Disruptive Innovation Part II: New Technologies To Impact The Future Of Pharmaceutical Manufacturing

Last November was my post “Coming soon to Big Pharma: Disruptive Innovation.”  Here is a post which represents a continuation of this notion which addresses the potential for new disruptive technologies in pharmaceutical manufacturing that may have an industry wide impact.

Despite incremental technological advancement over the past 100 years, the production model employed by the pharmaceutical manufacturing industry has remained rigid and inefficient--stalled on the cusp of a much-needed paradigm shift. New methodologies and disruptive technologies are emerging that may prove to be the catalysts that finally drive a maximally efficient, agile, and flexible pharmaceutical manufacturing sector that reliably produces high quality drugs without extensive regulatory oversight.

 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.

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.

 The full implications of the shift have yet to materialize. And, in all probability, the true shift will come only as more pioneering companies fully embrace the combined potential of these advancements. Two radical innovations, continuous manufacturing and producing drugs with a computer, also referred to as the 3-D printing of drugs, have the potential to fundamentally change the pharma manufacturing paradigm and, with that, impact whole pharmaceutical industry structures.

When graded on metrics including capacity utilization, throughput times, inventory turns, and scrap rates, the pharmaceutical industry lags considerably behind other manufacturing industries such as automotive, chemicals and chip production. Simply stated, pharmaceutical manufacturing remains more primitive.

From a supply-chain perspective, pharmaceutical companies face significant challenges from rising price pressure due to competition and government cost-containment measures. These pressures, coupled with dramatically increasing complexity from ever more SKUs; increasing demand volatility, e.g., from tenders; increasing regulatory scrutiny; and the difficulties posed by a shift in industry focus toward the world's emerging markets, make clear the need for supply chains with lower costs, higher agility, and complexity management capabilities, delivering products at a high quality level.

In recent years, these challenges have been addressed through a host of evolutionary developments. Industrywide emphases on strategies such as Lean Six Sigma methodologies, plant layout improvements, quality by design, and so on have led to small improvements. More cutting-edge innovations, such as disposable technologies and modular facility design are making strides to improve pharma operations, increasing flexibility and speed to market.

In the end, however, these new avenues are still tied to the old pharma batch-manufacturing paradigm and represent only incremental steps forward.

New Technologies And Incremental Implementation

The picture begins to change dramatically, however, with the advent and use of radically new technologies and production approaches. Two of these radical changes are continuous manufacturing and drug manufacturing with a computer (aka chemputer), also known as the "3-D printing of drugs." These two innovations portend true paradigm shifts with enormous disruptive potential.

Continuous manufacturing technology strings together the traditional, segmented steps of pharmaceutical manufacturing into one cohesive process, continually verifying quality and releasing products swiftly, leading to dramatically reduced throughput times, lower operating and investment costs, and smaller manufacturing footprints.

The concept of 3-D printing of drugs uses gel-based "inks" including carbon, hydrogen, and oxygen, plus vegetable oils, paraffin and other common pharmaceutical ingredients to create any organic molecules. This technique allows drugs to be produced anywhere and, even in low volumes, very cost-effectively. By harnessing that flexibility, on-demand, point-of-need, and personalized drug production is just beginning to show what may be possible in the future.

With the introduction of these two new technological advancements, not only will there be a tremendous reduction in manufacturing costs (a key element in competition, especially for generics), but the much-reduced lead and throughput times, along with lower capital requirements and smaller footprints, will also allow for new production networks. The novel manufacturing approaches provide the possibility of far more decentralized production setups, making it economical for smaller pharma companies to have their own production facilities--which will increase pressure on the business model of contract manufacturers.

None of these shifts will happen quickly, but as the manufacturing model morphs, both evolutionarily and revolutionarily, companies' level of adoption and specific strategic moves will determine which industry players will be the first to exploit the potential and achieve sustainable competitive advantage. More broadly, as is the case during the throes of any significant shift in technology, there will be those who recognize the coming sea change and invest for the future-- cementing their position at the forefront of the industry--and those who see the change as a distant problem, still years away, who will then struggle to keep pace when the industry moves rapidly forward without them.

Continuous Manufacturing Takes Hold

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.

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. 

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 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.

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.