader himself to the responsible person for OPEX at a corporate level and the Top Management. We will build a leadership model helping us to put leading in an OPEX context, and will then discuss what kind of leadership is the most appropriate for a sustainable implementation of OPEX.
Thomas Friedli, Jürgen Werani

Chapter 22. Transformational Leadership - Shaping the Future of the Biopharmaceutical Industry

The biopharmaceutical industry is undergoing deep structural changes in the marketplace as is the legacy business model that supports it. To succeed in this turbulent climate, organizations will need “transformational” leaders, at all levels, skilled at adapting to rapid socio-technical change, anticipating disruptive events in the marketplace, and setting a shared inspirational vision for all colleagues.
Andy Crossman

Chapter 23. Making Operational Excellence a Priority at Every Level

Operational Excellence programs do not come with a guarantee of success. Many reasons have been given for failures, one of the most common being the ‘layer of clay’ in middle management levels who are resistant to change. Although this is often the case, inertia, complacency and resistance are key challenges at the level of individual contributors and senior executives as well as middle management.
David Hampton

Chapter 24. How Do We Create Leadership Pull for Operational Excellence?

Several times a year, over the last decade, in multiple Operational Excellence (OPEX) focused conference workshops, we have asked the same question. What’s the #1 obstacle to successfully deploy OPEX? The #1 answer has invariably remained “lack of top management commitment”.
Paul Docherty

Chapter 25. Leadership Characteristics for a Sustainable OPEX-Implementation

Through long-term collaboration with leaders of OPEX initiatives, and by monitoring their initiatives’ development over the years, characteristics of successful leaders – of leaders who have implemented OPEX initiatives themselves, and of those who took them over at some point – have been determined. Some leaders successfully lead an OPEX initiative right from the start for many years, and maintain a positive OPEX culture that outlives the initial verve. Others have to put a lot of energy and effort into both execution as well as further development of their OPEX programmes. This raises the question of how, under comparable conditions, leaders differ from each other. Why does leading OPEX initiatives come naturally to some, whereas others have to work hard for it? The answer to this lies in the leaders themselves. It is not the concepts and methods, not the lack of resources or the pressure from everyday business. It is the personality of leaders that has a fundamental impact on the success of an OPEX initiative, affecting quality, speed, and outcomes of OPEX programmes.
Uta Walkhoff

Chapter 26. Leading Operational Excellence in a Global Company

Most pharmaceutical companies have introduced Operational Excellence (OPEX) programs to optimize quality, costs, and time. Many of those responsible for OPEX have tried to identify the key factors leading to a successful implementation of OPEX. Identifying these factors is especially interesting against the backdrop that more than a few OPEX programs fail during implementation. This article reflects on the importance of leadership at company and individual level for the successful implementation of OPEX programs.
Mark McColgan

Chapter 27. Leading an Operational Excellence Program at a Geographic Area Level

At the beginning of any Operational Excellence (OPEX) program it is of utmost importance to articulate (1) its purpose, i.e. the fundamental reason to launch such a program, and (2) its mission, i.e. the desired end state. It is also important to communicate how the purpose and mission of the program fit into the company’s strategy and vision for its business development.
Jürgen Werani

Chapter 28. Continuous Improvement: A Path Towards Excellence

In what way can a focus on continuous improvements (CI) affect the transformation of a culture? The Pfizer facility in Strängnäs, Sweden, has been producing large molecule biotech products since the mid 1980s. Today, the plant is a flexible multi-product facility with state-of-the-art platform technology.
Kim Sandell, Jesper Eriksson, Karin Eriksson, Maria Stigell Warnström, Kirsti Gjellan

Gaining the Future


Chapter 29. The Future of Pharmaceutical Manufacturing

The pharmaceutical industry is definitely a high-tech industry, for its role in discovery of new medicines for the treatment of unmet medical needs. Pharmaceutical manufacturing is complex and sophisticated due to various reasons, but in its current state probably cannot be categorized as really high-tech, too. In fact, pharmaceutical manufacturing was considered as relatively low-tech even by the pharmaceutical companies themselves as recently as in 2002. When ex-FDA commissioner Mark McClellan sought a benchmark for future pharmaceutical manufacturing performance, he looked outside the industry, and challenged Pharma, “You need to improve…Other high-tech industries have achieved enormous productivity gains in manufacturing in the last 25 years. We should expect nothing less from the Pharmaceutical industry.”
Prabir Basu, Thomas Friedli, Daniel Bellm

Chapter 30. Managing Global Pharmaceutical Manufacturing Networks

This final chapter presents both the reasons and a possible approach for tackling the challenges of today’s globally dispersed manufacturing networks of pharmaceutical companies. Despite of years of discussions about end-to-end value chains the main activities in production optimization in the pharmaceutical industry are still focused on single plant level. Nevertheless we are sure that the industry will have to follow the example of other more advanced manufacturing industries and systematically address production optimization from a true network perspective in the near future. The content of this article will in a first part cover the history of why global companies’ manufacturing is scattered around the world, why this development was not managed from a holistic perspective and what problems and challenges arose with that. It will then give several real life examples for difficulties and challenges such companies face and it will describe some targets and the current gaps between the status-quo and these targets. In the second part of this chapter we present some frameworks that can help managers to align site and network level and to systematically close the gap between status-quo and the targets. Those frameworks are illustrated with one real life example each. Further we will show some implications for the framework application in the pharmaceutical context. In part three we will sum up the content and close the chapter.
Thomas Friedli, Fabian Liebetrau, Richard Luetzner


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