Biopharma Benchmarking Unveils Performance Variance

The complexity of biopharmaceutical manufacturing has made operational excellence a relatively low priority to date, with manufacturers focused primarily on delivering an adequate supply of quality product. As the industry grows and evolves, however, the focus on operational excellence is increasing, and manufacturers are beginning to look at their peers to understand best practices and their own performance potential. As they do, McKinsey’s proprietary Pharma Operations Benchmarking service (POBOS Biologics) reveals notable performance variations among biomanufacturing sites, reflecting the immaturity of these operations. These performance gaps suggest that biomanufacturing companies should take a good look at the way they run their operations and consider whether it is, indeed, time to step up.

Biopharmaceutical manufacturers have dealt for some time with their products’ complex and unstable production processes and relatively low yields. Securing product delivery at sufficient quality has historically been considered challenging enough, therefore, without taking the risk of pursuing production improvements or a transfer to better facilities. Not surprisingly, it is accepted in the industry that variation in output, yields, productivity and quality is simply inherent to biopharma manufacturing. Operations are run at different levels of effectiveness (for example, costs, labor productivity and capital productivity), with technical performance varying as well. As a result, management’s focus in biomanufacturing to date has — justifiably — been on supplying the market, rather than improving established operations.
Today, the landscape of the industry is changing. Biosimilars are becoming a reality, making it more difficult to command significant price premiums for biopharmaceuticals, particularly in areas in which innovation may become more difficult, such as in inflammation treatments. Yet the biopharma industry is still more profitable than traditional pharma and has grown steadily for a number of years. In fact, the share of cost of goods (COGS) sold attributable to biomanufacturing in Big Pharma is increasing steadily. Where biomanufacturing was once a minor diversion for pharma’s technical-operations organizations — generating a limited share of total costs — many Big Pharma players today have, or aspire to have, a substantial part of their operations in biopharmaceuticals. Simultaneously, biomanufacturing is becoming increasingly industrialized, moving steadily from the frontiers of science into a new manufacturing mainstream.
As the industry changes, executives in biomanufacturing debate the potential for true performance improvement in their operations. Their expectations range from quality improvements and multiproduct flexibility to faster cycle times or throughput and an enhanced cost position. As they pursue these enhancements, they look to understand the true potential of their manufacturing sites, addressing a broad set of performance dimensions — such as process robustness, capacity utilization and lead time — that are as important as, or more important than, productivity itself.
As a result, there is already a strong sense that the industry is moving in the right direction, with some players beginning to take steps to achieve both technical and operational excellence. These players are following a path similar to the one taken several decades ago by a number of chemical active pharmaceutical ingredient (API) manufacturers, moving one step at a time toward more effective operations. Some even find themselves ahead of the curve, having built, or begun to build, operational and technical expertise that puts them at the forefront of the biopharma industry. They are operating multiproduct facilities at a high level of utilization, have rapid batch and product changeovers, and are seeing excellent cost, quality and delivery results.
It is generally understood that certain players perform better than others, but those who have tried to understand their performance vis-à-vis that of the industry have found little transparency, making it difficult to compare the results at different sites or discover the industry’s true level of competitiveness. Understandably, many manufacturers are asking themselves important questions:
• Which performance metrics should we consider?
• What does good performance look like?
• How big is our opportunity for improvement?
• Are there any trade-offs? For instance, does increased productivity hinder quality?
To uncover the true potential of a given biomanufacturing site, it is essential to ask the right questions, look at the right performance indicators, and make the right comparisons. Companies should begin by attempting to benchmark themselves against their industry peers, assessing the performance of each biomanufacturing site across the board, whether at the site, line or product level. Where available, a stringent benchmarking exercise will provide insights into important factors such as:
• Technical performance in relation to indicators such as yield, titer, success rates and improvement rates
• Operational performance characteristics such as utilization and cycle times
• Productivity factors such as costs, labor, capital and inventory
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