IW asked George Koenigsaecker, President, Lean Investments LLC, for his take on what pharma is doing right and what it needs to do going forward.
Q: Is there a cultural bias in pharma that would make it harder to implement lean?
A: One issue is that Lean is still thought of as something, mostly, for the shop floor. In pharma the leverage is in R&D and marketing...manufacturing is usually a small proportion of total cost and not central to senior management thinking. However, as it is becoming generally known, that Lean improves "work" and it does not really matter what kind of work it is, then interest in applying this to core processes grows.
Q: Would a combination of lean/six sigma be a better fit for pharma as opposed to adopting lean by itself?
A: There is a general misperception of what Lean is in the West. My view is that it is "what Toyota does." And what Toyota does is a combined system that is built on the dual foundation of both TQC and TPS. Many in the West have broken the system into two parts and do not do well because of this. Lean, in my practice, is always the combination of tools/principles and practices that came out of the combined schools of TQC and TPS.
George Koenigsaecker, President, Lean Investments LLC
Q: In your experience are pharma companies spreading their lean implementation from the factory floor to other functions such as supply chain and R&D?
A: It is becoming common knowledge that Lean is a set of tools, principles and practices that improve work -- and that it does not matter what the work is, if you apply the tools, practice the principles (flow, pull, seeking perfection etc.), then you can improve the work. The rule of thumb for going through a value stream a first time is that you will "double the good, and half the bad" -- e.g., half the time, half the quality issues and double the productivity. And then you can do this again with the improved value stream by starting the study all over. Particularly in pharma, most firms have a small part of cost on the production side, so they will not be successful unless they study and improve all enterprise processes.
Q: There will be a need for the pharma industry to join with the regulators and educate the consumer as to the shorter trial times due to the implementation of lean in the R&D function. The joint effort would be reassure consumers that shorter time to market doesn't mean less quality it actually means improved processes and quality. Your comment?
A: A good educational effort would be to give a real-world example of one of their value streams, that points out the value-adding steps and the non-value adding steps within the process, at the start...normally value-adding steps cumulative time would be 1-5% of total elapsed time, so the opportunity becomes clear.
Q: How will the increased pressure for developing block buster drugs to replace those that turn generic impact the implementation of lean at all levels of the organization?
A: This could go either way. Lean New Product Development practices (which use a different set of tools, principles and practices from TPS or normal lean) can improve the probabilities of success and reduce the cost/ time for major new drugs. But few are aware of this practice and very few have enough experience to know that it works. So the pressure of generics may push some to accelerate improvement of both existing work processes and new product development processes, while most may see only the short term commitment to get started and, not having experience that tells them it will work, may just do "cost take outs."
Pharmaceutical's Lean Prescription