eBOOK

Best of
Pharma
2018

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 www.PharmaManufacturing.com

TABLE OF CONTENTS
Beyond the Reporting Lines: Secrets of Successful Quality Organizations 4
Recent global benchmarking of pharmacos’ quality models reveals what sets
top-performing organizations apart

3 Reasons why the Pharma Supply Chain is Ripe for Digital Transformation 13
Digital transformation is a harbinger of active and integral business growth

Battered but Unbroken 17

One year after Hurricane Maria, Puerto Rico’s pharma industry is standing its ground

Shrinking Big Pharma 29

Why building smaller manufacturing plants is the next big thing

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Beyond the Reporting

Lines: Secrets of Successful
Quality Organizations
Recent global benchmarking of pharmacos’ quality models
reveals what sets top-performing organizations apart

By Andrew Gonce, Lorenzo Positano, and Vanya Telpis, McKinsey & Co.

W
hat is the best way to design
a quality organization to
maximize effectiveness and
minimize risk? That question is top of mind
for pharmacos’ senior management teams
everywhere. The catalysts of concern are
no mystery: complexity and lack of supply
chain transparency have tripped up many
companies, and more-intense scrutiny and
greater expectations from regulators leave
pharmacos with no choice but to devote
greater attention to improving efficiency
and minimizing risk within the qual-
ity function.
Which raises the question of how exactly
pharmacos can be both efficient and low
risk. The FDA guidelines simply point out
that a quality group needs to maintain
independence from the operations group
whose outputs it is meant to assess. There
is no current best standard for organization
design. So, it is up to pharmacos them-
selves to determine how best to manage
reporting lines and deal with the appropri-
ate degree of centralization as well as to
define roles and responsibilities for quality
activities as they relate to other functions.
Furthermore, the quality organization’s
design must deliver the levels of agil-
ity, cost, and risk that meet all necessary
external standards—and that can be readily
accepted by the whole organization.
With those questions in mind, McKinsey
recently benchmarked the quality organi-
zations of pharmacos worldwide. The study
covered 30 pharmacos, including 16 of the
top 25 companies globally. The research
examined organization structures at both

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 www.PharmaManufacturing.com

site and central levels, as well as gover- with the chosen organization model. Our
nance mechanisms and other supporting benchmarking and research provided the
organization practices. following insights:

The key finding of the research is that report-
ing structures are not predictive of quality
outcomes; we found strong and weak per-
formers in each of the structural models
that we examined. What truly sets apart the
top-performing quality organizations is excel-
lence in execution, not organization structure.
Companies need to carefully align ele-
ments including governance, capabilities,
organization culture, and rule setting
There are two common design choices
for all quality organizations: the degree
of centralization and the degree of inde-
pendence. From these, we have defined
four archetypes.
The most common design is a centralized/
independent archetype—a model that is
particularly favored by U.S. pharmacos
and those that have recently faced compli-
ance challenges.

Exhibit 1

The organization of pharmacos’ quality units follows four main archetypes

Centralized Decentralized;
quality oversight integrated into manufacturing

1 2 3 4
Centrally Centralized Site Site
managed QA integrated, managed
centrally
coordinated
(Site quality reports (Site QA reports into (Site quality reports (Site quality reports
directly into central quality, into manufacturing, directly and only
central quality) site QC into but with link to into manufacturing)
manufacturing) global quality)

55% 15% 20% 10%

Percentage of sample size:
Source: Interviews; benchmarking data; McKinsey analysis

eBOOK: Best of Pharma 2018 5


Comparisons of quality performance
between the four archetypes show that
organization design alone confers no real
performance advantage.
However, within each archetype there are
unique pitfalls to be avoided—and lessons
to be learned from top performers.
No matter what the organization design, the
ultimate objective is effective governance
of all quality issues.
FOUR ORGANIZATION
ARCHETYPES
When pharmaco executives discuss
how pharmacos’ quality organizations
should be designed, they often struggle
to determine the degree to which there
is central oversight and control over
quality versus the degree to which quality
is integrated into manufacturing.
In the past decade, more companies have
chosen greater centralization. Survey
respondents highlighted a need to address
internal quality issues as well as external
drivers—notably the U.S. FDA’s direc-
tional guidance on company-wide quality
systems and adequate monitoring and
risk management.
Our benchmarking research reveals that
pharmacos use four main types of structure
to design and manage their quality organi-
zations (Exhibit 1). These range from more
www.PharmaManufacturing.com
centralized and independent to more inte-
grated and local. We look at each archetype
in turn:
1. Centrally managed: site quality
organizations report directly into
central quality, with limited links
to manufacturing
Approximately 55 percent of phar-
macos use this archetype. In these
companies, the central quality orga-
nization directly oversees processes,
standards, and decision making for
quality issues at the site level (Exhibit
2.) The link between the quality
function and the operations func-
tion—whether at the site, regional, or
business unit level—is quite varied in
terms of its strength and nature. At
some companies, the quality func-
tion does not even have dotted-line
reporting to site management. Other
companies have dotted lines from qual-
ity into operations from all levels, while
still others have the central quality
group reporting into the chief operat-
ing officer or head of operations.
Pharmacos that have adopted this orga-
nization model believe it gives the quality
group an independent view of product
quality, facilitates adoption of global
company standards and sharing of best
practices, and allows for rapid escalation
and resolution of issues. At the site level,
eBOOK: Best of Pharma 2018 6

the quality organization gets an equal
seat at the table with site management,
which helps to give its managers more
authority on operational matters.
2. Centralized QA: quality assurance is
coordinated centrally, with quality con-
trol integrated into manufacturing
Fifteen percent of the pharmacos use this
model. In this case, oversight for quality
assurance (QA) is centralized, and quality
control (QC) is handled by the manu-
facturing organization (Exhibit 2). Some
of these organizations also have limited
centralized QC functions (such as shared
service labs or QC harmonization units)
that report into the global quality func-
tion, along with site-level QA.
Pharmacos that integrate QC into man-
ufacturing believe they will achieve
greater efficiency and operational speed
while reaping the advantages of global
standards and central independent
oversight. Some companies also think
that QC teams can collaborate more
effectively with production teams if they
belong to the same unit given that QC
work is essentially like production work:
oriented toward output, efficiency, and
service rather than involving policy cre-
ation or interpretation of regulations.
3. Site integrated, centrally coordi-
nated: quality functions are integrated
into manufacturing but with some
www.PharmaManufacturing.com
centralized quality coordination
In these organizations—20 percent
of our research sample—the quality
function is embedded in the manufac-
turing organization, but a dotted-line
reporting connection to central quality
ensures consistent policies and pro-
cedures across sites (Exhibit 2). The
quality function’s independence from
operations is kept intact thanks to strict
definitions of interfaces and allocation
of roles and responsibilities between
the two functions.
This model is perceived to promote
better collaboration between quality
and operations teams by including
them within the same organization.
The pharmacos that subscribe to this
model see it as enabling greater oper-
ational efficiency and speed, faster
decision making, and a sharper focus
on customer service and business pri-
orities; the model’s global guidance and
monitoring of quality reduce compli-
ance risk.
4. Site managed: quality activities
are under plant management’s
direct oversight
Some pharmacos (10 percent of the
sample) integrate QA and QC into the
site organization and have these units
report to site management. The central
quality organization, if it exists, typically
has only basic reporting responsibilities
eBOOK: Best of Pharma 2018 7
 www.PharmaManufacturing.com

and a weak functional link with the site
quality group (Exhibit 2).
This model is advantageous if sites have
a strong, autonomous quality culture
and can implement local standards as
needed. However, the largest movement
in the past decade has seen companies
transitioning away from this archetype
in favor of increased central oversight.
STRUCTURE IS NOT A CATALYST
FOR PERFORMANCE
Our benchmarking revealed
empirical patterns:
• Company size does not heavily influence
the choice of organization design.
• Company culture or history appears to
have an influence on organization design.
Companies that are more heterogeneous,
or those formed through mergers, favor

Exhibit 2

Simplified examples of each organization design

1 Centrally managed 2 Centralized QA

Global/Business Global/Business Global/Business
Global/Business Unit Operations Unit Quality Unit Operations
Unit Quality

Site Manager
Site Quality Lead Site Manager

Site QA Site QC Site QA Site QC

3 Site integrated, centrally 4 Site-managed

coordinated
Global/Business
Unit Operations
Global/Business Global/Business
Unit Quality Unit Quality
Site Manager Site Manager

Site Quality Lead Site Quality Lead

Site QA Site QC Site QA Site QC

Line type reflects strength of link, from direct report to very weak or no connection

eBOOK: Best of Pharma 2018 8


more decentralized archetypes, and
those with a more homogeneous culture
and common tools lean toward central-
ized structures.
• There are loose regional preferences:
• Pharmacos with U.S. headquarters tend
to have both QA and QC in one organiza-
tion, centrally managed.
• Pharmacos in Japan tend to integrate
quality into manufacturing.
• Pharmacos in India tend to be
more centralized.
• Pharmacos in Europe do not show a
preference for any one type of organiza-
tion design.
More interestingly, though, the choice of
organization design has little or no bearing
on superior quality or operational results
(Exhibit 3). Companies in each archetype
show very similar external quality perfor-
mance (measured in terms of compliance).
Further, there is no meaningful difference
across archetypes with respect to the
level of site resources engaged in quality
work. The average share of site employees
engaged in quality activities varied from
28 percent to 32 percent among the four
archetypes. There is also little difference in
the size of the central quality organization
among the three archetypes that demon-
strate some degree of centralized reporting
or coordination.
www.PharmaManufacturing.com
Comparing pharmacos’ structuring of qual-
ity functions with that of other industries,
it’s plain to see that approaches are similar
regardless of industry.
WHERE DOES ORGANIZATION
DESIGN MAKE A DIFFERENCE?
Given that the choice of organization
structure does not yield higher
levels of quality and does not affect
productivity, what does drive greater
efficiency and effectiveness for the
quality organization? We looked at the
strengths and the challenges faced by
companies at each end of the spectrum:
Strengths and challenges of more
centralized models
Strongly centralized oversight, as fea-
tured in the “centrally managed” and
“QA centralized” archetypes, may lead
to micromanagement of site issues and
burdensome levels of bureaucracy and
governance. Some companies have found
their centralization efforts weighed down
by an ineffective global quality organiza-
tion. The fault often lies with inadequate
talent or insufficient investment in creating
and enforcing global standards. In some
cases, the company culture overrides the
reporting lines; for example, a site manager
may use operational priorities to over-
rule the quality department even if it has
formal authority.
eBOOK: Best of Pharma 2018 9
 www.PharmaManufacturing.com

Exhibit 3

Quality performance seems not to vary significantly by archetype

Average number of sites Average number of sites Average plant POBOS

with warning letters or with two or more 483s quality performance
a consent decree (no WL or CD) score per company
2008-2013 YTD 2008-2013 YTD (100 = best, 1 = worst)
N=231 companies N=221 companies N=72 companies
Archetypes

1 Centrally
managed 1.0 5.8 59

2 Centralized QA 1.3 5.0 59

Site integrated,
3 centrally
coordinated
1.3 5.2 6.2

4 Site managed 1.3 6.8 73

1 Numbers reflect dominant archetype from 2008 to 2013, not current archetype. Also excludes very small companies (<$2bn in sales) and one company with
non-FDA-approved sites.
2 Classification by archetype is based on type at time of benchmarking.
Source: FDA website, POBOS Quality

We find that high performers avoid the cen- requires a strong emphasis on coaching
tralized model’s disadvantages by building and development, as well as mechanisms
strong leaders for the global quality organi- for strengthening the culture (including
zation. The top-performing pharmacos also leadership involvement, the right kinds of
develop pragmatic standards to ensure that incentives, and engagement forums).
guidance is thorough and is applicable to dif-
ferent local setups—detailed enough to allow For their part, companies with a hetero-
consistent interpretation, but not too detailed geneous culture that adopt a centralized
to be inflexible. They strive for consistency model (typically during a crisis) already
and appropriate risk management when allow local autonomy. They should aim to
implementing global standards across the develop clear, well-designed quality proce-
network, while empowering sites and making dures and principles so that their sites can
them accountable for improvement ideas. operate under consistent guidance.

Companies with a homogeneous culture Strengths and challenges of more

should build local autonomy based on a decentralized models
strong culture of compliance and account- Quality organizations that are integrated
ability. This can enable the organization into manufacturing (the “site integrated,
to make decisions rapidly and without centrally coordinated” and “site man-
sign-off by senior managers. Success aged” archetypes) are susceptible to

eBOOK: Best of Pharma 2018 10


compromised independence and incon-
gruent systems. These organizations must
be careful to ensure that their organiza-
tion design maintains the independence
needed for a compliant quality unit. Com-
panies that favor decentralized models
also struggle often with multiple quality
systems, a scenario that increases com-
plexity, allows multiple standards (which
embeds risk), and leads to inconsistent
metrics that make quality monitoring and
learning difficult. At some of these com-
panies, the process for escalating issues is
also cumbersome and ineffective, increas-
ing local “firefighting” and waste.
What truly sets apart the top-performing
quality organizations is excellence in
execution, not organization structure.
High performers that have integrated qual-
ity into manufacturing tend to have a strong
compliance culture throughout the entire
organization. Companies with successful
strategies define high-level sets of metrics
globally to facilitate monitoring; they also
enforce global standards to increase pro-
cess consistency across sites. At the same
time, they give their quality units sufficient
authority at the site level, and they establish
well-defined interfaces between quality and
technical operations at three levels: the site,
local commercial affiliates, and corporate.
www.PharmaManufacturing.com
Some companies have set up monthly
meetings and other forums for sharing
best practices.
WHY GOOD GOVERNANCE
MATTERS SO MUCH
Good quality performance comes
from the cross-functional alignment
mechanisms that make any organization
model work. If there is one factor
that does predict the effectiveness
of a quality organization, it is good
governance. Our benchmarking study
confirms that this is true regardless
of the organization model.
Without strong governance, organizations
often find that individual responsibility for
making specific decisions is unclear and
that the respective roles of sites and head-
quarters in decision making are poorly
defined. In the absence of clearly desig-
nated authority, decisions delegated to
lower organization levels don’t necessar-
ily take hold. And without guidelines that
delineate information requirements, the
information presented to executives and
managers is not sufficient for good deci-
sion making.
eBOOK: Best of Pharma 2018 11

Strong governance extends beyond the
committees and senior oversight and
requires clear decision-making boundaries
and effective execution across organization
groups. Examples from strongly performing
pharmacos point to specific behaviors and
practices. These include the following:
• Aligning decision-making rights with
accountabilities so that executives
and managers don’t have overlap-
ping authority;
• Requiring cross-functional discussions for
decision making; organizational “silos”
should not have authority to make deci-
sions that affect other functions;
• Establishing clear rules for issue
escalation from shop floor to senior man-
agement, combined with role modeling
and empowerment of shop floor people
to own and surface quality issues;
www.PharmaManufacturing.com
• Limiting participation in governance
committees to only the stakeholders who
have clear roles in the decision-mak-
ing process;
• Ensuring that meetings adhere to high
standards for “hygiene” (for example,
minute-taking, quality inputs, and meeting
practices).
Organization structure neither guarantees
nor dooms the effectiveness of a quality
unit. However, pharmacos have a far better
chance of achieving world-class performance
if they understand the pitfalls and success
factors for each type of model. Further, there
is no substitute for a good governance pro-
cess. Effective governance is the function
of any organization design, and it is entirely
independent of how the “lines and boxes” of
the organization are arranged.
eBOOK: Best of Pharma 2018 12

3 Reasons why the Pharma
Supply Chain is Ripe for
Digital Transformation
Digital transformation is a harbinger of active and integral business growth
By Kaushal Dave, VP Cognitive (AI) Solutions, Aera Technology
T
he global pharmaceutical market
has long passed the $1 trillion
mark and is projected to grow
at 6.3 percent CAGR through 2022.
Pharma supply chains are complex, highly
regulated, and reach a customer base
rivaled by few. The increased access to
copious amounts of data and the rise
of data-driven technologies­ — including
artificial intelligence, IoT, and cognitive
computing — are transforming capabil-
ities to manage this massive network of
manufacturers, distributors, pharmacies
and patients.
The businesses that will ultimately thrive
are those at the forefront of digital trans-
formation, capitalizing on these new
technologies — while those who do not
will lag. For 2018 and beyond, the pharma
www.PharmaManufacturing.com
supply chain will need to venture into the
world of digital transformation.
1. Most large pharmaceutical companies
struggle with end-to-end and “out-
side-in” visibility — and it’s time for
that to change.
Many pharmaceutical companies —
often large companies with annual
revenues in the tens of billions of dollars
— do not actually have full insight into
their supply chains from end-to-end.
Spreadsheets are still prevalent and
data is still siloed in ERP, MES, LIMS,
and other external “outside-in” sources.
Error-prone manual processes, guess-
work due to incomplete data, and data
latency have a decidedly negative
impact on the supply chain. Decisions
eBOOK: Best of Pharma 2018 13

are made with the best data and tools
available, but they would be much more
powerful — and many could even be
automated — if digital transformation
were able to be leveraged.
Dozens of data sources could help com-
panies better manage supply, quality,
and cost: real-time data availability
from the shop floor to the patient;
data collected from internal sources;
third-parties; social media; trends
in patient health; and even weather
patterns. But digital transformation
necessitates first bringing it all together
in one place. It is critical that silos are
broken down and data from across the
organization is harmonized and then
enriched with external data like weather,
regulatory and customers data. What
you end up with is a unified dataset that
connects your business, the outside
world, and the inner workings of your
enterprise strategy.
One concrete example comes from
German pharmaceutical company Merck
KGaA. Merck utilizes this harmonized,
real-time information — everything
from supply chain performance to
stock-keeping units to data collected
from the company’s ERP — to optimize
its operations. By placing “sensors”
throughout its supply chain that gather
data about inventory distribution prac-
tices and availability for every SKU,
www.PharmaManufacturing.com
Merck has end-to-end visibility. The
dataset helps them to process orders in
the shortest time possible by enabling
them to shift production or materials
to different locations as needed. In
the case of forecasting, analytics and
algorithms applied to the data enables
Merck to forecast more accurately than
traditional tools and humans in 80 per-
cent of their predictions.1
This example reflects the industry shift
to technological advancements that can
offer not only a full picture of a com-
pany’s complex supply chain, but also
suggestions for how that company can
save money, move inventory smartly
and make more intelligent supply
chain decisions.
2. “Artificial intelligence” and “big data”
may sound like buzzwords, but their
potential to transform the pharma
industry is powerful.
Just because artificial intelligence and
machine learning have become buzz-
words recently does not mean they
are all talk. A few months ago, Crunch-
base2 reported that in the third quarter
of 2017, a whopping $1.165 billion was
invested in American AI startups.
AI is poised to transform pharmaceu-
tical supply chains with breakthrough
capabilities to process huge amounts
of real-time data and make intelligent
eBOOK: Best of Pharma 2018 14

recommendations to usher supply
chains into a truly data-driven future.
Rather than relying on the limiting rules
of traditional software, AI taps into
machine learning algorithms to learn
and refine in real time as it crawls inter-
nal and external data sets. That could
include inventory data, supplier perfor-
mance, demand fluctuations and even
weather or road conditions.
AI combines this seemingly disparate
knowledge to make recommendations
or decisions on optimal actions. Think
of it almost as a self-driving business
based on cognitive automation — the
same way that a self-driving car learns
about road conditions and takes stock
of potential dangers, the pharma
supply chain will have the ability to
learn, think and take action based
on traditional data points as well as
new ones.
Take the available-to-promise (ATP)
function, for instance, which responds
to customer order inquiries based
on resource availability. In traditional
software, ATP is fundamentally a rules-
based calculation based on theoretical
lead times and allocation rules that are
variable and volatile. Using those data
points in ATP calculations can result in
wrong ATP dates.
www.PharmaManufacturing.com
In contrast, AI can automatically gen-
erate a “supply chain map,” showing
details about an order that include
metrics like allocated quantity and
expected delivery date. The AI system
then delivers highly accurate recom-
mendations and predictions based on
machine learning and data science, not
simple rules-based ATP calculations.
ATP is just one example. AI’s power-
ful cognitive automation capabilities
can be applied to all supply chain
processes, from demand and supply
forecasting to inventory optimization,
manufacturing performance, pro-
curement automation and supplier
reliability assessments.
Predictive capabilities are getting
more powerful, and applications of AI
in pharma in particular are building
momentum. Business leaders who adopt
these technologies in the early stages
will be the ones blazing the trail in the
pharmaceutical space in the years to
come — and those who eschew the
progress that is made risk falling behind.
3. M&A and Pharma are almost synony-
mous, but take note: there may be a
shift from horizontal to vertical.
Most pharma M&A activity over the last
several decades has been horizontal
and dominated by manufacturers. We
eBOOK: Best of Pharma 2018 15

are now starting to see what was once
unthinkable — M&A activity across the
network of manufacturers, distributors,
pharmacies and insurers.
In the last few years, we’ve seen Roche
acquire Genentech and Gilead Sciences
acquire Kite Pharma; we’ve even seen
Pfizer look to strike deals with compa-
nies like Allergan and AstraZeneca. But
in December we saw the largest U.S.
pharmacy chain CVS rock the health-
care industry with its decision to buy
Aetna for $69 billion. This was bold
news. Combined, the company will gen-
erate a whopping $240 billion in annual
revenue. In merging health insurance
services with retail offerings, we may
be seeing the beginning of a wave of
vertical integrations.
M&A creates prolific opportunity for
pharma companies to expand their
portfolios and reduce cost, but com-
bining supply chains? No easy feat. The
end-to-end supply chain visibility we
discussed earlier is especially challeng-
ing after a merger. For example, Pfizer
has gone through four major and mul-
tiple minor acquisitions over the last 18
years. You have two companies with
completely different IT and ERP sys-
tems that now need to do business as
one. Now what?
www.PharmaManufacturing.com
Embracing digital transformation is the
key to making large scale mergers as
seamless as possible. Supply chains are
the core artery of big business, so quickly
harmonizing data across multiple supply
chains is a good place to start with the
digital transformation journey. Especially
in pharma, a steady, functioning supply
chain can make or break a business’ suc-
cess as it undergoes major changes. The
ultimately goal is customer satisfaction,
and AI goes a long way to meet those
expectations, even as they evolve.
A transparent and dynamic supply chain
is fast becoming crucial for pharma
companies to thrive in a complex global
industry. Firms that utilize modern and
advanced technologies are already
asserting leadership positions. Digital
transformation is seen more and more
as a harbinger of active and integral
business transformation and will be key
in bringing our pharma businesses to
the forefront of digital transformation
and growth.
REFERENCES
1. Nash, Kim. Merck Deploys AI for
Self-Driving Supply Chain. The Wall
Street Journal. Dec 2016.
2. Page, Holden. Falling Q3 Seed Fund-
ing Could Stunt AI’s Hyped Innovation
Cycle. Crunchbase (Oct 9, 2017).
eBOOK: Best of Pharma 2018 16

Battered but Unbroken
One year after Hurricane Maria, Puerto Rico’s pharma industry
is standing its ground
By Karen Langhauser, Chief Content Editor, and Meagan Parrish, Senior Editor
A
sk someone what it was like in
Puerto Rico the night Hurricane
Maria barreled into the island, and
often, the answers take on a surprisingly
calm tone.
Sure, it was loud. The winds roared at over
155 miles per hour. And there was the side-
ways rain — something many had never
seen. But although some stayed awake all
night and watched as Maria showed no
mercy, many managed to sleep.
For most on the island, the real drama
began the morning after.
“It’s as if you went to sleep in the 21st cen-
tury and woke up in the 19th century,”
Marco Monrouzeau, CFO and general
www.PharmaManufacturing.com
manager of Neolpharma, says as we sit in
his office in Caguas.
All throughout Puerto Rico, it looked as
though the island had been pummeled by
bombs. Trees were scattered like tooth-
picks on the streets. A massive storm surge
plunged parts of the island underwater. And
all of the forms of modern technology we
rely on were suddenly gone — no power,
no internet, no phone service. Puerto Rico
was on its own — and the scramble to find
resources had begun.
News (whether accurate or not) was spread
primarily by word-of-mouth and sporadic
radio broadcasts. Occasionally, someone
would find a functioning cell tower and
people would cluster around it in cars,
eBOOK: Best of Pharma 2018 17

The authors (Karen Langhauser, left; Meagan
Parrish, right) meet with Marco Monrouzeau,
CFO and general manager, Neolpharma.
desperate to connect with the outside
world. Lines to get water, food and gas
were horrendously long. And all of these
new challenges had to be managed amidst
the sudden need to rebuild.
At first, many stayed close to home, clear-
ing debris from local roads, repairing
damage to their houses, and checking in
on neighbors.
But for many employed by one of the
island’s dozens of pharmaceutical plants,
there was a notable exception to this
post-Maria routine: They were at work. In
fact, some hadn’t left their facilities during
the storm. Luckily, many pharma compa-
nies were able to provide employees with
www.PharmaManufacturing.com
much-needed post-storm supplies. But per-
haps more importantly, going to work gave
people some semblance of normalcy after
their lives were so violently disrupted.
The post-Maria effort from the pharmaceu-
tical industry, like that of Puerto Rico as a
whole, is a story about resilience.
The pharma industry in Puerto Rico is up
against unprecedented challenges: The
Commonwealth’s crippling debt, an unsta-
ble power grid, the rapid consolidation of
manufacturing facilities and a changing tax
structure. On top of this, Maria has sparked
worries about the future growth of manu-
facturing on the island.
As Puerto Rico approaches the one-year
anniversary of the most destructive storm in
close to a century, we headed to the island
to meet with industry leaders and tour major
manufacturing facilities to find out how
pharma companies are recovering. Their
message? The industry may have been bat-
tered, but “¡Puerto Rico se levanta!”
PHARMA’S TROPICAL HUB
Puerto Rico may often be thought of
as a picturesque getaway, but in the
pharma world, it’s one of the globe’s
most vibrant hubs of manufacturing.
The island became a leading destination
for pharmaceutical companies after 1976,
when Congress passed a tax code to make
eBOOK: Best of Pharma 2018 18

THE CAST
A quick guide to everyone quoted in this article
Víctor Batista, general manager, Pfizer-Guayama
Alejandro Blanco, general manager, Becton, Dickinson
and Company
Arthur Deboeck, general manager, Galephar Pharma
Research
Idalia García, vice president and general manager, Avara
Pharmaceutical Services
Gustavo Hermida, president, CIC Construction Group
Kerry Ingalls, vice president, site operations,
Amgen-Juncos
Juan C. Kuang, vice president, manufacturing,
Amgen-Juncos
Iván Lugo, executive director, INDUNIV Research Center
Inc.
Marco Monrouzeau, CFO and general manager,
Neolpharma-Caguas
Carlos Serrano, capital partner, Reichard & Escalera
it more attractive for businesses. Called
Section 936, the law exempted companies
from paying corporate taxes on profits
made in Puerto Rico, and was enacted to
help bolster the island’s sputtering econ-
omy. It paid off. Soon, companies flocked
to Puerto Rico to set up shop, including
most of the biggest players in pharma:
Pfizer, Bristol-Myers Squibb, Merck, Mylan,
Eli Lilly and Company, and many others.
Amgen built its flagship site in Puerto Rico,
which is also the biggest pharma facility
on the island. About 90 percent of the
company’s products now pass through the
sprawling complex with 1.7 million square
feet of manufacturing space and about
2,000 employees.
In particular, Puerto Rico became the place
to make high-profit blockbuster drugs.
www.PharmaManufacturing.com
Today, 11 of the world’s top 20 drugs are
manufactured in Puerto Rico, including
Humira, Enbrel and Lyrica.
But the good times couldn’t last forever.
Despite the manufacturing boom triggered
by Section 936, many began to see the law
as an unfair tax break for corporations that
was fueling the island’s rising debt. In 1996,
Congress decided to phase out the law as
the Puerto Rican government struggled to
pay for public services and over-borrowed
to cover its growing deficit.
After Section 936 was wiped away in 2006,
the industry stumbled but didn’t fall. Some
jobs were lost, but many cuts were also
related to mergers, and increased efficien-
cies brought on by technological advances
like automation.
Today, manufacturing still accounts for
one-third of the island’s GDP, of which the
pharma industry occupies the largest slice
of the pie.
“Although companies now might pay higher
taxes, it’s still better than what they pay in
the States, depending on their company
model,” explains Ivan Lugo, executive direc-
tor of INDUNIV Research Center.
We’re gathered at Amgen’s main facility
in Juncos, alongside representatives from
pharma, construction and legal companies,
eBOOK: Best of Pharma 2018 19

The authors get a tour of Amgen’s biomanufacturing facilities
in Juncos
to discuss what Maria has
meant for the island.
As the front man for IND-
UNIV, an organization that
represents the business,
government and academic
sectors of pharma in Puerto
Rico, it’s Lugo’s job to tout
the strength of the indus-
try. There’s much to be
proud of.
According to INDUNIV,
pharmaceuticals now create
about 78,000 direct and
indirect jobs in Puerto Rico.
The industry exports to
more than 80 countries
and is the sole source for
www.PharmaManufacturing.com
several top-selling drugs
and medical devices. The
industry is also extremely
high-tech with a well-ed-
ucated workforce, a long
history of regulatory com-
pliance and a few notable
“firsts” in pharma, including
real-time release and con-
tinuous manufacturing.
In short, the business
environment in Puerto
Rico may have evolved in
recent years — with some
companies consolidat-
ing and raw job numbers
declining slightly — but the
pharma industry is here
to stay.
eBOOK: Best of Pharma 2018
BATTEN DOWN
THE BATCHES
For Puerto Rico, September
of last year was a painful
cliché. Just two weeks after
Hurricane Irma left more
than half the island without
power and nearly 50,000
without water, Maria made
landfall — a crushing
example of what it’s like for
an entire island to be kicked
when it’s already down.
Hitting the island as a Cat-
egory 4 storm, and now
considered the worst natu-
ral disaster to affect Puerto
Rico in history, Maria’s
155-mph winds wiped out
what was left of the electri-
cal grid, grinding through
wounds already opened
by Irma.
Arthur Deboeck, general
manager at Galephar Phar-
maceutical Research, has
one word for Maria: Ugly.
“As an engineer, I’m accus-
tomed to building. Maria
was hard because you had
to slowly, but surely, watch
the destruction unfold,”
he explains.
20
 www.PharmaManufacturing.com

For those managing pharma plants on the
island, their responsibilities were twofold:
Not only did they have to worry about their
own homes, but they also had to prepare
for the storm’s effects on their facilities,
workers and, ultimately, patients.
It’s basic practice for manufacturing plants
in Puerto Rico to have Standard Operating
Procedures (SOPs) for both disaster prepa-
ration and recovery. The plans are specific,
and executed by hurricane task forces — a
group of people who are trained to stay
on-site during the storm. The task forces
spent the evening of Sept. 20th taking
care of critical utilities, reinforcing failing
doors and windows, relocating inventory as
needed and keeping key personnel updated
on the facility status.
Some facilities manufacturing biologics,
such as AbbVie and Amgen, were not able
to halt all their processes, and thus con-
tinued manufacturing through the storm,
relying on generators for power.
Although most of the pharma facilities were
structurally safer than many homes, the sto-
ries of those who stayed on-site were chilling.
“This is where I slept during the storm,
while the rain water seeped into the room,
soaking the floor around me,” says Kerry
Ingalls, vice president of site operations at

From, left to right: Old San Juan; A roundtable discussion at Amgen. Seen here (from left to
right): Alejandro Blanco, general manager, Becton, Dickinson and Company; David Thompson,
site director, AbbVie Biologics Ltd, Barceloneta; Kerry Ingalls, vice president, site operations,
Amgen-Juncos; and Juan C. Kuang, vice president, manufacturing, Amgen-Juncos; A door in
Old San Juan showing the saying: “Puerto Rico se levanta” —a local rallying cry that means
“Puerto Rico rises.”

eBOOK: Best of Pharma 2018 21

 www.PharmaManufacturing.com

Amgen, gesturing to the table we’re sitting
at in Amgen’s Juncos conference room.
East of Juncos, at the Galephar facility in
the coastal city of Humacao, Deboeck tells
us about how he covered his chief of secu-
rity’s post-Maria psychological treatment
after the worker witnessed the two-story
windows of the administrative building
exploding around him during the storm.
In times of crisis, a sense of order is often
the most comforting asset — most site
SOLVING A PROBLEM LIKE MARIA
But even the best of plans could not
combat the power of Maria. The short-
term impact of the storm on the pharma
industry was daunting. However, the
industry was strategic, and at times, even
fiercely creative in sourcing solutions.
Contrary to public perception, Puerto Rico
has endured surprisingly few catastrophic
hurricanes — the last storm that came
close to matching the intensity of Maria
was Hurricane Hugo in 1989. Perhaps the

“There was a need to supply direction,

so we took that leadership role.”
— Idalia García, vice president and general
manager, Avara Pharmaceutical Services

leaders agreed that a crucial benefit of the
disaster preparedness plans was the struc-
ture they provided.
“I think a business continuity plan pro-
vides a clear chain of command,” says
Idalia García, vice president and site
director of CDMO, Avara Pharmaceutical
Services -Arecibo. “Who’s the leader?
What are the roles? This was critical to
keep people calm and provide direc-
tion. People were in a state of shock but
they were willing to work. And the team
showed them what to do and what we
were going to accomplish.”
biggest adjustment to make post-Maria
was the loss of essential communications
— cell service and email especially. These
communication issues, combined with the
physical obstacles caused by flooding and
downed trees, and the sheer demand for
essentials, made securing resources and
workers a challenge.
After companies did their best to locate
employees and ascertain their safety (most
used radio communication via satellite)
there were several issues that needed to
be addressed. The knowledge that pharma
facilities were manufacturing drugs, and

eBOOK: Best of Pharma 2018 22

 www.PharmaManufacturing.com

in some cases, controlled

substances, meant that
security was a top prior-
ity — especially at night as
darkness fell on the areas
surrounding the plants.

“Even though we added

some additional security
people, they were here
alone without perimeter
lighting and without mon-
itoring systems to see
what’s happening around
them. I was also concerned
that our security gate was
affected,” Monrouzeau
notes about the Neol-
pharma site.

The Pfizer site in Guayama

got assistance from an
unlikely source — inmates
from the neighboring low
security detention center,
who helped repair the
plant’s exterior fencing after
the storm. And Pfizer repaid
the favor too, allowing the
center to fill their potable
water tanks at the site to
keep the inmates hydrated.
To help with the lack of
power, all of the facilities
had contingency plans
Top left: a power pole in San Juan; middle left: post-Maria dam-
age outside Neolpharma; top right: damage caused by Maria to
a conference room at Neolpharma; bottom: damage caused by
Maria to an office room at Galephar.
— most of which involved This continuous oper-
diesel-powered generators. ation also gave rise
Unfortunately, these gener- to other problems no
ators were meant for brief one anticipated.
outages — days, typically.
None of the companies “One thing we learned is
thought they would need to that we need to identify the
use their generators critical materials that we
for months, like they did might need, such as spare
after Maria. parts for generators. For

eBOOK: Best of Pharma 2018 23


example, we needed oil filters and then we
couldn’t find any — they weren’t available
on the island,” Monrouzeau says.
And then there were the unexpected chal-
lenges most don’t think of initially: With
no power or internet, banks were closed,
and ATMs and credit cards didn’t work.
Suddenly, life was cash-only and that cash
was hard to come by. While larger estab-
lishments, such as Amgen, have their own
credit unions on-site, other plants had to
get creative.
Medical technology company, Becton, Dick-
inson and Company (BD), for example, flew
in a corporate jet full of cash. Deboeck took
an even more hands-on approach at Gale-
phar, personally driving $50k from San Juan
to his plant in order to pay workers.
Filling in the Gaps
There was notable reluctance among all
interviewed to criticize the government’s
response to Maria. Instead, the general
mindset was that of self-reliance. Pharma
companies were more than willing to assist
the government in “connecting the dots”
as Alejandro Blanco, general manager, BD
puts it.
The pharma industry knew it had to proac-
tively take matters into its own hands and
it collectively stepped up to not only assist
employees, but the government and com-
munity at large.
www.PharmaManufacturing.com
“Someone had to provide a structured
approach to manage an emergency, and
our role was to take that lead,” García says.
“As you can imagine, the government was
busy with other things. There was a need to
provide a defined direction, so we took that
leadership role.”
After the storm, Amgen worked with the
Puerto Rico Water Authority and supplied
resources to fix a pump that services the
nearby community. The drugmaker also
supplied diesel to local gas stations. When a
supermarket generator broke down, Amgen
sent technicians to fix it so the store could
continue operating.
“There were different ways to mitigate
some of the gaps that were created,” Juan
Kuang, vice president, manufacturing,
Amgen, says. “We came up with plans to
handle whatever factors we could.”
Pharma companies also did something
unexpected for a such a highly competitive
industry — they worked together.
For example, there was a sudden constraint
on gases like nitrogen and oxygen, that are
essential for pharma manufacturers, after
one of the island’s main supplier’s facility
was damaged during the storm.
“Companies started talking to each other
and created a supply chain for gases. Once
one of us found a route, we shared with
eBOOK: Best of Pharma 2018 24

the other companies and
could even share some of
the product as we were
getting it to the island,”
Kuang explains.
Getting Personal
Strong relationships with
suppliers and contractors
proved essential to help-
ing the pharma industry
overcome the deluge of
obstacles that rained down
with Maria.
Neolpharma, for example,
had contractors on-site
the day after the storm,
dealing with flooding and
roof issues — Monrou-
zeau attributes this quick
service to loyal, long-stand-
ing relationships.
Amgen gave props to the
support and expertise they
received from companies
such as CIC Construction
Group, which provides
construction services for
the biopharma and med-
ical device industries in
Puerto Rico.
Gustavo Hermida, president,
CIC Construction Group,
www.PharmaManufacturing.com
says he had 70 percent of
his employees back to work
the day after Maria, and 100
percent within a few days.
“We have an action plan to
make sure we can respond
immediately to customers.
Our company has close to
650 employees around the
island and we can react
quickly,” Hermida says.
Notably, not one pharma
leader failed to praise the
efforts of the pharma work-
force post-Maria. Despite
suffering extensive personal
losses, employees were tra-
versing tree-strewn roads
and using the little gas they
had to show up to work.
“After this I have become
an even bigger fan of our
San Juan
colleagues,” says Víctor
Batista, general manager,
Pfizer-Guayama. “They put generators, propane stoves
the interests of Pfizer even and portable gas tanks
before their own.” to all its employees, and
then distributed the extra
In return, pharma com- to critical contractors and
panies looked out for nonprofits, giving away
the wellness of employ- 2,200 kits in total. Amgen
ees, too. Pfizer provided opened a temporary gas
free kits with portable station and laundromat
eBOOK: Best of Pharma 2018 25

MANAGING DISASTERS
Key takeaways from industry leaders in Puerto Rico
Stock up: Make sure your water and energy
reserves are always full and have enough to keep
your facility operating off the grid for a prolonged
period of time.
Have spare parts: Be ready to fix broken
generators or other key machinery on your own.
Have IT know-how: So many systems are now
automated and online, it’s crucial to have a
professional available who can quickly solve IT-
related hiccups.
Establish a clear chain of command: Know who’s
going to be in charge in case of an emergency.
Track employees: Have a plan to account for
everyone at your facility if phone service is
disrupted.
Line up contractors: Establishing good
relationships with contractors will help with
rebuilding when you need them to prioritize
working with you over other companies.
on-site. The majority of companies fed
their employees and families meals, as
well as provided other essentials, such
as hygiene kits, water, batteries, diapers
and ice.
“It was important to provide them a
better and more comfortable place than
they had outside, so that they could
come to work and focus on contributing,”
Batista concludes.
BEYOND THE STORM
Last month, as a Category 4 hurricane
closed in on Hawaii, Honolulu’s
mayor made a public statement to
reassure the city’s residents.
“We do not want to see here what hap-
pened in Puerto Rico,” Kirk Caldwell said.
www.PharmaManufacturing.com
The statement illustrated how, even
though a year has passed, Puerto Rico is
still synonymous with “disaster.” In fact,
repairing the industry’s public image may
prove to be more difficult than rebuilding
its infrastructure.
Part of the holdup is that the effects of
Maria are lingering throughout the island.
Signs on highways that long ago blew
away haven’t been replaced. At some
intersections, inoperable traffic lights hang
precariously. Parts of rooftops in the hard-
est hit areas are pounded into pieces. And
some are still without power.
Although most pharma facilities were
up and running within weeks, some of
the sites we visited are also still rebuild-
ing, with walls, floors and windows
under construction.
According to the most recent estimates
from the Puerto Rican government, the full
cost of repairs from Maria could reach $139
billion. For pharma companies, the costs
were significant as well.
A month after Maria, Amgen estimated that
its hurricane-related costs could reach $165
million. According to Monrouzeau, Neol-
pharma, which has a much smaller facility,
submitted an insurance claim for $5 million
after the hurricane to cover the cost of
repairs and business interruptions — but it
still hasn’t been fully repaid.
eBOOK: Best of Pharma 2018 26

Monrouzeau admits that Neolpharma also
lost one-third of a customer account due to
production delays — and all of the company
representatives we spoke to said there were
concerns from customers. But most compa-
nies were able to reassure customers they
could maintain business as usual.
“We were expecting major equipment
— a compressing machine — and when
it came, we sent our customers a video
of that,” García says. “So, companies
could see that we were doing our work to
deliver our commitments and be back on
our feet.”
Despite its business disruptions, Mon-
rouzeau says Neolpharma is still pushing
ahead with its plans to invest $35 million in
its Caguas facility — a move the company
announced just weeks before Maria.
Even so, Puerto Rico is still plagued by sev-
eral major concerns for businesses.
Maria exposed the vulnerability of the
island’s power grid, and there are worries
it could easily fail again. The govern-
ment is still over $70 billion in debt. And
recently- passed taxation laws are also rais-
ing concerns.
According to Carlos Serrano, a capital part-
ner with Reichard and Escalera Law Firm,
companies are still assessing how the new
taxation structure will impact businesses
www.PharmaManufacturing.com
— but he predicts that the benefits and
drawbacks will likely equal each other out.
Either way, it’s one more element of uncer-
tainty that companies in Puerto Rico have
to grapple with.
After seeing the damage Maria caused, it’s
difficult not to wonder if pharma compa-
nies still see Puerto Rico as an attractive
destination for manufacturing. Those who
attended our Amgen panel were dismis-
sive of the idea, however, that Maria will
have a long-term impact on the health of
the industry.
“I’ve watched the indicators that keep
track of the risk of industry decline —
taxations, royalties by patent expirations,
mergers, where sites are closing, etc.
This has all been an ongoing process, but
those issues have been ongoing for 30
years,” Serrano explains. “But the indus-
try just evolves.”
What’s it going to take to overcome the
public perception that Puerto Rico is a
place in peril? Right now, it’s all about prov-
ing that the industry has learned from all of
these storms and is even better prepared
for what comes next.
ANOTHER MARIA? BRING IT ON
Storms like Maria don’t come around
often. But global warming has also
increased concerns that strong hurricanes
could become more frequent.
eBOOK: Best of Pharma 2018 27

Either way, all of the company leaders
we spoke to said they have updated their
SOPs for hurricanes and have strengthened
their business continuity plans in case of
another blackout. Many have increased
reserves for critical resources and are look-
ing at new ways to ensure their supply of
electricity will be stable. For most, that will
likely mean switching to co-generation,
or combined heat and power. These kinds
of systems are generally located near the
point of consumption and recycle wasted
heat to produce heating, cooling and elec-
tricity from a single source.
Blanco says there has also been a lot of
knowledge sharing in the industry so that
others can learn from the experiences of
companies on the island.
One year after Maria, the goal is to shake
the image that Puerto Rico is in a state
www.PharmaManufacturing.com
of disaster. Those in pharma hope the
storm will showcase the industry’s abil-
ity to roll with the punches and bounce
back stronger than it was before. No
matter how many challenges the industry
is up against, it’s determined to main-
tain its footing as a high-tech hub for
pharma manufacturing.
“The reality is that what we built on this island
cannot be done overnight,” Batista says of
the industry’s long history and staying power.
If companies in Puerto Rico have any-
thing to say about it, the industry won’t be
un-done overnight either — and for now,
it’s going to take a lot more than Maria to
unearth their commitment to the island.
“I didn’t choose to come here 35 years ago
only to leave because the wind is blowing a
little bit more,” Deboeck says.
eBOOK: Best of Pharma 2018 28

Shrinking Big Pharma
Why building smaller manufacturing plants is the next big thing
By Meagan Parrish, Senior Editor
B
igger isn’t always better. In fact, the
growing trend in pharma is look-
ing at ways to shrink the industry’s
plant-floor footprint down.
A few months ago, Amgen announced plans
to build a new “next-generation” manufac-
turing facility in Rhode Island, which will be
modeled on the company’s highly innovative
plant in Singapore. What makes it cutting
edge? Its smaller size. According to Amgen,
its Singapore facility occupies about one-
fifth the size of a traditional pharma plant
but maintains a comparable level of output.
It was also built in half the time and at a frac-
tion of the price of a conventional plant —
­ a
new measure of efficiency Amgen intends to
replicate in the U.S.
www.PharmaManufacturing.com
In the last few years, other pharma compa-
nies have followed Amgen’s lead and have
been thinking outside of the big box when
building or revamping their manufactur-
ing spaces.
On the surface, the environmental and cost
benefits are clear. In aseptic processing in
particular, every square foot can be a major
expense and the less floor space there is to
keep free from contaminants, the more a
company saves.
Rethinking the way space is used is also
helping companies increase their level of
flexibility — a new must as the industry
shifts from manufacturing medicines on a
mass scale to meeting the rising need of
eBOOK: Best of Pharma 2018 29
 www.PharmaManufacturing.com

making small batches of

personalized therapies.

But there could also be

wider implications for
companies looking for and
successfully finding ways
to make manufacturing
more compact, flexi-
ble and mobile. And the
industry is far from done
scaling down. Inside Amgen’s next-generation biomanufacturing facility
in Singapore.

“Our vision is that one day,

we can manufacture med-
icine in a space as small as
this stage,” Arleen Paulino,
vice president of site opera-
tions at Amgen’s Singapore
facility, said earlier this year
during a keynote presen-
tation at the PDA Annual
Meeting in Orlando.
If successful, the ability to
make medicine using less
space could change the
way it is distributed around
the globe.
What is allowing pharma
companies to squeeze into
tighter spaces? And just
how small could we go?
Many in the pharma world
are on a quest to find out.
GETTING MORE
FROM CELLS
It’s tempting to call the
trend of going small
“downsizing,” but Maik
Jornitz, the president of
G-Con Manufacturing, has
a more accurate term.
“We call it ‘process inten-
sification,’” he explains.
“In the past, one gained
milligrams per liter of the
target protein from a cell
expression system. But
now, cell development
improvements make higher
expression rates up to
five grams per liter pos-
sible. In conjunction with
much higher cell densities,
a better rate of protein
expression is achieved,
which means bioreactor
volumes can be lowered.”
According to Paulino,
improving cell development
was a major stepping stone
for Amgen’s goal of reduc-
ing its footprint. Advances
in cell development made
in the last 10 years have
allowed companies to grow
cells faster and express
proteins for medicines in a
more efficient way.
“We didn’t just want to
have one-tenth of the scale
and get one-tenth of the
total product out,” Paulino
explains. “We wanted our
output to match or be more

eBOOK: Best of Pharma 2018 30


than what we are currently doing at a
larger scale.”
These improved efficiencies mean that
companies can now reduce the size of the
bioreactors inside their facilities. Instead
of stainless steel tanks built to hold 15,000
liters, companies can now use 2,000
liter tanks.
Thus, advances in equipment technology
have also been critical for achieving the
goal of reducing manufacturing space.
THE RISE OF SINGLE-USE
Single-use systems have been widely
embraced by the industry thanks to
the boost in efficiency and ease-of-use
disposable parts provide. They can also
be major money- and space-savers.
“The adoption of single-use process tech-
nologies not only enables faster production
turn-around schedules, but also a major
reduction in the utilities size. Single-use
equipment avoids high water and energy
consumptions, as cleaning processes and
the need for copious amounts of water
for injection are avoided, and steam ster-
ilization is replaced by pre-sterilization of
equipment,” Jornitz says.
All told, Paulino says about 95 percent of
the contact surfaces the products touch in
Amgen’s Singapore plant are single-use sys-
tems, including disposable plastic bags in
www.PharmaManufacturing.com
its smaller bioreactors. Removing the clean-
in-place processes also allowed Amgen
to create an aseptic system that is more
closed, which reduces contamination risks.
“When you’re operating in a way where
you’re not opening your connection or your
product flows to the environment and it’s in
a closed manner, it helps protect your prod-
ucts,” Paulino says.
THE PAYOFF
Since Amgen began production at
its Singapore plant in 2015, several
other companies have realized
the benefits of going small.
“We all learned from Amgen’s Singapore
site, as they pioneered a fully functional sin-
gle-use, process intensified, small footprint
facility. The design and accomplishment of
this site encouraged our industry to think in
a new paradigm,” Jornitz says. “Having said
this, there are now newer, innovative solu-
tions, which create turnkey facilities that I
think are even more flexible and more rap-
idly deployable.”
According to Jornitz, the trend isn’t limited
to biomanufacturing and several compa-
nies have been looking at ways to make
oral solid dose production more efficient
with continuous processing modes. But
in an aseptic processing environment, the
payoff is especially large, as robust con-
tainment is a must.
eBOOK: Best of Pharma 2018 31

“In aseptic, simple is always better,” Barry
Starkman, a principal consultant with DPS
Group, explains. “The regulatory burden
is always high. And for manufacturing, it
comes down to dollars per square foot —
$1,200-$1,500 per square foot adds up fast.”
One of the biggest cost factors in an
aseptic environment is air flow — as an
ISO 5 environment demands up to 480
air changes an hour. Naturally, if you’re
operating in a smaller space, you don’t
need to run a high air volume to reach
the required air changes to maintain the
same cleanroom classification, which saves
energy costs.
SMALLER, FASTER
Even in facilities producing bigger
batches of medicines, Starkman says
many companies are starting to see the
value in running multiple small machines
instead of a single large production line.
“I once worked with a vial line that did
about 700 vials per minute and it was a
monstrosity,” he recalls. “The reality was
that it was so complicated, it probably
would have been more efficient to run sev-
eral smaller lines so that if one machine
went down, the others continued to operate
and we didn’t lose as much output.”
According to Jornitz, many of the compa-
nies who come to G-CON Manufacturing
— which produces prefabricated cleanroom
www.PharmaManufacturing.com
systems called PODs — are looking to
shrink their footprint while quickly scaling
up operations.
“Speed of deployment is essential, as
capital investment decisions can be
delayed and manufacturing processes
come online without the need of upfront
inventory burdens,” he says. “Since our
cleanroom PODs can be predesigned and
are prefabricated within our manufac-
turing environment, we are able to gain
much higher man-hour productivities. This
typically means we are able to deliver
standard PODs in three months and a POD
project in five to nine months.”
The trend is intensifying as more compa-
nies work with personalized medicines to
fight cancer and rare diseases. In fact, with
thousands of gene therapies in clinical
trials, that segment of the industry is now
the second largest class of medicines being
developed — second only to traditional
new chemical entities.
“The largest number of inquiries we get at
G-CON is on the cell gene therapy side, as
the autonomous air handling of our PODs
guarantees robust containment,” Jor-
nitz says.
REDUCING RISK
Containing the biomanufacturing process
to a small space is not only good for the
pharma company, it’s safer for patients.
eBOOK: Best of Pharma 2018 32

“In cell therapy, the received patient sample
is a very small volume. A potential con-
tamination would not only represent an
economical risk, but a tremendous patient
risk, as one may not gain another sample,”
Jornitz says. “This means robust contain-
ment is crucial.”
At Amgen’s Singapore plant, some of the
benefits of a smaller space have come from
the facility’s unique “ballroom” design. Tra-
ditionally, the different parts of operation
— from the cell culture phase through to
purification — are done in separate rooms.
But if you stand on one end of Amgen’s
Singapore facility, you can see all the way
across the plant — from the bioreactors
to purification.
“In a traditional plant, you can see a lot of
long stainless steel pipping running through
the wall into another room that could be
three floors down from where you’re at,”
Paulino explains. “So to get them really
close together allows us to use single-use
systems to shorten our flow pathway and
optimize our yield.”
The change has also given the company
an advantage in how it manages workers.
One benefit is that employees don’t have
to frequently un-gown and re-gown as they
move into new rooms, which saves time
and space. But the ballroom design has also
shifted the way employees interact with the
manufacturing process.
www.PharmaManufacturing.com
“Instead of having employees who only
do cell culture or purification, etc., we now
train and develop our staff to be much
broader manufacturing operators,” Paulino
says. “Our staff don’t identify themselves
by where they are. They think about them-
selves as manufacturing professionals and
get opportunities to learn about different
parts of operations.”
THE TRADEOFF
Shrinking manufacturing isn’t for everyone.
Although many companies are looking at
ways to reap the benefits of producing
in a more compact space, there still has
to be some cost/benefit analysis to make
sure it’s a good fit for your operations.
“The end game is that form has to follow
function,” Starkman cautions.
When working with companies to design
their spaces, Starkman says they always
consider the tradeoffs between stainless
steel versus single-use, the cost of utilities,
air monitoring and all the other cost factors
of running a plant.
Despite the many advantages of single-use
systems, they don’t automatically translate
into space savings.
In fact, Jerome Pionchon, an engineering
expert with the bioreliance solutions organi-
zation at the Merck unit in Martillac, France,
says that switching their plant to mostly
eBOOK: Best of Pharma 2018 33

Inside Amgen’s next-genera-
tion biomanufacturing plant
in Singapore.
single-use systems didn’t
translate into a significant
space savings.
“When you use single-use
systems, you don’t need to
use clean-in-place anymore,
but you need to store the
disposable parts and need
more storage space. It’s just
a different way to manage
the facility,” Pionchon says.
Although Pionchon says that
single-use doesn’t automat-
ically mean that a company
can downsize its facility, it
has improved efficiency at
the Merck plant in Martillac.
www.PharmaManufacturing.com
“It makes sense to switch to
single-use systems when you
need a high level of flexibil-
ity,” he says. “But if you’re
still producing at an identical
scale…I’m not sure you’re
going to get a huge improve-
ment in terms of footprint.”
There are also challenges to
thinking small.
At Amgen, Paulino says the
company has had to tran-
sition its relationships with
equipment suppliers to be
more like partnerships.
“As we pushed these technol-
ogies we are learning about
the robustness of them, and
we’ve had to work closely
with our suppliers and part-
ner with them to continue
building that robustness,” she
says. “Because we rely heav-
ily on suppliers for single-use
systems … we are working
with them to increase the
expectations so that we get
zero defects and ‘right the
first time.’”
THE FUTURE
LOOKS SMALLER
What’s it going to take to
eBOOK: Best of Pharma 2018
shrink biomanufacturing
to the size of a stage
— or even smaller?
For Amgen, Paulino
says that improving its
current systems will help
reduce its manufacturing
footprint even more.
“We’re going to need
to advance the cellular
growth and productivity
to continue yielding higher
growth and we’re going
to need to look at our
purification processes to
think about how we can
increase the protein yield
and reduce the buffer vol-
umes,” she says. “We also
need to take advantage
of small-scale equipment
with better automation and
advance that technology
for use in a GMP setting.”
According to Starkman,
robotics could also play
a role, especially as they
become more intuitive
and capable of handling
multiple tasks. The more
functionality we can get
from a single robot, the less
space manufacturers will
need to operate them.
34

“In aseptic processing, robots could be used
in materials handling, manipulating all the
components, cleaning and environmental
monitoring inside the isolator,” he says. “I
think that’s the key to all this.”
Advances in continuous biomanufacturing
could also be a game-changer.
“There are people playing around on the
bulk side with continuous cell culture and
fermentation,” Starkman says. “I’ve seen
a continuous freeze drying process, and
then filling. So, there are some really cut-
ting-edge technologies that people are
experimenting with.”
“With continuous processing bioreactor
volumes and downstream processing, foot-
prints can be further reduced. Certainly,
media and buffer volumes increase, but also
the preparation technologies in this area
are evolving,” Jornitz echoes. “Quite a few
biomanufacturers are pursuing continuous
manufacturing, which can help them shrink
that facility footprint even further.
“Major advances in the field of antibody
boosters need to be accelerated. The hope
is that in five to 10 years, designs of more
mobile, rapidly deployable bioprocessing
spaces are available to fight any potential
pandemic threat,” Jornitz continues.
That solution could prove to be especially
needed as the threat of the next global
www.PharmaManufacturing.com
health crisis looms. For example, in May of
this year, the World Health Organization
reported that Ebola is back and several
cases have been confirmed in the Dem-
ocratic Republic of Congo (the disease
claimed more than 11,000 lives between
2014-2016 in West Africa). The fresh out-
break has already killed dozens and health
officials are scrambling to contain it before
the disease spreads again.
Currently, one of their chief weapons of
defense is a new experimental vaccine cre-
ated by Merck, which has been approved
for “compassionate use” in outbreaks even
though it has not yet been formally given
the green light by any regulatory body. But
because the new cases are in very remote
areas, maintaining the cold chain to trans-
port thousands of vaccines where they’re
needed has been a concern. Mobile manu-
facturing could change that.
“My dream is that four trucks drive into a
warehouse anywhere in the world,” Jornitz
says. “One truck is utilities, like chilled water,
electricity etc. The other two trucks are cell-
based drug substance processing spaces,
and the last truck is for final dosage formula-
tion and filling. With that you could produce
vaccines wherever they are needed.
“I think there is the potential to make that
dream happen,” he continues. “There’s so
much tremendous technology out there
­— we just need the support of regulatory
eBOOK: Best of Pharma 2018 35

authorities to utilize it. Because what do
we do? We work for the same person: the
patient. All of us in the industry — from man-
ufacturers to regulaters — need to strive to
serve that patient better, and this can only
be done in a collaborative manner.”
Less Space
for Waste
As single-use technology becomes
mainstream, biopharma companies
need a better way to handle waste
By Karen Langhauser, Chief Content Director
“S
ingle-use devices have
clearly reached mainstream
acceptance in the industry,”
concluded BioPlan, after reviewing the
results of their Annual Report and Survey of
Biopharmaceutical Manufacturing Capacity
and Production.
According to BioPlan’s survey, almost 90
percent of respondents continue to use one
or more single-use device at some stage in
bioproduction (R&D through commercial).
The most common uses were in tubing,
disposable filter cartridges, and connectors
and clamps.1
This should come as no surprise to the
industry, as these single-use technologies
www.PharmaManufacturing.com
offer distinct advantages compared to
traditional, fixed stainless steel systems in
terms of cleaning and validation. This can
lead to a positive environmental impact
by reducing the use of resources such
as water and energy. Single-use options
can also reduce the time and investment
required to get facilities and process lines
up and running.
But these advantages must be balanced
against new operational challenges,
chief among them, waste management
and disposal.
The adoption and growth of single-use
technologies in biopharma manufacturing is
significantly increasing the amount of plas-
tic waste being generated. It’s estimated
that by 2025, biomanufacturers will be
producing 112,000 tons per year of plastic
waste, globally.2
DISPOSAL OPTIONS
Biopharma facilities produce different
categories of waste: non-hazardous,
hazardous, regulated medical waste and
biohazardous. EPA regulations define
what is considered hazardous and the
Department of Transportation regulates
how waste is handled and transported.
The industry standard for years has
involved landfilling or incineration, depend-
ing on the type of waste. Biohazardous and
regulated medical waste disposal typically
eBOOK: Best of Pharma 2018 36

involves contracting with
a company authorized
to contain, transport and
dispose of this waste. Bio-
pharma companies perform
robust risk assessments to
determine the right disposal
options. Not surprisingly,
many companies err on
the side of caution, even
going as far as choosing
to autoclave waste before
allowing it to leave the
facility or labelling waste as
biohazardous whether it is
biohazardous or not.
But the increase in sin-
gle-use plastics waste is
pushing biopharma com-
panies to address the
environmental impact of
these currently utilized
methods of disposal, and
question whether there is a
better option.
RECYCLING PLASTIC
While recycling seems
like an easy solution,
there are challenges
that arise when it comes
to recycling single-use
technologies in biopharma.
Most standard recycling
programs cannot accept
MilliporeSigma recycles all plastic containing products used in
biopharma manufacturing.
biohazardous or medical
waste without it first being
sterilized. Additionally,
many single-use products
used in biopharma
facilities are made from
multiple plastics and
materials — and standard
recycling programs are
not equipment to handle
separating these materials.
Perhaps the biggest
hesitation has to do
with traceability. The
traditional recycling infra-
structure does not allow
for traceability.
“It makes sense that bio-
pharma customers are very
eBOOK: Best of Pharma 2018
www.PharmaManufacturing.com
concerned about losing
track of where plastic
waste goes once it leaves
their facilities. Obviously,
they want to make sure
that their waste is properly
disposed and that nothing
happens that isn’t sup-
posed to in the process,”
says Jacqueline Ignacio,
global manager, Customer
Sustainability Solu-
tions, MilliporeSigma.
Ignacio points out that
human rights are also
a concern, given that
labor violations are not
uncommon in facili-
ties that process plastic
waste abroad.
37

“If you are a company making products
that better people’s lives, it would be con-
tradictory for your trash to be doing the
opposite,” says Ignacio.
FINDING A SOLUTION
MilliporeSigma estimates that a single
biopharma site produces about 12.5
tons waste per month that is eligible
for recycling. As a leading supplier of
single-use biopharmaceutical products,
including single-use bags, tubing,
connectors and filters, MilliporeSigma
recognizes the need to reduce the
environmental impact of its products.
In 2015, MilliporeSigma launched an
exclusive partnership with Triumvirate
Environmental in order to enable biopro-
cess manufacturing customers to fully
recycle plastic single-use and dispos-
able products.
Triumvirate’s innovative program can utilize
the entire product in its recycling process,
without requiring segregation or disas-
sembly. Triumvirate can accept regulated
medical and biohazardous waste, as well
as non-hazardous waste such as hairnets,
gloves and gowns. The waste is shredded
and sterilized in one step, and turned into
landscape timbers, construction materials
and plastic shipping pallets at Triumvirate’s
Pennsylvania facility.
www.PharmaManufacturing.com
“Having biopharma waste processed in the
same facility that is manufacturing the next
product completely takes traceability issues
out of the equation. Biopharma manufactur-
ers know where their waste went and what
it was transformed into,” explains Ignacio.
MilliporeSigma and Triumvirate are
currently working with 11 biopharma cus-
tomers, including Johnson & Johnson’s
Janseen site in Malvern, PA. Johnson
& Johnson’s reports that through this
program alone, 50 tons of single use tech-
nologies were recycled last year.
IT’S NOT WASTE,
IT’S OPPORTUNITY
Despite an impressive start, single-use
technology recycling is still in its infancy in
the biopharma industry. The MilliporeSigma/
Triumvirate partnership is the only one
of its kind in the industry and is focused
primarily on East Coast facilities. As global
disposable plastic production continues to
exceed the ability of waste management to
keep up, recycling is becoming imperative.
“This is just the tip of the iceberg for recy-
cling processes. There’s a whole economy
surrounding plastic recycling that we’ve
only just started to tap into,” says Ignacio.
What’s it going to take to make this happen
in pharma? For starters, collaboration
eBOOK: Best of Pharma 2018 38

between waste management, single-use
suppliers and biopharma companies, yield-
ing programs such as the one put in place
by MilliporeSigma and Triumvirate.
“My hope is that this gets people looking at
waste differently and realizing that it’s not
just single use. It can become another prod-
uct, safely and affordably. Eventually people
will start to look at waste not as waste, but
www.PharmaManufacturing.com
as a feedstock for something more,” con-
cludes Ignacio.
REFERENCES
1. BioPlan’s 14th Annual Report and Survey
of Biopharmaceutical Manufacturing
Capacity and Production, April 2017.
2. YouTube, “Millipore Sigma Tech
Talks: Biopharm Recycling Program.”
April 2018.
eBOOK: Best of Pharma 2018 39