The global pharmaceutical industry generates trillions of dollars in annual revenue. But a key reason for the high prices of new drugs is the cost of research and development. Advancing a single drug from discovery all the way through regulatory approval can take more than a decade at a cost of nearly $2.6 billion, according to the Tufts Center for the Study of Drug Development. Blockbuster status for a pharmaceutical product is both a scientific success and a business achievement. But the largesse of the successful products has also led to complacency and inefficiencies in the drug development process, making the pharma industry a prime candidate for kanban project management.
Kanban is primarily thought of as a manufacturing concept, due to its origins in Japanese car manufacturing. But the tenets of lean operations and efficiency in manufacturing still have applications throughout the pharma industry, and particularly as blockbuster drugs lose their patent protections, putting, even more, pressure on pharma drug pipelines to produce new products. The drug discovery and development process include many actions that are repeated, Pharmaceutical Executive explains. By standardising steps such as protocol review or clinical data processing, research scientists can streamline development of drug candidates. These efficiencies are important given the high failure rate of drug candidates. What pharma companies want to do is get reach those failure points as quickly as possible.
Striving to fail may seem counterintuitive, but keep in mind that most drug candidates fail due to problems with safety, efficacy, or both, Forbes explains. The key is to figure out, as quickly as possible, which compounds work and which ones don’t. Taking longer to identify promising drug candidates is less efficient and more expensive. Most of the drug development costs come at the tail end of this R&D process. A pharma company that learns late in the process that its drug won’t work will have expended a great deal of work and resources that ends up as waste, according to Pharmaceutical Executive. A lean approach can refocus pharma on experiments and efforts that reduce the risk of experiencing these failures.
“By embracing a ‘fail fast’ approach to drug development and customising the path to each compound, scientists and managers can become more thoughtful in how they evaluate risks, make decisions, and use resources,” Pharmaceutical Executive explains.
Lean approaches have already trimmed unnecessary waste in unused clinical supplies. At one company cited by Pharmaceutical Executive, about half of all supplies that the company ordered went unused, due to poor forecasting, the inability to track consumption of supplies, lack of packaging and labelling standardisation, and inefficient shipments from suppliers. The company adopted a lean program that included better forecasting tools that can predict patient enrollment at each trial site, which helps match the clinical supplies to the patient need. Also, consolidated packaging and labelling, consolidated shipments, and a new inventory system helped the company better manage supplies. The combined lean efforts are saving the company more than $20 million each year.
Kanban also applies to maintaining drug inventory. When pharma companies were riding high on the billion dollar sales of blockbuster drugs, the expense of keeping inventory levels high inventories posed little concern. But pharma companies can make better choices about which products they stock at high levels. When it comes to keeping inventory levels high, there is a difference between expensive life-saving drugs and a low-demand, low-margin products, Pharmaceutical Executive explains. Pharma companies can make smarter decisions about which drugs they keep on hand, and in what quantities. Inventory levels of lower margin products can be kept at a minimum, which helps lower drug manufacturing costs.
Pressure on pharmaceutical companies to become more productive and more efficient has never been greater. Besides the looming patent expirations facing blockbuster drugs, drug pipelines that once held the promise of delivering new blockbusters have steadily dried up. Meanwhile, insurers, health care providers, and patients have become more vocal in calling for pharma companies to keep rising drug prices in check. Productivity and pricing concerns can be alleviated by making the drug discovery and development process more efficient. Contact us to learn more about how to bring Kanban practices to your pharmaceutical organization.