Have you ever thought about how drugs get made? Not your Walter-White kind of drugs but proper ethical pharmaceuticals. As the Wall Street Journal tells it, major players in the industry like Novartis and Johnson & Johnson are taking new approach to producing drugs (Drug Making Breaks Away From Its Old Ways, Feb 8).
For decades, drug makers have used cutting-edge science to discover medicines but have manufactured them using techniques dating to the days of the steam engine. …
Under the new approach, raw materials are fed into a single, continuously running process. Many other industries adopted such a “continuous-manufacturing” approach years ago, because quality can be checked without interrupting production—with weeks shaved off production times and operating expenses cut by as much as 50%.
Until recently, pharmaceutical companies have been stuck making drugs the old-fashioned way, mixing ingredients in large vats and in separate steps, often at separate plants and with no way to check for quality until after each step is finished. Any desire to modernize was partly blunted, industry officials say, by the high margins netted on the industry’s string of billion-dollar-selling drugs.
To give you an idea of the scope of what is happening, the article reports that J&J is aiming to have 70% of its highest volume products produced under a continuous-manufacturing approach within eight years.
Fans of the product-process matrix will recognize this as a transition from batch production to continuous flow. The real question is why this has taken so long. The notion presented in the quote above that high margins cover dumb decisions doesn’t really cut it. High margins can alway be higher if costs can be saved in production. Further, as is argued in the article, a more continuous flow can improve quality and product consistency. You would think that a drug company would like that.
The article mentions FDA regulation as an issue. The Feds regulate not only the content of a drug but its production process. Changing the order of reactions — even if they result in the same output — needs to get approved. There is then an incentive to lock in a good enough production process early. (Gary Pisano’s work on process development in the pharmaceutical industry along these lines is really interesting.) The FDA has apparently come around on continuous manufacturing so this change may actually stick.