Traditional cost-cutting needs rethinking
Traditionally pharmaceutical companies aiming to cut operational expenditure have targeted
areas such as labor costs or have reduced production output in a bid to make savings. But cutting labor costs aggressively can undermine vital R&D capability, while constantly trimming production can hinder a company’s ability to meet demand.
One area of operational expenditure that has been largely overlooked, but which has
substantial potential to deliver savings, is the cost and use of indirect materials, such as water, energy, maintenance and hidden value in assets. Although indirect materials typically account for only 4% of a pharmaceutical plant’s total costs (see figure 1), this figure is set to grow.