The Perfect Storm: A Low-Performing Biotech Plant

For the past 12 months, a major pharmaceutical company had rolled out a comprehensive set of cultural changes and breakthrough lean-process activities that were instigated by the need to cut nearly 25% of costs across its key global production facilities. The cultural changes and breakthrough lean-process activities called for aggressive action, and company leadership thought that the company's cost reduction goal could only be achieved through operational transformation, in a three-prong approach incorporating leadership behavior and management infrastructure changes that complimented the lean initiatives rolled out in the 24 manufacturing operating systems of its more than 40 global sites. A senior leader charged with heading up this global effort schedules a meeting with her lead contact from the external advisory firm hired to help with the design and initial implementation of a cost reduction to discuss the roadblocks they both had encountered at their least successful site. Excerpt UVA-OM-1463 Jan. 20, 2012 THE PERFECT STORM: A LOW-PERFORMING BIOTECH PLANT For the past 12 months, a major pharmaceutical company had rolled out a comprehensive set of cultural changes and breakthrough lean-process activities that were instigated by the need to cut nearly 25% of costs across its key global production facilities. This need to cut costs was driven by two events. First, several of the company's patented blockbuster products would soon be going off-patent creating a significant revenue shortfall in the near future. Second, company leadership was currently negotiating with representatives from another major pharmaceutical company that had offered to acquire it over the next 18 months. The cultural changes and breakthrough lean-process activities called for aggressive action, and company leadership thought that the company's cost reduction goal could only be achieved through operational transformation, in a three-prong approach incorporating leadership behavior and management infrastructure changes that complimented the lean initiatives rolled out in the 24 manufacturing operating systems of its more than 40 global sites. The large-scale program involved both senior leadership and an external advisory firm. With the assistance of the external firm, the pharmaceutical company had designed a complete rollout plan that began by identifying the first- and second-wave sites (others in the global network would be tackled later) and conducting an in-depth diagnostic analysis of the potential for financial gain, process improvement, and cultural changes at each of these production sites. . . .