In the recent years we all have been reading and hearing about what the Indians have been doing in the areas of IT, chemicals, pharmaceuticals and petrochemicals etc. They have accomplished all through desire, creativity and Jugaad.
Recent issue of Business Week covers “India's Next Global Export: Innovation” called Jugaad. So, what does this new management fad mean? In the simplistic terms, Jugaad literally means an arrangement or a work around, which have to be used because of lack of resources.
This definition is very apropos. All of us have exercised Jugaad in our lives and may not have realized it. It could be developing a better process or a product. It could be stealing a base in baseball, kicking a soccer ball to score a goal or the topspin of the tennis racket to win the match i.e. achieving an objective using whatever it takes. All of us have the creativity to achieve our goals and objectives. We have what it takes.
Many of us might not have heard of Mr. Michael O’Leary. He is the chief executive of Ryanair Holdings Co., the Irish no-frills airline. He is putting his Jugaad to practice. His creativity is evident when he started a one-car taxi company to legally use Dublin’s bus lanes and cut an hour from his daily commute. This is Jugaad. Jugaad is not an Indian thing. It is everywhere. All of us have it. We just need to do things in a manner that simplify things and processes.
Can we apply Jugaad to the manufacture of chemicals, pharmaceuticals, polymers, resins and other chemical based products? Yes, we absolutely can. By learning the fundamentals of chemistry, physics, mathematics we have the knowledge base. Along with these fundamentals if we just apply our creativity and imagination we will have the simplest and cost effective processes producing highest quality products. Customer will come back time after time and we will generate sufficient and significant profits.
Girish Malhotra, PE
President
EPCOT International
Pharmaceutical, Specialty and Fine Chemicals and Coating process and manufacturing technologies have to be simple to have the best possible process. Processes have to be safe and best of the methods need to be included to minimize the environmental impact due to air, water or soil discharges. Conservation is a necessity. Simple and good technology will result in a profitable and consistent quality product. This is the intent of every developer, chemist and chemical engineer.
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Thursday, December 10, 2009
Thursday, October 8, 2009
An Interpretation of U.S. FDA Guidance for Pharma Manufacture
About five years ago FDA issued its “PAT Guidance for Industry” (September 2004). FDA’s intent by issuing the guidelines is to encourage the Pharmaceutical Industry to improve and innovate its manufacturing practices so that they produce quality product the first time and all the time. Manufacturing innovation will be the lifeline for the Pharmaceuticals as their business model changes.
Regulatory bodies want the companies to move away from achieving quality through the current practice of “after the fact repeated analysis”. Achieving product quality “the first time” and all the time is the goal. This is not a difficult expectation.
The guideline is suggesting the industry of how and what needs to be done and the methodology for improving the processes. However, innovation has to come from within the industry rather than thrust upon them. The guidance is very legalese and can be interpreted in many different ways. As written it eludes more to drug formulation than to Active Pharmaceutical Ingredient (API) manufacture. However, the rules of the game for API and drug formulation are same as quality is the ultimate goal.
If we clear the forest and the legal jargon, FDA is saying “understand how the chemicals react, interact and behave with each other and have a process that if operated at the desired process conditions should deliver quality product the “first time” and all the time [basic tenants of chemical engineering, chemistry curriculum and process development]”. Anything short will not deliver first time quality product.
In product and process development, we need to understand the chemicals, their interaction, establish specifications and use different analytical technologies to ensure that the developed process will deliver the expected product. If one is expecting that the process analytical technologies will fix a bad process, then that would be a gross error and expectation. Analytical technologies tell us the result rather than the path to the result.
Good manufacturing practices and continuous improvement is a must for every manufacturing. PAT guidance suggests that the pharmaceutical industry should have discussion and approval from FDA on their existing process improvement plans. This is adding costs. The benefits of process improvement can be quantified but since the re-approval costs are not known, my conjecture is that the industry would not opt for any process improvement for their existing products as the costs could exceed the benefits. Estimated savings due to process innovations for the pharmaceutical companies are in the $100 to $200 billion dollars range. I hope this is good incentive to innovate.
Pharmaceuticals companies due to first to market pressures and following regulatory directives and guidelines are not able to apply good chemistry and engineering principles to have an efficient process that produces quality product. The current state of pharmaceutical manufacture is manifestation of our methods. If we are expecting it to change pharmaceutical companies have to take the lead. Innovation can happen for the products that will become generic in the coming years and for the new molecules that will be commercialized.
Development of innovative processes has to start during the process conceptualization and development. Even then it would have to be an effort as old methods and thinking would have to be discarded, which is not easy. The regulatory bodies will have to be flexible and encourage innovation. PAT guidelines and other guidelines are encouraging innovation but have too many constraints. I strongly believe that innovation can reduce regulation.
Girish Malhotra, PE
President
EPCOT International
Regulatory bodies want the companies to move away from achieving quality through the current practice of “after the fact repeated analysis”. Achieving product quality “the first time” and all the time is the goal. This is not a difficult expectation.
The guideline is suggesting the industry of how and what needs to be done and the methodology for improving the processes. However, innovation has to come from within the industry rather than thrust upon them. The guidance is very legalese and can be interpreted in many different ways. As written it eludes more to drug formulation than to Active Pharmaceutical Ingredient (API) manufacture. However, the rules of the game for API and drug formulation are same as quality is the ultimate goal.
If we clear the forest and the legal jargon, FDA is saying “understand how the chemicals react, interact and behave with each other and have a process that if operated at the desired process conditions should deliver quality product the “first time” and all the time [basic tenants of chemical engineering, chemistry curriculum and process development]”. Anything short will not deliver first time quality product.
In product and process development, we need to understand the chemicals, their interaction, establish specifications and use different analytical technologies to ensure that the developed process will deliver the expected product. If one is expecting that the process analytical technologies will fix a bad process, then that would be a gross error and expectation. Analytical technologies tell us the result rather than the path to the result.
Good manufacturing practices and continuous improvement is a must for every manufacturing. PAT guidance suggests that the pharmaceutical industry should have discussion and approval from FDA on their existing process improvement plans. This is adding costs. The benefits of process improvement can be quantified but since the re-approval costs are not known, my conjecture is that the industry would not opt for any process improvement for their existing products as the costs could exceed the benefits. Estimated savings due to process innovations for the pharmaceutical companies are in the $100 to $200 billion dollars range. I hope this is good incentive to innovate.
Pharmaceuticals companies due to first to market pressures and following regulatory directives and guidelines are not able to apply good chemistry and engineering principles to have an efficient process that produces quality product. The current state of pharmaceutical manufacture is manifestation of our methods. If we are expecting it to change pharmaceutical companies have to take the lead. Innovation can happen for the products that will become generic in the coming years and for the new molecules that will be commercialized.
Development of innovative processes has to start during the process conceptualization and development. Even then it would have to be an effort as old methods and thinking would have to be discarded, which is not easy. The regulatory bodies will have to be flexible and encourage innovation. PAT guidelines and other guidelines are encouraging innovation but have too many constraints. I strongly believe that innovation can reduce regulation.
Girish Malhotra, PE
President
EPCOT International
Friday, September 25, 2009
Fine Chemicals: Quality Manufacturing and Technology Innovation in Pharmaceuticals
A recent survey “Pharmaceutical Process Control: Is the Great Divide Growing?” makes one think and ponder about the direction of manufacturing technologies and process development methods in the changing pharmaceutical business model.
I found some of the answers to be conflicting. The problems of technology inefficiencies should go away are the expectation. However, costs and how to go about comes in the way. Survey suggests that PAT and QBD could be mutually exclusivity, this was a surprise and as they cannot be.
For a chemical process to produce quality product complete understanding and incorporation of the physical properties of chemicals, their reaction chemistry and interaction is necessary. Understanding facilitates development of an excellent process. These are the fundamental elements of QBD and PAT.
Survey raises the following questions.
1. Do the survey answers give the direction of the company as a whole or only the thinking of the participating staff? Is the staff opinion in sync with what the management wants?
2. What is management thinking with respect to manufacturing and process technologies?
3. Are the survey questions such that by answering “yes” to one part of the survey could result in an automatic “no” for the other part of the survey i.e. consistency or lack of it?
My focus is on having the best Process Development and Manufacturing technologies so that we can have a process that is safe, environmentally sustainable and produces quality product first time and all the time without repeated analysis.
If we understand the fundamental elements, our creativity and imagineering should result in “state of the art” processes that will produce a quality product. Proper process controls are derived from such knowledge.
Unless we understand the fundamental elements, after the fact improvement effort (Lean, Six Sigma etc.) would not result in an optimum process. Actually such an effort can be expensive. Incomplete understanding will result in less than an optimum process. It will be an expensive investment as is the case in Pharmaceutical Manufacturing.
Knowledge of elements will facilitate incorporation and adoption of state of the art and new technologies. Microreactors are the new “to be discussed” technology after the pharma acronyms. They are being touted as the next best thing after sliced bread.
For the last ten plus years “micro-reactors” have been a laboratory curiosity. Microreactors are simplistically a reaction space that act as an efficient heat exchange device also. If used properly can lead to an “efficient, green and sustainable” process. They are a modified/enhanced nano-version of plate and frame heat exchangers, which have been commercial for 40+ years. Such exchangers have been primarily used as heat exchangers rather than a combination reaction and heat transfer space. They perform extremely well in their dual role. These and similar technologies have to be understood and their value capitalized. Such reactors have a place in the pharmaceuticals (specialty chemicals) and fine chemical world.
Use of innovative technologies and improvement of manufacturing practices is only possible if we understand the fundamentals and apply principles of chemical engineering for an optimum process. Effort is not expensive and once incorporated, we would see very positive results.
Girish MALHOTRA, PE
President
EPCOT International
I found some of the answers to be conflicting. The problems of technology inefficiencies should go away are the expectation. However, costs and how to go about comes in the way. Survey suggests that PAT and QBD could be mutually exclusivity, this was a surprise and as they cannot be.
For a chemical process to produce quality product complete understanding and incorporation of the physical properties of chemicals, their reaction chemistry and interaction is necessary. Understanding facilitates development of an excellent process. These are the fundamental elements of QBD and PAT.
Survey raises the following questions.
1. Do the survey answers give the direction of the company as a whole or only the thinking of the participating staff? Is the staff opinion in sync with what the management wants?
2. What is management thinking with respect to manufacturing and process technologies?
3. Are the survey questions such that by answering “yes” to one part of the survey could result in an automatic “no” for the other part of the survey i.e. consistency or lack of it?
My focus is on having the best Process Development and Manufacturing technologies so that we can have a process that is safe, environmentally sustainable and produces quality product first time and all the time without repeated analysis.
If we understand the fundamental elements, our creativity and imagineering should result in “state of the art” processes that will produce a quality product. Proper process controls are derived from such knowledge.
Unless we understand the fundamental elements, after the fact improvement effort (Lean, Six Sigma etc.) would not result in an optimum process. Actually such an effort can be expensive. Incomplete understanding will result in less than an optimum process. It will be an expensive investment as is the case in Pharmaceutical Manufacturing.
Knowledge of elements will facilitate incorporation and adoption of state of the art and new technologies. Microreactors are the new “to be discussed” technology after the pharma acronyms. They are being touted as the next best thing after sliced bread.
For the last ten plus years “micro-reactors” have been a laboratory curiosity. Microreactors are simplistically a reaction space that act as an efficient heat exchange device also. If used properly can lead to an “efficient, green and sustainable” process. They are a modified/enhanced nano-version of plate and frame heat exchangers, which have been commercial for 40+ years. Such exchangers have been primarily used as heat exchangers rather than a combination reaction and heat transfer space. They perform extremely well in their dual role. These and similar technologies have to be understood and their value capitalized. Such reactors have a place in the pharmaceuticals (specialty chemicals) and fine chemical world.
Use of innovative technologies and improvement of manufacturing practices is only possible if we understand the fundamentals and apply principles of chemical engineering for an optimum process. Effort is not expensive and once incorporated, we would see very positive results.
Girish MALHOTRA, PE
President
EPCOT International
Friday, August 21, 2009
A Pharmaceutical Challenge for Technocrats
Pharmaceuticals have their own unique technology and pricing positions compared with the other chemical products. Can we introduce innovative development and manufacturing technologies for the pharmaceuticals sector? The answer in unequivocal ‘yes!’ We just need to understand the roadblocks and overcome them.
Since we want to live forever, we are willing to pay the demanded price for a drug. Our willingness to pay for long life along with the monopoly during the life of the patent has been the primary driver for setting drug pricing. Drug prices are set at the highest level the market will bear. Once the patent expires, brand companies move on to invent new drugs.
The above two factors ensure the desired profit margins for the pharmaceutical companies. Any costs due to regulatory mandate are passed on to the consumer. Thus, the need for product, process development and manufacturing technology innovation has been minimal. Inefficiencies are an accepted part of doing business. Generics have followed ethical (brand) companies in their modus operandi.
Regulatory bodies have cajoled pharmaceutical companies toward innovation by creating PAT, CMC, QBD and other TLAs. However, these cannot be forced or mandated unless some other event takes place, which will have a financial return. [We are familiar with the phrase “you can lead the horse to water but cannot make it drink.”]
There has to be a solution for this dilemma. Only an “economic incentive” will result in innovation.
Latent blame for the lack of innovation is placed on regulatory agencies. This is unjust. The repeatability of quality at the active pharma ingredients (API) and the final formulated drug stages is mandated- as it should be. However, the “path to quality” should not be mandated. Companies should be held responsible for “quality failure”. Penalty for quality failure has to be severe. Companies should have the freedom to choose the “path to quality” as it is the road to innovation and creativity.
Providing manufacturers with the freedom to choose their “path to quality” is the equivalent of stopping the sampling of intermediates” for quality. This will force everyone to “drink the water”. Companies will save significant money, which will be additional incentive for pharmaceutical development and manufacturing technology innovation.
Stopping intermediate sampling could be encouraged and even mandated. It will happen only if we understand “everything about the raw materials and intermediates but were afraid to ask.” I am quite confident that based on the education and training that chemical engineers and chemists receive they can become the proponents of “stopping the sampling of intermediates.” With their backing we will arrive at the destination where the regulators want us to go. Technology innovation is not hard and for the technocrats it is the most exhilarating experience.
We need to keep API and drug formulation as separate processes and that will simplify innovation. In general, many articles discuss pharmaceutical process improvements. These do not include API manufacturing process improvements but only refer to formulation process improvements. McKinsey in a recent report suggests that the pharmaceutical companies have an opportunity that exceeds about $65 billion through productivity improvements in the drug formulation area. Based on my review of the API segment, I believe that the opportunity in the API sector based on yield, technology improvements and conservation far exceeds $65 billion.
The question is: “Are the chemists and chemical engineers ready and willing to take the challenge?” I know the answer and it is “Yes we can”. If we do, many of the TLAs would become irrelevant.
Girish MALHOTRA, PE
President
Since we want to live forever, we are willing to pay the demanded price for a drug. Our willingness to pay for long life along with the monopoly during the life of the patent has been the primary driver for setting drug pricing. Drug prices are set at the highest level the market will bear. Once the patent expires, brand companies move on to invent new drugs.
The above two factors ensure the desired profit margins for the pharmaceutical companies. Any costs due to regulatory mandate are passed on to the consumer. Thus, the need for product, process development and manufacturing technology innovation has been minimal. Inefficiencies are an accepted part of doing business. Generics have followed ethical (brand) companies in their modus operandi.
Regulatory bodies have cajoled pharmaceutical companies toward innovation by creating PAT, CMC, QBD and other TLAs. However, these cannot be forced or mandated unless some other event takes place, which will have a financial return. [We are familiar with the phrase “you can lead the horse to water but cannot make it drink.”]
There has to be a solution for this dilemma. Only an “economic incentive” will result in innovation.
Latent blame for the lack of innovation is placed on regulatory agencies. This is unjust. The repeatability of quality at the active pharma ingredients (API) and the final formulated drug stages is mandated- as it should be. However, the “path to quality” should not be mandated. Companies should be held responsible for “quality failure”. Penalty for quality failure has to be severe. Companies should have the freedom to choose the “path to quality” as it is the road to innovation and creativity.
Providing manufacturers with the freedom to choose their “path to quality” is the equivalent of stopping the sampling of intermediates” for quality. This will force everyone to “drink the water”. Companies will save significant money, which will be additional incentive for pharmaceutical development and manufacturing technology innovation.
Stopping intermediate sampling could be encouraged and even mandated. It will happen only if we understand “everything about the raw materials and intermediates but were afraid to ask.” I am quite confident that based on the education and training that chemical engineers and chemists receive they can become the proponents of “stopping the sampling of intermediates.” With their backing we will arrive at the destination where the regulators want us to go. Technology innovation is not hard and for the technocrats it is the most exhilarating experience.
We need to keep API and drug formulation as separate processes and that will simplify innovation. In general, many articles discuss pharmaceutical process improvements. These do not include API manufacturing process improvements but only refer to formulation process improvements. McKinsey in a recent report suggests that the pharmaceutical companies have an opportunity that exceeds about $65 billion through productivity improvements in the drug formulation area. Based on my review of the API segment, I believe that the opportunity in the API sector based on yield, technology improvements and conservation far exceeds $65 billion.
The question is: “Are the chemists and chemical engineers ready and willing to take the challenge?” I know the answer and it is “Yes we can”. If we do, many of the TLAs would become irrelevant.
Girish MALHOTRA, PE
President
Wednesday, August 5, 2009
Chemical Engineering: Understanding the Curriculum for Quality Manufacturing
Chemical Engineers during their training are taught that they will commercialize and/or operate a process that will produce consistent quality product all the time (without re-work) using a safe, sustainable and an economic process.
To achieve these objectives, we review topics that teach us the understanding of the physical properties of material (raw material, intermediate, by-product and the product) involved in the process. This allows us to understand their interaction in a reactive and/or a blending process. Chem. E. uses this information to commercialize a robust process.
If we have mastered the properties and the interaction of chemicals involved, we should be able to define the operating conditions of a process having the highest yield with above defined process characteristics. We are also taught various unit operations that we can use as is, modify and/or manipulate to produce a quality product all the time. If we are not able to achieve the objective of producing quality product using a safe and sustainable process, the first time and all the time, we have to improve our understanding so that we can have the correct process.
If I translate the Chem. E. training fundamentals to acronyms, we are taught to develop and commercialize a QUALITY BY DESIGN (QBD) process. This is our “hippocratic oath”. Anything short of this objective suggests that we need to improve.
Regulatory bodies have introduced few other acronyms in the pharmaceutical manufacturing. They are fine to have but what they mean and tell us is not totally understood. Interpretations of these vary and introduce variability. My question is: are we trying to have the best pharmaceutical manufacturing technology or are we trying to conform to the current fashion crowd?
My interpretation of QBA, CQA, CMC, DS, and PAT is as follows. If my understanding is not what the “guru’s” expect it to be, then please help with the correct interpretation.
• CQA [critical quality attributes]: We need to understand the physical properties of the materials (raw material, intermediate, by-product and the final product) and how they interact with each other.
• DS [design space]: Definition of the process operating parameters that have been identified by the developers, which if followed will produce quality product all the time.
• CMC [chemistry, manufacturing and controls]: Reaction mechanism, kinetics and process controls that is understood and followed will allow production of quality product.
• PAT [process analytical technologies]: This acronym is the least understood. It is believed that by having PAT, all of the process ills will go away. That is far from the truth. Analytical instruments will let the manufacturing and quality people know that the process has erred. However, it will not correct the problem and give a solution to the problem. Only people who are familiar with the characteristics of the materials and chemistry can correct the process. Analytical instruments are an indicator and not the corrector. There is difference between process control technologies and process analytical technologies.
• QBA [quality by analysis]: It suggests that we have a problem and we do not meet quality. We have to go back and fix the problem so that we can produce the desired quality.
To summarize the above mentioned acronyms are the fundamentals of chemical engineering curriculum. If we understand pieces parts of the curriculum, then we should have a QBD process. Question then arises why it is so hard to implement the fundamentals of chemical engineering in the manufacture of a pharmaceutical (API or a blend of API and excipients) or did I miss something.
Girish Malhotra, PE
President
To achieve these objectives, we review topics that teach us the understanding of the physical properties of material (raw material, intermediate, by-product and the product) involved in the process. This allows us to understand their interaction in a reactive and/or a blending process. Chem. E. uses this information to commercialize a robust process.
If we have mastered the properties and the interaction of chemicals involved, we should be able to define the operating conditions of a process having the highest yield with above defined process characteristics. We are also taught various unit operations that we can use as is, modify and/or manipulate to produce a quality product all the time. If we are not able to achieve the objective of producing quality product using a safe and sustainable process, the first time and all the time, we have to improve our understanding so that we can have the correct process.
If I translate the Chem. E. training fundamentals to acronyms, we are taught to develop and commercialize a QUALITY BY DESIGN (QBD) process. This is our “hippocratic oath”. Anything short of this objective suggests that we need to improve.
Regulatory bodies have introduced few other acronyms in the pharmaceutical manufacturing. They are fine to have but what they mean and tell us is not totally understood. Interpretations of these vary and introduce variability. My question is: are we trying to have the best pharmaceutical manufacturing technology or are we trying to conform to the current fashion crowd?
My interpretation of QBA, CQA, CMC, DS, and PAT is as follows. If my understanding is not what the “guru’s” expect it to be, then please help with the correct interpretation.
• CQA [critical quality attributes]: We need to understand the physical properties of the materials (raw material, intermediate, by-product and the final product) and how they interact with each other.
• DS [design space]: Definition of the process operating parameters that have been identified by the developers, which if followed will produce quality product all the time.
• CMC [chemistry, manufacturing and controls]: Reaction mechanism, kinetics and process controls that is understood and followed will allow production of quality product.
• PAT [process analytical technologies]: This acronym is the least understood. It is believed that by having PAT, all of the process ills will go away. That is far from the truth. Analytical instruments will let the manufacturing and quality people know that the process has erred. However, it will not correct the problem and give a solution to the problem. Only people who are familiar with the characteristics of the materials and chemistry can correct the process. Analytical instruments are an indicator and not the corrector. There is difference between process control technologies and process analytical technologies.
• QBA [quality by analysis]: It suggests that we have a problem and we do not meet quality. We have to go back and fix the problem so that we can produce the desired quality.
To summarize the above mentioned acronyms are the fundamentals of chemical engineering curriculum. If we understand pieces parts of the curriculum, then we should have a QBD process. Question then arises why it is so hard to implement the fundamentals of chemical engineering in the manufacture of a pharmaceutical (API or a blend of API and excipients) or did I miss something.
Girish Malhotra, PE
President
Tuesday, August 4, 2009
Climate Change and its impact on Industrial Production
Climate change is a new challenge and a major discussion point between the developed and the developing countries. Some sort of emission limits will be placed as we move forward. There is lot of posturing and both sides are making point and counterpoint.
Developed countries did not have emission restrictions during their growth. With the current demand to curb emissions, some curbs will be negotiated. Developed and developing countries are afraid of the curtailment of their industrial machine. In order to retain their industrial complex developed countries will exert pressure. However, the developing countries especially India and China are not going to readily agree to any curbs. In Secretary Clinton’s recent trip India Rejected U.S. Proposal of Carbon Limits.
A recent article India and Climate Change takes India as example and excludes China, though both present similar challenges for the developed countries.
This article states “If (the) developed nations are held responsible for emissions that they historically contributed, oblivious to their impact on climate change, why shouldn't (the) developing nations take responsibility for producing generations of people who will generate emissions into the future?” Is it an indirect admission that the developed countries are afraid of the curbing their economic growth and are afraid of the growth of the developing countries? It seems to suggest that since the developed countries control their population, they can keep emitting at the current per capita rate. Is it also suggesting that the living standards of the developed countries should stay high and of the developing countries should not? If this is the latent intent, it is not going to sit well with the developing countries.
Are we saying “Maslow’s hierarchy of needs” only applicable to the developed countries? Developed countries have had the developing countries as their market, but now they challenging us on our turf, we are not willing to accept the challenge. The game has changed and we will have to play with the new rules. Their development and negotiation is going to be a challenge.
Recently International Council of Chemical Associations engaged McKinsey & Co. to suggest steps the chemical industry needs to take to curb emissions and still innovate. This study excludes chemicals that improve the living standards (including pharmaceuticals) and assumes gross savings from such chemicals to be zero.
I have concerns about this exclusion as we are excluding an important segment (pharmaceuticals about $800 billion revenue out of $3 trillion dollars per year) that has a large carbon imprint. Pharmaceuticals (API and formulated products) present an opportunity to reduce their imprint. There is an opportunity to improve their manufacturing inefficiencies (low yield) and reduce their solvent use, there by achieving an offsetting positive impact. Technology improvement will also reduce healthcare costs. An effort is needed in earnest.
Development and global sharing of the low carbon emission technologies might be the answer. Other choice for the companies in the developed countries is to move their factories to the developing countries. Thus they would not have to implement tougher emission standards. This is not a viable option.
In the last 15-20 years countries have become dependent on each other. What was environmentally acceptable yesterday will not be acceptable tomorrow. Since the global warming will affect us all, we will have to compromise and live with the new rules whatever they might be.
Girish Malhotra, PE
President
Developed countries did not have emission restrictions during their growth. With the current demand to curb emissions, some curbs will be negotiated. Developed and developing countries are afraid of the curtailment of their industrial machine. In order to retain their industrial complex developed countries will exert pressure. However, the developing countries especially India and China are not going to readily agree to any curbs. In Secretary Clinton’s recent trip India Rejected U.S. Proposal of Carbon Limits.
A recent article India and Climate Change takes India as example and excludes China, though both present similar challenges for the developed countries.
This article states “If (the) developed nations are held responsible for emissions that they historically contributed, oblivious to their impact on climate change, why shouldn't (the) developing nations take responsibility for producing generations of people who will generate emissions into the future?” Is it an indirect admission that the developed countries are afraid of the curbing their economic growth and are afraid of the growth of the developing countries? It seems to suggest that since the developed countries control their population, they can keep emitting at the current per capita rate. Is it also suggesting that the living standards of the developed countries should stay high and of the developing countries should not? If this is the latent intent, it is not going to sit well with the developing countries.
Girish Malhotra, PE
President
Wednesday, July 8, 2009
Recycling Coatings: An Environmental and Business Opportunity
In today’s environmental concerns and how to reduce green house gases (GHG)/carbon imprint, an opportunity exists in the coating business areas and that can appease many. This is through recycling of coatings.
Recycling of coatings is a possibility and a challenge. The challenge comes from the perspective of the formulators and the raw material suppliers. Raw materials deliver the desired coating performance. If the raw materials can be used interchangeably to deliver the required performance, we can have the makings of easier recycling and better manufacturing (batch à continuous) technologies. Certain scenarios exist.
Kelly Moore, a
Over the last many years, different methods and applications of surplus coating have been considered with sporadic success. Sustained success is needed to reduce environmental impact of the coatings.
If the government mandates coating recycling through EPA regulations, it would be called meddling in the business. However, the government can assist by creating an incentive program for the companies who recycle. This could be through VOC credits. This presents the best opportunity and any company’s effort in recycling should be awarded.
A joint effort will be needed to establish such VOC credit program. Companies should decide how they develop and incorporate the recycled material in their products. Companies have the knowledge base and the creativity to develop coatings that can have significant recycled material as a part of their formulation. Strategic and interchangeable use of different raw materials is the key for recycling. This would be a win-win.
Friday, June 12, 2009
Pharmaceuticals: What is Holding Back Quality By Design?
We come across many TLAs and their number is increasing. What is a TLA? It stands for “three letter acronym”.
In the regulatory world, TLAs keep us on our toes. In the pharmaceutical world two TLAs are in vogue. They are QBA and QBD. Everyone associated with the manufacture of pharmaceuticals is familiar with these acronyms. But just to re-iterate, QBA is product “quality by analysis” and QBD is “quality by design”. QBA is the current tradition of the pharmaceutical manufacturing processes whereas QBD presents what the technology should be or the future.
Level of going on discussion is suggestive of that there is a significant hesitation to improve technology. One has to ask the question, why it is so difficult to move from “A” to “D” and I am sure many have. There has to be a monumental hurdle/roadblock for the pharmaceuticals to move from QBA to QBD.
I do not think there are any hurdles. We are just up against tradition. Since the traditions are entrenched in pharmaceuticals, we have accepted the current manufacturing practices. They have not been challenged. We are also afraid of the “Regulatory Gods”. Move from QBA to QBD is very simple and the roadblock is staring at us. However, it has not been obvious to us. I define the hurdle/roadblock for the move from “A” to “D” to be “the isolation of intermediates of the reaction or the formulation steps”. The mantra for QBD is “stopping isolation of intermediates”.
If we isolate a reaction product after every reaction step or a mix after every formulation step to test the quality and the conversion yield, we are acknowledging that we do not have a complete understanding, control of the process step and its mechanism. If we did have the understanding, we would not be isolating the reaction step and/or blend intermediate and testing them for their quality.
Specialty/Fine chemical industry by and large has a complete understanding and control of the processes. It does not necessitate isolation of the intermediates, as the quality is designed in the products. If we can achieve the same level of proficiency for the pharmaceuticals, we would move from quality by “A” [analysis] to quality by “D” [design].
In the pharmaceutical industry move from “A” → “D”, will be a major accomplishment in simplifying the manufacturing technologies and processes. It will not only improve process efficiencies and but also reduce the carbon footprint of the fine, specialty chemicals and the pharmaceutical manufacturing processes. It will reduce the cycle time for many batch processes and could nudge quite a few products to be manufactured by continuous processes.
Jumping the “A” to “D” hurdle is simple and easy. We just have to set our heart and mind to it. If it happens, my conjecture is the even the “Regulatory Gods” will celebrate.
Girish MALHOTRA, PE
President
EPCOT International
In the regulatory world, TLAs keep us on our toes. In the pharmaceutical world two TLAs are in vogue. They are QBA and QBD. Everyone associated with the manufacture of pharmaceuticals is familiar with these acronyms. But just to re-iterate, QBA is product “quality by analysis” and QBD is “quality by design”. QBA is the current tradition of the pharmaceutical manufacturing processes whereas QBD presents what the technology should be or the future.
Level of going on discussion is suggestive of that there is a significant hesitation to improve technology. One has to ask the question, why it is so difficult to move from “A” to “D” and I am sure many have. There has to be a monumental hurdle/roadblock for the pharmaceuticals to move from QBA to QBD.
I do not think there are any hurdles. We are just up against tradition. Since the traditions are entrenched in pharmaceuticals, we have accepted the current manufacturing practices. They have not been challenged. We are also afraid of the “Regulatory Gods”. Move from QBA to QBD is very simple and the roadblock is staring at us. However, it has not been obvious to us. I define the hurdle/roadblock for the move from “A” to “D” to be “the isolation of intermediates of the reaction or the formulation steps”. The mantra for QBD is “stopping isolation of intermediates”.
If we isolate a reaction product after every reaction step or a mix after every formulation step to test the quality and the conversion yield, we are acknowledging that we do not have a complete understanding, control of the process step and its mechanism. If we did have the understanding, we would not be isolating the reaction step and/or blend intermediate and testing them for their quality.
Specialty/Fine chemical industry by and large has a complete understanding and control of the processes. It does not necessitate isolation of the intermediates, as the quality is designed in the products. If we can achieve the same level of proficiency for the pharmaceuticals, we would move from quality by “A” [analysis] to quality by “D” [design].
In the pharmaceutical industry move from “A” → “D”, will be a major accomplishment in simplifying the manufacturing technologies and processes. It will not only improve process efficiencies and but also reduce the carbon footprint of the fine, specialty chemicals and the pharmaceutical manufacturing processes. It will reduce the cycle time for many batch processes and could nudge quite a few products to be manufactured by continuous processes.
Jumping the “A” to “D” hurdle is simple and easy. We just have to set our heart and mind to it. If it happens, my conjecture is the even the “Regulatory Gods” will celebrate.
Girish MALHOTRA, PE
President
EPCOT International
Monday, June 1, 2009
Process of Continuous Improvement and Pharmaceuticals
In every industry, “process of continuous improvement” is a religion as it improves their profitability. A recent article "Drug CEOs Switch Tactics on Reform" in The Wall Street Journal discusses new strategies being developed by the Pharmaceutical companies. Pharmaceutical CEO’s believe that the drug costs do not contribute to the high health-care costs. The following points are mentioned in the article.
If the health-care costs are to be reduced, it has to be full court press on every element of the costs and that includes drug costs. Drug costs cannot and should not be excluded even if they are small part of the overall costs. The pharmaceutical companies should make any effort to lower drug prices as part of their continuous business improvement process. Point #5 suggests that the drug companies want to fund the development of new drugs through raising drug prices only. If an effort is made to improve their R&D methods and manufacturing technologies, which is definitely feasible and possible, the pharmaceutical companies will not only have more funds to develop new drugs will also have higher profits.
It is well known that the current drug manufacturing technologies and methods are inefficient. Effort needs to be made to improve the manufacturing technologies. Improvement in API and drug formulation yield e.g. from 60% to 90% might not seem to be major improvement in the cost but every dollar saved adds up. These savings might be in billions of Dollars or Euros and will be more than sufficient to pay for new drug research and development.
We all need to work together to reduce healthcare costs rather than saying problem is some place else. Suggesting that the problem is elsewhere is an indirect acknowledgment by the pharmaceutical industry that we do not believe in “process of continuous improvement” thereby cannot reduce drug costs. With the effort being made by every government to reduce health care costs, I hope the pharmaceutical companies are not saying that we have no room for such improvements and “do not tread on me.”
Based on the fundamentals taught in engineering schools, every student will say that the current manufacturing methods can be improved. The real question is why such effort has not been made and what is blocking the path of “continuous improvement”. It is well known that if manufacturing methods are improved, they will improve profit margins to levels that are much higher than the current levels and some of the savings can be passed on to the customers to make it a win-win.
Question is “can and/or should an effort to reduce drug costs be made?” The answer is we should and if someone says it cannot be done then the question is why not.
Girish Malhotra, PE
President, EPCOT International
- Prescription drugs account for "just about 10% of the overall (health care) cost".
- Reforms shouldn't force doctors and patients to choose a drug based on cost if the more expensive treatment would have a better outcome.
- The drug makers have been pushing through hefty price increases. Prices for many drugs were up more than 15% in the first quarter from a year earlier, according to data from Credit Suisse.
- Drug industry executives are worried about Medicare’s authority to negotiate the prices for drugs dispensed through its Part D benefit. That could limit the prices pharmaceutical companies can charge.
- Pharmaceutical executives argue that such steps (negotiated drug prices) would hamper drug makers' ability to pay for costly research into new treatments. "It would knock our legs out".
If the health-care costs are to be reduced, it has to be full court press on every element of the costs and that includes drug costs. Drug costs cannot and should not be excluded even if they are small part of the overall costs. The pharmaceutical companies should make any effort to lower drug prices as part of their continuous business improvement process. Point #5 suggests that the drug companies want to fund the development of new drugs through raising drug prices only. If an effort is made to improve their R&D methods and manufacturing technologies, which is definitely feasible and possible, the pharmaceutical companies will not only have more funds to develop new drugs will also have higher profits.
It is well known that the current drug manufacturing technologies and methods are inefficient. Effort needs to be made to improve the manufacturing technologies. Improvement in API and drug formulation yield e.g. from 60% to 90% might not seem to be major improvement in the cost but every dollar saved adds up. These savings might be in billions of Dollars or Euros and will be more than sufficient to pay for new drug research and development.
We all need to work together to reduce healthcare costs rather than saying problem is some place else. Suggesting that the problem is elsewhere is an indirect acknowledgment by the pharmaceutical industry that we do not believe in “process of continuous improvement” thereby cannot reduce drug costs. With the effort being made by every government to reduce health care costs, I hope the pharmaceutical companies are not saying that we have no room for such improvements and “do not tread on me.”
Based on the fundamentals taught in engineering schools, every student will say that the current manufacturing methods can be improved. The real question is why such effort has not been made and what is blocking the path of “continuous improvement”. It is well known that if manufacturing methods are improved, they will improve profit margins to levels that are much higher than the current levels and some of the savings can be passed on to the customers to make it a win-win.
Question is “can and/or should an effort to reduce drug costs be made?” The answer is we should and if someone says it cannot be done then the question is why not.
Girish Malhotra, PE
President, EPCOT International
Friday, April 24, 2009
Pharmaceuticals in the Water
Every so often we read about how pharmaceuticals are being discharged into global water systems. It’s good that we’re being told and reminded that this is a problem we’ve created for ourselves. Unless these pharmaceuticals are removed from water, they will accumulate to a level that will have ill effects on both our bodies and our ecosystems.
There are two distinct issues here, and they really should be separated. Every article I’ve read combines the two issues – this makes it more difficult to find a real solution to the problem.
The two issues are:
1) Pharmaceuticals in the water due to humans discarding them. There are no laws to control these discharges.
2) Pharmaceuticals from the manufacturing plants leaking into water. Regulatory bodies have guidelines and laws to control BOD (biological oxygen demand), COD (chemical oxygen demand), and suspended and dissolved solids to certain levels. There is no incentive for companies that abide by the rules to cut toxic chemical levels any further.
We can analyze and talk about the toxicity of pharmaceuticals and their ill effects on humans and eco-systems, but if there are no laws to control them, little will be done.
Talk, unfortunately, is cheap. Yes, the manufacturing process efficiencies need to be improved, but if I can make my profit margin and meet the water discharge regulations, there’s no reason for me to spend extra money to ensure water safety. There is simply no prospect of a return on such an investment.
Conscience does matter to a certain extent, but the economics drive these decisions.
Unless we make a concerted effort to fix this problem, we are going to see another Patancheru. The ball is in our court.
There are two distinct issues here, and they really should be separated. Every article I’ve read combines the two issues – this makes it more difficult to find a real solution to the problem.
The two issues are:
1) Pharmaceuticals in the water due to humans discarding them. There are no laws to control these discharges.
2) Pharmaceuticals from the manufacturing plants leaking into water. Regulatory bodies have guidelines and laws to control BOD (biological oxygen demand), COD (chemical oxygen demand), and suspended and dissolved solids to certain levels. There is no incentive for companies that abide by the rules to cut toxic chemical levels any further.
We can analyze and talk about the toxicity of pharmaceuticals and their ill effects on humans and eco-systems, but if there are no laws to control them, little will be done.
Talk, unfortunately, is cheap. Yes, the manufacturing process efficiencies need to be improved, but if I can make my profit margin and meet the water discharge regulations, there’s no reason for me to spend extra money to ensure water safety. There is simply no prospect of a return on such an investment.
Conscience does matter to a certain extent, but the economics drive these decisions.
Unless we make a concerted effort to fix this problem, we are going to see another Patancheru. The ball is in our court.
Friday, March 27, 2009
Nano and Paradigm shift
Nano car, when conceived was the joke of the night shows and most of the news broadcasters. Earlier this week reporters wanted to touch and feel “Oh my God” no radio, no air-conditioning and it is a tin can. May be it is. It might be bottom of the rug but it illustrates what is feasible. We have a new point to go forward from.
It is a HUGE paradigm shift not only for the automobile industry but also for every manufacturing industry. Gives 55 miles per gallon and gets you from point A to point B. Yes, it has its deficiencies but still we all talk about it over a drink.
Nano shows us that “Element Human Hu” can do unique things. It can go to point “x” which is out there, beyond our imagination, if we put our mind to it. Is it new iPod of the manufacturing industry? May be.
At the turn of the twentieth century, the four-wheel gasoline buggy fascinated us. Did we ever think in nineteen eighties that we will have laptop that can launch a missile? Most of us will say NO. We have driven film photography to a Technology Museum.
We are now looking at the next generation of adventure. Human creativity is beyond control and Nano is a rendition of possibilities of manufacturing and technology innovation. It should be celebrated. Hats off to the Human element.
Can we do anything? Yes we can!
It is a HUGE paradigm shift not only for the automobile industry but also for every manufacturing industry. Gives 55 miles per gallon and gets you from point A to point B. Yes, it has its deficiencies but still we all talk about it over a drink.
Nano shows us that “Element Human Hu” can do unique things. It can go to point “x” which is out there, beyond our imagination, if we put our mind to it. Is it new iPod of the manufacturing industry? May be.
At the turn of the twentieth century, the four-wheel gasoline buggy fascinated us. Did we ever think in nineteen eighties that we will have laptop that can launch a missile? Most of us will say NO. We have driven film photography to a Technology Museum.
We are now looking at the next generation of adventure. Human creativity is beyond control and Nano is a rendition of possibilities of manufacturing and technology innovation. It should be celebrated. Hats off to the Human element.
Can we do anything? Yes we can!
Thursday, March 26, 2009
Pharmaceuticals and Return on Investment (ROI)
Every reader is an investor. Investors know that there has to be a good return on their investment irrespective of the place of investment.
We have all been taught that different risks necessitate different ROI. For “low risk investments,” ROI of 10-24% is suggested, 24% being in Pharmaceuticals. The ROI range for “average risk” is about 15-40%. Again, 40% is for pharmaceuticals. ROI for high-risk investments should be 24-56% with 56% for Pharmaceuticals (1).
In the past few weeks, three major pharmaceutical mergers have been announced. Total investment is about $156 billion U.S. dollars. If the total investment is equally distributed between the three companies and each would like to have a “Five years ROI”, then [due to high risk] one should expect “before tax” return of about $20 billion dollars per year per deal. Another way to look at earning $20 billion/year is that the each company will have to have 10-20 blockbuster drugs on the market beginning in 2010. Based on each company’s pipeline, I just do not see such a gusher. Unless the acquiring players know something we do not know, I believe these are risky investments considering that less than 5% of drugs become blockbusters and past acquisitions and their assimilation have not been stellar.
I would like the readers to opine on the recent pharmaceutical investments, share their thoughts and what they think are the short and long-term options for pharmaceutical companies?
(1) J. Frank Valle-Riestra, Project evaluation in the chemical process industries, McGraw Hill 1983 p 433.
We have all been taught that different risks necessitate different ROI. For “low risk investments,” ROI of 10-24% is suggested, 24% being in Pharmaceuticals. The ROI range for “average risk” is about 15-40%. Again, 40% is for pharmaceuticals. ROI for high-risk investments should be 24-56% with 56% for Pharmaceuticals (1).
In the past few weeks, three major pharmaceutical mergers have been announced. Total investment is about $156 billion U.S. dollars. If the total investment is equally distributed between the three companies and each would like to have a “Five years ROI”, then [due to high risk] one should expect “before tax” return of about $20 billion dollars per year per deal. Another way to look at earning $20 billion/year is that the each company will have to have 10-20 blockbuster drugs on the market beginning in 2010. Based on each company’s pipeline, I just do not see such a gusher. Unless the acquiring players know something we do not know, I believe these are risky investments considering that less than 5% of drugs become blockbusters and past acquisitions and their assimilation have not been stellar.
I would like the readers to opine on the recent pharmaceutical investments, share their thoughts and what they think are the short and long-term options for pharmaceutical companies?
(1) J. Frank Valle-Riestra, Project evaluation in the chemical process industries, McGraw Hill 1983 p 433.
Thursday, March 5, 2009
Global Fine/Specialty Chemical industry and its challenges:
Current situation:
Global chemical industry is going through multiple transformations under the current economic environment is not helping either. It needs to address the following.
1. How to react to the current slow down?
2. What are their long-term prospects?
Companies in Europe and US innovated and developed many unique molecules that have improved our quality of life and life style. Products include pharmaceuticals, polymers, additives, flavors and fragrances, fertilizers and list goes on.
Some of the old giants have disappeared. Recent re-factoring of the European companies to rationalize their businesses has caused more turmoil than solved as the companies are still loosing money. Some are trying to find themselves and some have given themselves new names after reorganization. Some of the new entities have not found equilibrium.
Lack of growth (i.e. growth equal to GDP growth is no growth) has been a challenge [some segments have had higher than GDP growth but many are lower]. On the other hand growth better than plan has been exhilarating. These have impacted their profitability.
As the world grapples with the current slow down, more so in the developed countries than the developing countries, the future looks murky. To conserve profits companies have selectively shuttered their plants. This might be prudent for the short-term but mothballing plants might not solve the long-term ills.
Impact of expiration of the pharmaceutical patents and lack of new drugs in the pipeline will reposition the global fine chemical industry. We will begin to see a sea change in the second half of 2010.
What is the recourse for the future?
Current markets for the chemical products can be categorized as follows.
• Slow or no growth [growth equal to or less than GDP]
• Growth [growth greater than GDP]
In the current economic down turn, the human and social impact of shutting down and/or moving R&D and manufacturing from the slow and/no growth countries to the growth countries can have significant negative connotations. However, such moves might be necessary for the multinational companies. In the slowing global economy, due to political sensitivity moving from developed countries and investing in growth markets is a going to take longer than normal time and effort. Lack of rapid decision-making might further complicate strategy development.
Until few years ago growth in the under-developed countries was slow and these markets could be supplied from the developed countries. However, with much higher growth in these under-developed countries, it has become necessary for the multinationals to fulfill the market needs either by opening R&D and manufacturing sites or collaborate with local partners. This poses an interesting dilemma for the multinationals. Should they consolidate their plants and supply the needs of the developed countries, if possible, from the plants in the developing countries and shutter their operations is the developed countries? This option has its own challenges. How to explain to its shareholders including its employees of such moves and how to blend in the local culture and nuances.
Multinationals face another challenge in the developing countries. It comes from the local enterprises that have served the local and global markets. These enterprises might not be technologically strong but is a matter of time when they could become fierce competitors.
More than 50 percent of the global population lives outside the developed countries. In the next few years, growth is going to come from these markets. They might not require the technologies currently used in the developed countries. Technologies to suit the local market preferences and environment might have to be developed. A joint collaboration between the local companies and multinationals can be a fast track option. Go alone could be an option also. However, it would require understanding of the local markets. In addition, multinational companies will have to invest in technologies and capacities that are economic and can meet the market needs from fewer plants. This could be a challenge but is necessary for the survival.
Manufacturing of commodity (slow or no growth) products will move to the lowest wage countries. India and China could benefit from such moves. Only offset to such moves is the development of better manufacturing technologies for commodity products e.g. plastic additives, flame-retardants, corrosion inhibitors, rubber chemicals to name a few. They have to be such that they offset the lower labor cost advantage offered by low cost countries.
The newest technology (growth better than GDP) products will be developed in the labs in the developed countries and could be manufactured anywhere to serve their respective needs.
World is changing faster than we can strategize and implement.
Global chemical industry is going through multiple transformations under the current economic environment is not helping either. It needs to address the following.
1. How to react to the current slow down?
2. What are their long-term prospects?
Companies in Europe and US innovated and developed many unique molecules that have improved our quality of life and life style. Products include pharmaceuticals, polymers, additives, flavors and fragrances, fertilizers and list goes on.
Some of the old giants have disappeared. Recent re-factoring of the European companies to rationalize their businesses has caused more turmoil than solved as the companies are still loosing money. Some are trying to find themselves and some have given themselves new names after reorganization. Some of the new entities have not found equilibrium.
Lack of growth (i.e. growth equal to GDP growth is no growth) has been a challenge [some segments have had higher than GDP growth but many are lower]. On the other hand growth better than plan has been exhilarating. These have impacted their profitability.
As the world grapples with the current slow down, more so in the developed countries than the developing countries, the future looks murky. To conserve profits companies have selectively shuttered their plants. This might be prudent for the short-term but mothballing plants might not solve the long-term ills.
Impact of expiration of the pharmaceutical patents and lack of new drugs in the pipeline will reposition the global fine chemical industry. We will begin to see a sea change in the second half of 2010.
What is the recourse for the future?
Current markets for the chemical products can be categorized as follows.
• Slow or no growth [growth equal to or less than GDP]
• Growth [growth greater than GDP]
In the current economic down turn, the human and social impact of shutting down and/or moving R&D and manufacturing from the slow and/no growth countries to the growth countries can have significant negative connotations. However, such moves might be necessary for the multinational companies. In the slowing global economy, due to political sensitivity moving from developed countries and investing in growth markets is a going to take longer than normal time and effort. Lack of rapid decision-making might further complicate strategy development.
Until few years ago growth in the under-developed countries was slow and these markets could be supplied from the developed countries. However, with much higher growth in these under-developed countries, it has become necessary for the multinationals to fulfill the market needs either by opening R&D and manufacturing sites or collaborate with local partners. This poses an interesting dilemma for the multinationals. Should they consolidate their plants and supply the needs of the developed countries, if possible, from the plants in the developing countries and shutter their operations is the developed countries? This option has its own challenges. How to explain to its shareholders including its employees of such moves and how to blend in the local culture and nuances.
Multinationals face another challenge in the developing countries. It comes from the local enterprises that have served the local and global markets. These enterprises might not be technologically strong but is a matter of time when they could become fierce competitors.
More than 50 percent of the global population lives outside the developed countries. In the next few years, growth is going to come from these markets. They might not require the technologies currently used in the developed countries. Technologies to suit the local market preferences and environment might have to be developed. A joint collaboration between the local companies and multinationals can be a fast track option. Go alone could be an option also. However, it would require understanding of the local markets. In addition, multinational companies will have to invest in technologies and capacities that are economic and can meet the market needs from fewer plants. This could be a challenge but is necessary for the survival.
Manufacturing of commodity (slow or no growth) products will move to the lowest wage countries. India and China could benefit from such moves. Only offset to such moves is the development of better manufacturing technologies for commodity products e.g. plastic additives, flame-retardants, corrosion inhibitors, rubber chemicals to name a few. They have to be such that they offset the lower labor cost advantage offered by low cost countries.
The newest technology (growth better than GDP) products will be developed in the labs in the developed countries and could be manufactured anywhere to serve their respective needs.
World is changing faster than we can strategize and implement.
Wednesday, February 25, 2009
A Fine Chemical Version of Chernobyl? Patancheru, India: An opportunity for Quality by Design and Environmental Sustainability
A study by Dr. Joakim Larsson etal (1) in September 2007 has suddenly become an eye of a storm in India (2, 3, 4, 5, 6, 7). There are denials of the scientific study as it exposes weak links. For the long term, these issues have to be addressed. If the problems are not corrected, the area could be equated to Chernobyl of the fine/specialty chemicals and pharmaceutical industries. There is a solution out of this quandary.
Solution touches the heart of manufacture of active pharmaceutical ingredients and their subsequent formulations. Using Professor Larsson’s study, I have presented potential scenarios for Patancheru problem and solution (8). The process yield can be improved. Effort is needed. Depending on total ciprofloxacin capacity, which is a quinolone, the companies can collectively reduce out fall by 30-60 kg/day. This might not look a big number but based total daily production this is big. Based on toxicity this is significant. Similar saving can be achieved on other quinolones and other drugs.
In the recent brouhaha ciprofloxacin has been identified as the culprit. Actually the problem is much bigger. There are other quinolones and actives pharma ingredients being produced and formulated by many companies in the Hyderabad and vicinity. Not only there are producers of these products, there are suppliers of the necessary raw materials for these products in the area. Effluents from these chemical plants also discharges in water bodies of the area. Even if the effluent meets the established local standards of chemical discharge, no one has established the toxicity of every chemical that is trickling in the ecosystem.
If we want to salvage the Patancheru eco-system, we should establish toxicity levels of associated chemicals and use them rather than the current chemical limits to control effluent. We have to recognize that every active pharmaceutical ingredient is toxic to varying degree and their toxicity kills the disease causing bacteria. The lessons learnt from Patancheru could be applied globally.
Why we have a problem?
High levels of chemicals entering the effluent treatment plant point to inefficient manufacturing technology and low yields of the manufacturing process. Questions should be asked that why we have a problem and if the yields could be improved to reduce the effluent load, why it has not been improved. There is a simple answer to these questions and it encompasses the following.
1. Since high profit margins are made with the existing processes, there is no incentive to improve them. If the companies can meet the local water, solid and air effluent standards, there is no need to worry about the eco-toxic or toxicity effect, as there are no standards.
2. The current process with their current low yield produces a chemical that meets a certain impurity profile that has been approved the drug regulatory agencies. If the yield is improved, the producer should be able to reduce the chemical discharge load. This improvement could change the impurity profile of the active ingredient. Under the current regulatory laws of various countries (9), the producer might have to re-qualify the higher drug produced by an improved process for its performance and efficacy. This is an expensive and long drawn process. In addition, processes might have to re-audited. No one wants to invest any money in this effort.
3. Since the current processes are not efficient, the product quality is controlled at every intermediate step and this is called quality by analysis. Reasons of low yield i.e. high amount of chemicals in the effluent are that the processes are not completely understood. Lack of complete process understanding and control can result is a product that is made on day 100 of one year and day 200 of the same year to be slightly different or might not meet specifications. If the product does not meet the defined specifications that have been filed and approved, the product could be reworked or disposed. These products and their intermediates are equally or more toxic and could leach out in the soil and water. Quality by analysis insures high quality and this is expensive. These costs can be contained or eliminated if we understand have repeatable processes.
Problems identified by Professor Larsson do exist in many areas of the world where active pharmaceutical ingredients are produced. However, they have not been studied. I am sure we will find similar problems.
Solution:
Only solution out of the dilemma in Hyderabad is to improve the process manufacturing technologies. This has to be done for the short and the long haul. If the manufacturing processes can be improved, depending on the total capacity of the quinolone plants in Patancheru area, significant quantities of ciprofloxacin instead of going to waste water and solid disposal can be recovered as a product. It will make a big impact on the local ecosystem. Ciprofloxacin is one of the many quinolones being produced in Hyderabad. The plants producing ciprofloxacin also produce other quinolones. In addition, we have to recognize that there are ancillary plants in the area that produce raw materials for these products. Their effluent is part of the wastewater and solid sludge system. There are many other actives produced in the area and their levels have not been tested.
Manufacturing technology improvement is the only solution to reduce chemicals in the eco-system. Drug regulatory agencies have lately suggested that manufacturing improvements should be done. Formulators and producers of actives pharmaceutical ingredients claim that there are hurdles of bureaucracy and insufficient ROI. I have difficulty believing that. Meeting chemical effluent standards at Patancheru would be the first step. Unless effluent toxicity standards are established, not much will change. Intervention is needed to rationalize toxicity and address the “Patancheru problem”. We have to maximize our effort to improve manufacturing technologies.
1. D.G. Joakim Larsson, Cecilia de Pedro, and Nicklas Paxeus, Effluent from drug manufactures contains extremely high levels of pharmaceuticals; Journal of Hazardous Materials, Volume 148, Issue 3, 30 September 2007, Pages 751-755
2. Margie Mason, Associated Press, Drug waste creates highest disaster zone in Andhra Times of India, January 27, 2009
3. Rajeev Deshpande, TNN, PMO orders testing of Patancheru water, Times of India, January 28, 2009
4. Manjula Kolanu, TNN, Officials sleep as pollution sinks Patancheru Greens To Step Up Anti-Pollution Drive, Times of India, January 29, 2009
5. Times of India, Independent lab to test Patancheru water, Jan 31, 2009
6. Times of India, Silent streams turn Patancheru's sorrow, January 31, 2009
7. Times of India, Drug traces in Patancheru wells, February 17, 2009
8. Girish Malhotra, Pharmaceuticals, Their Manufacturing Methods, Ecotoxicology, and Human Life Relationship, Pharmaceutical Processing, pg 18-22, November 2007
9. Link to global regulatory bodies
Solution touches the heart of manufacture of active pharmaceutical ingredients and their subsequent formulations. Using Professor Larsson’s study, I have presented potential scenarios for Patancheru problem and solution (8). The process yield can be improved. Effort is needed. Depending on total ciprofloxacin capacity, which is a quinolone, the companies can collectively reduce out fall by 30-60 kg/day. This might not look a big number but based total daily production this is big. Based on toxicity this is significant. Similar saving can be achieved on other quinolones and other drugs.
In the recent brouhaha ciprofloxacin has been identified as the culprit. Actually the problem is much bigger. There are other quinolones and actives pharma ingredients being produced and formulated by many companies in the Hyderabad and vicinity. Not only there are producers of these products, there are suppliers of the necessary raw materials for these products in the area. Effluents from these chemical plants also discharges in water bodies of the area. Even if the effluent meets the established local standards of chemical discharge, no one has established the toxicity of every chemical that is trickling in the ecosystem.
If we want to salvage the Patancheru eco-system, we should establish toxicity levels of associated chemicals and use them rather than the current chemical limits to control effluent. We have to recognize that every active pharmaceutical ingredient is toxic to varying degree and their toxicity kills the disease causing bacteria. The lessons learnt from Patancheru could be applied globally.
Why we have a problem?
High levels of chemicals entering the effluent treatment plant point to inefficient manufacturing technology and low yields of the manufacturing process. Questions should be asked that why we have a problem and if the yields could be improved to reduce the effluent load, why it has not been improved. There is a simple answer to these questions and it encompasses the following.
1. Since high profit margins are made with the existing processes, there is no incentive to improve them. If the companies can meet the local water, solid and air effluent standards, there is no need to worry about the eco-toxic or toxicity effect, as there are no standards.
2. The current process with their current low yield produces a chemical that meets a certain impurity profile that has been approved the drug regulatory agencies. If the yield is improved, the producer should be able to reduce the chemical discharge load. This improvement could change the impurity profile of the active ingredient. Under the current regulatory laws of various countries (9), the producer might have to re-qualify the higher drug produced by an improved process for its performance and efficacy. This is an expensive and long drawn process. In addition, processes might have to re-audited. No one wants to invest any money in this effort.
3. Since the current processes are not efficient, the product quality is controlled at every intermediate step and this is called quality by analysis. Reasons of low yield i.e. high amount of chemicals in the effluent are that the processes are not completely understood. Lack of complete process understanding and control can result is a product that is made on day 100 of one year and day 200 of the same year to be slightly different or might not meet specifications. If the product does not meet the defined specifications that have been filed and approved, the product could be reworked or disposed. These products and their intermediates are equally or more toxic and could leach out in the soil and water. Quality by analysis insures high quality and this is expensive. These costs can be contained or eliminated if we understand have repeatable processes.
Problems identified by Professor Larsson do exist in many areas of the world where active pharmaceutical ingredients are produced. However, they have not been studied. I am sure we will find similar problems.
Solution:
Only solution out of the dilemma in Hyderabad is to improve the process manufacturing technologies. This has to be done for the short and the long haul. If the manufacturing processes can be improved, depending on the total capacity of the quinolone plants in Patancheru area, significant quantities of ciprofloxacin instead of going to waste water and solid disposal can be recovered as a product. It will make a big impact on the local ecosystem. Ciprofloxacin is one of the many quinolones being produced in Hyderabad. The plants producing ciprofloxacin also produce other quinolones. In addition, we have to recognize that there are ancillary plants in the area that produce raw materials for these products. Their effluent is part of the wastewater and solid sludge system. There are many other actives produced in the area and their levels have not been tested.
Manufacturing technology improvement is the only solution to reduce chemicals in the eco-system. Drug regulatory agencies have lately suggested that manufacturing improvements should be done. Formulators and producers of actives pharmaceutical ingredients claim that there are hurdles of bureaucracy and insufficient ROI. I have difficulty believing that. Meeting chemical effluent standards at Patancheru would be the first step. Unless effluent toxicity standards are established, not much will change. Intervention is needed to rationalize toxicity and address the “Patancheru problem”. We have to maximize our effort to improve manufacturing technologies.
1. D.G. Joakim Larsson, Cecilia de Pedro, and Nicklas Paxeus, Effluent from drug manufactures contains extremely high levels of pharmaceuticals; Journal of Hazardous Materials, Volume 148, Issue 3, 30 September 2007, Pages 751-755
2. Margie Mason, Associated Press, Drug waste creates highest disaster zone in Andhra Times of India, January 27, 2009
3. Rajeev Deshpande, TNN, PMO orders testing of Patancheru water, Times of India, January 28, 2009
4. Manjula Kolanu, TNN, Officials sleep as pollution sinks Patancheru Greens To Step Up Anti-Pollution Drive, Times of India, January 29, 2009
5. Times of India, Independent lab to test Patancheru water, Jan 31, 2009
6. Times of India, Silent streams turn Patancheru's sorrow, January 31, 2009
7. Times of India, Drug traces in Patancheru wells, February 17, 2009
8. Girish Malhotra, Pharmaceuticals, Their Manufacturing Methods, Ecotoxicology, and Human Life Relationship, Pharmaceutical Processing, pg 18-22, November 2007
9. Link to global regulatory bodies
Monday, February 9, 2009
Why Have the Fine and Specialty Chemical Sectors Been Moving from the Developed Countries?
I am sure we all have been wondering about the shift. I have my own rationale, potential solution and would like to share. I believe there are opportunities to innovate and we can capitalize on them.
I speculate and believe the industry moved for combination of the following reasons.
1. Environmental laws
2. Health and Safety laws
3. Significantly lower labor costs in the third world countries.
4. We did not invest in the technologies to improve processes.
In early seventies, the developed countries were adopting new environmental protection laws. They seemed unrealistic and unachievable [this is based on my being at a state EPA] to some. Many complied. For some it was easier to shut down rather than invest in the complying technologies. In my view, improving process technologies was a missed innovation opportunity. The chemicals were needed and since there was a need, companies in China and India filled in the supply gap.
India and China also had advantage of Rupee/Yuan/Dollar parity. This made investments in their country cheaper.
Laxity of health and safety laws persists in the developing countries. The associated expenses are low compared to the developed countries. In my recent trips, I saw workers with open toe shoes, without safety glasses, wearing street cloths and eating meals on the operating floor. These might not be across the board but is there. Human life needs to be valued as an asset.
Environmental laws are comparatively lax also compared to the laws in the developed countries. Thus, the respective investment in pollution abatement is lower. I have seen multi-colored water bodies next to the plants. Abatement of eco-toxicity is not a high priority. In the developed countries endocrine disruptors have been found in the drinking waters. I am sure these and other chemicals exist in the water in the developing countries also and the scale is different.
Labor costs in China and India are magnitude levels lower than the costs in the developed countries e.g. a plant operator in India could be paid $200 per month (we have to recognize high Yuan/Rupee/Dollar parity) compared to $4000.00 per month or more in US.
Combination of the above factors has resulted in China, India and some of the East European countries making the fine and specialty chemicals to feed the insatiable need for these chemicals in the developed countries.
As the time has progressed, these suppliers found that their products were being used to produce the active pharmaceutical ingredients or other higher valued products i.e. moving up the supply chain. These companies also moved up the supply chain. These have resulted in additional plant closures in the developed countries.
With time the costs in the developing countries are going up as they incorporate better safety, health and environmental laws but are not to the levels in the developed countries. They still have price advantage and customers wiling to purchase their products.
Now we have a situation where many of the pharma APIs and other strategic drugs and products are coming from China and India. This is discomforting as expressed in a recent New Times article. Drug Making’s Move Abroad Stirs Concerns.
We have to recognize that the pharmaceutical and other companies are buying products (API, intermediates and fine specialty chemicals) from the companies in India and China who are alleged not to be playing by the rules companies in the developed countries have to live by. It is a demand and supply question and rules in every country are different.
Can this be reduced, prevented or stopped? Do we have a way out of this quandary? Yes we do, but it would require an effort. We have to have total involvement of the suppliers and buyers, which might not be easy. If such an attempt is made, I hope it would not turn out like “the Doha WTO negotiations” as many companies/countries have lot to loose and/or gain. I doubt if any trade organization can influence any country’s environmental, health, safety and pay scale policies. Those changes have to come from within. Maslow still rules.
SOCMA, CEFIC and other organizations could identify the highest imported chemicals, API or formulated products. Interested companies in the developed countries could develop technologies for these products that will offset the cost advantages of the imported products and convince the companies in the developed countries to buy their products. Every advantage perceived or otherwise from the developing countries will have to be offset by cost and quality through better technologies.
Partial protectionism under a “strategic defense initiative” could be a temporary alternate for certain chemicals or drugs. Such a program cannot be government subsidized. This could give interested companies a “time window” to develop better technologies. With many countries now part of WTO, such an initiative is not going to sit well with many countries, companies and organizations.
Competing technologies that will offset the costs due to local wages, environmental, health and safety rules and methods is the only answer. If this does not work safeguards leading to continuous supply of strategically vital products can be implemented but there are costs associated with that strategy. A win-win strategy needs to be developed.
I speculate and believe the industry moved for combination of the following reasons.
1. Environmental laws
2. Health and Safety laws
3. Significantly lower labor costs in the third world countries.
4. We did not invest in the technologies to improve processes.
In early seventies, the developed countries were adopting new environmental protection laws. They seemed unrealistic and unachievable [this is based on my being at a state EPA] to some. Many complied. For some it was easier to shut down rather than invest in the complying technologies. In my view, improving process technologies was a missed innovation opportunity. The chemicals were needed and since there was a need, companies in China and India filled in the supply gap.
India and China also had advantage of Rupee/Yuan/Dollar parity. This made investments in their country cheaper.
Laxity of health and safety laws persists in the developing countries. The associated expenses are low compared to the developed countries. In my recent trips, I saw workers with open toe shoes, without safety glasses, wearing street cloths and eating meals on the operating floor. These might not be across the board but is there. Human life needs to be valued as an asset.
Environmental laws are comparatively lax also compared to the laws in the developed countries. Thus, the respective investment in pollution abatement is lower. I have seen multi-colored water bodies next to the plants. Abatement of eco-toxicity is not a high priority. In the developed countries endocrine disruptors have been found in the drinking waters. I am sure these and other chemicals exist in the water in the developing countries also and the scale is different.
Labor costs in China and India are magnitude levels lower than the costs in the developed countries e.g. a plant operator in India could be paid $200 per month (we have to recognize high Yuan/Rupee/Dollar parity) compared to $4000.00 per month or more in US.
Combination of the above factors has resulted in China, India and some of the East European countries making the fine and specialty chemicals to feed the insatiable need for these chemicals in the developed countries.
As the time has progressed, these suppliers found that their products were being used to produce the active pharmaceutical ingredients or other higher valued products i.e. moving up the supply chain. These companies also moved up the supply chain. These have resulted in additional plant closures in the developed countries.
With time the costs in the developing countries are going up as they incorporate better safety, health and environmental laws but are not to the levels in the developed countries. They still have price advantage and customers wiling to purchase their products.
Now we have a situation where many of the pharma APIs and other strategic drugs and products are coming from China and India. This is discomforting as expressed in a recent New Times article. Drug Making’s Move Abroad Stirs Concerns.
We have to recognize that the pharmaceutical and other companies are buying products (API, intermediates and fine specialty chemicals) from the companies in India and China who are alleged not to be playing by the rules companies in the developed countries have to live by. It is a demand and supply question and rules in every country are different.
Can this be reduced, prevented or stopped? Do we have a way out of this quandary? Yes we do, but it would require an effort. We have to have total involvement of the suppliers and buyers, which might not be easy. If such an attempt is made, I hope it would not turn out like “the Doha WTO negotiations” as many companies/countries have lot to loose and/or gain. I doubt if any trade organization can influence any country’s environmental, health, safety and pay scale policies. Those changes have to come from within. Maslow still rules.
SOCMA, CEFIC and other organizations could identify the highest imported chemicals, API or formulated products. Interested companies in the developed countries could develop technologies for these products that will offset the cost advantages of the imported products and convince the companies in the developed countries to buy their products. Every advantage perceived or otherwise from the developing countries will have to be offset by cost and quality through better technologies.
Partial protectionism under a “strategic defense initiative” could be a temporary alternate for certain chemicals or drugs. Such a program cannot be government subsidized. This could give interested companies a “time window” to develop better technologies. With many countries now part of WTO, such an initiative is not going to sit well with many countries, companies and organizations.
Competing technologies that will offset the costs due to local wages, environmental, health and safety rules and methods is the only answer. If this does not work safeguards leading to continuous supply of strategically vital products can be implemented but there are costs associated with that strategy. A win-win strategy needs to be developed.
Wednesday, February 4, 2009
Commoditization of Drugs
Until 2006 low cost drugs could be purchased outside US only. Wal-Mart started to sell 30-day and 90-day supply at $4.00 and $10.00 respectively in 2006. Recently other pharma-sellers have joined to serve the growing market. These prices were unheard of before 2006. Even at these prices respective members of the supply chain (producers, formulators and HMO’s) are making “good” margins.
Commoditization had begun in 2006 and we did not realize it. With the current global economic downturn, an ever-increasing aging population and economic upswing of the under-developed countries demanding common ailment drugs, the commoditization pace has accelerated. As we go forward the number of the drugs in the 30 and 90-day pool will increase. With the larger customer base, the annual volume for many of the active pharmaceutical ingredients (API) will increase.
Fine and specialty chemical companies (e.g. BASF and Albemarle among others are producers of ibuprofen and naproxen (Non-steroidal anti-inflammatory drugs: NSAID)) and generic drug companies are producing common cure APIs (i.e. specialty fine chemicals that have disease curing value). Many generics formulate various dosages for sale. Most of the drugs US pharma-sellers are offering for sale are being produced and formulated outside US. Big pharmaceutical companies are not involved in these programs.
As more brand name drugs become generic and the volume of generics increases, entrepreneurs, existing and new, would want to take advantage of the business opportunity. Market economics and desire for profits will result in the development of better processes and movement from batch processes to continuous processes. Better process technologies will reduce the costs of active pharmaceutical ingredient (API) resulting in higher profits for the members of the supply chain. All this will be result in higher profits and increased commoditization of the “off-patent” drugs.
It is expected that successes of better process technologies for the generic APIs might result in better manufacturing technologies for the ethical/brand drugs also thereby increasing their respective profits. It is possible that the lower costs from better processes for generics and ethical drugs might not be necessarily passed on to the consumers.
Commoditization had begun in 2006 and we did not realize it. With the current global economic downturn, an ever-increasing aging population and economic upswing of the under-developed countries demanding common ailment drugs, the commoditization pace has accelerated. As we go forward the number of the drugs in the 30 and 90-day pool will increase. With the larger customer base, the annual volume for many of the active pharmaceutical ingredients (API) will increase.
Fine and specialty chemical companies (e.g. BASF and Albemarle among others are producers of ibuprofen and naproxen (Non-steroidal anti-inflammatory drugs: NSAID)) and generic drug companies are producing common cure APIs (i.e. specialty fine chemicals that have disease curing value). Many generics formulate various dosages for sale. Most of the drugs US pharma-sellers are offering for sale are being produced and formulated outside US. Big pharmaceutical companies are not involved in these programs.
As more brand name drugs become generic and the volume of generics increases, entrepreneurs, existing and new, would want to take advantage of the business opportunity. Market economics and desire for profits will result in the development of better processes and movement from batch processes to continuous processes. Better process technologies will reduce the costs of active pharmaceutical ingredient (API) resulting in higher profits for the members of the supply chain. All this will be result in higher profits and increased commoditization of the “off-patent” drugs.
It is expected that successes of better process technologies for the generic APIs might result in better manufacturing technologies for the ethical/brand drugs also thereby increasing their respective profits. It is possible that the lower costs from better processes for generics and ethical drugs might not be necessarily passed on to the consumers.
Tuesday, January 13, 2009
A hidden “diamond in the rough”
There are companies in the specialty chemical world that have good technologies and product applications. Their unique niche and technologies enhance the performance of their customer’s products. I call them the “real specialty chemical” company. Such uniqueness should have value. However, the “Wall Street mind-readers or investing aficionados” have not had much penchant for them. One can only conclude such an oversight is due to lack of the investors understanding of the technologies of such companies. One such company is International Specialty Products, Inc.
In 2002 ISP went back to being a publicly held company to being a privately held company. Their sales from 1999 to 2001 were around $787 million for each year with profits going through its cycles. In 2007 ISP revenue was about $1.6 billion about 10% revenue growth per year. Samuel Heyman being an astute investor has had margins to his liking in the last nine years with his management. If the margins were not there, he would have unloaded the business.
Since ISP is privately held company and away from the daily Wall Street scrutiny, they have also managed to stay under the acquisition radar. I believe that 2009 or 2010 may be the year when someone will realize their full potential and buy them out. It would have to be a company, which values technologies and would want to cross-fertilize ISP technologies to other applications and realize their full potential.
In 2002 ISP went back to being a publicly held company to being a privately held company. Their sales from 1999 to 2001 were around $787 million for each year with profits going through its cycles. In 2007 ISP revenue was about $1.6 billion about 10% revenue growth per year. Samuel Heyman being an astute investor has had margins to his liking in the last nine years with his management. If the margins were not there, he would have unloaded the business.
Since ISP is privately held company and away from the daily Wall Street scrutiny, they have also managed to stay under the acquisition radar. I believe that 2009 or 2010 may be the year when someone will realize their full potential and buy them out. It would have to be a company, which values technologies and would want to cross-fertilize ISP technologies to other applications and realize their full potential.
Thursday, January 1, 2009
“Bail out or Hand out” is not the answer but Innovation and Conservation is.
Recent turmoil in the financial markets is taking its global toll. However, this event, once in lifetime event, is also giving us a message and presenting us with an opportunity. The message is “It is time to have innovative technologies that also conserve our resources”.
US Automobile industry lost its focus when it quit innovation in sixties and were not farsighted to raise the fuel efficiency. They fought tooth and nail against raising gas mileage standards. Japanese came with better quality, pizzazz and hybrids. But Detroit thought it was not a good idea to have a “better idea”.
Lately we have read about plants of many chemical companies being shuttered for lack of demand. We will probably hear more such closures before things come back. Bankruptcies would be there also.
I wonder if the closures are a reflection of not having the best technologies to manufacture the products. Had the technologies been such that the feed rates could be lowered or increased to meet the prevailing demand, plant shutdowns could have been avoided. Lack of the best methods suggest that there is an opportunity to have better manufacturing technologies. Better equals high conservation i.e. produce more from less.
Pharmaceuticals, which are disease-curing chemicals, cannot think conservation when they are able to make their profit margins on “human desire” to extend their life. Poor yields, high in-process inventory and producing quality only by checking every milligram are acceptable suggest significant opportunities. Consumer pays for every in-efficiency e.g. inventories, poor quality and costs related with inefficient use of their raw materials. In 2007-2008 we saw loss of employment and knowledge base accelerate. When a pharmaceutical company can close more than 50 plants, it suggests that companies have technologies that need total overhaul. They need to develop and implement technologies for their survival.
Their blockbuster model is dying on the vine and their new product pipeline is heading from gusher to a trickle in the next few years. Pharma needs to create a new business model. Due to toxicity of their chemicals Pharma needs to improve their manufacturing technologies to levels better than “non-disease-curing” chemicals. Higher yields mean higher profitability and less effluent or/and emissions in our eco system.
In my recent trip to China, I saw electrically charged bikes to move around town. Similarly in Europe and China they have low cost and simple solar water heaters on their rooftops to provide them with the hot water for their daily use. Roof top heaters do not look esthetically bad but tell us the inherent character of inhabitant’s and their nature to conserve and use nature’s gift of sun’s heat. A missing rooftop heater suggests a “missing link”. Communities in US have prevented such installations with the thinking that they look ugly and will lower real estate value. Esthetics is more important than conservation.
Chinese company BYD is introducing an electrical car and an Indian company TATA is introducing about $2500.00 car. This suggests innovation is possible if we step up to the challenge.
We need to move from a “consumption zealots” to “conservation zealots”. Conservation and preservation will not result in any hardship but will lead to innovation that will improve profitability. Present slow down is the best time to innovate and we need to spend effort so that we can reap benefits in future.
US Automobile industry lost its focus when it quit innovation in sixties and were not farsighted to raise the fuel efficiency. They fought tooth and nail against raising gas mileage standards. Japanese came with better quality, pizzazz and hybrids. But Detroit thought it was not a good idea to have a “better idea”.
Lately we have read about plants of many chemical companies being shuttered for lack of demand. We will probably hear more such closures before things come back. Bankruptcies would be there also.
I wonder if the closures are a reflection of not having the best technologies to manufacture the products. Had the technologies been such that the feed rates could be lowered or increased to meet the prevailing demand, plant shutdowns could have been avoided. Lack of the best methods suggest that there is an opportunity to have better manufacturing technologies. Better equals high conservation i.e. produce more from less.
Pharmaceuticals, which are disease-curing chemicals, cannot think conservation when they are able to make their profit margins on “human desire” to extend their life. Poor yields, high in-process inventory and producing quality only by checking every milligram are acceptable suggest significant opportunities. Consumer pays for every in-efficiency e.g. inventories, poor quality and costs related with inefficient use of their raw materials. In 2007-2008 we saw loss of employment and knowledge base accelerate. When a pharmaceutical company can close more than 50 plants, it suggests that companies have technologies that need total overhaul. They need to develop and implement technologies for their survival.
Their blockbuster model is dying on the vine and their new product pipeline is heading from gusher to a trickle in the next few years. Pharma needs to create a new business model. Due to toxicity of their chemicals Pharma needs to improve their manufacturing technologies to levels better than “non-disease-curing” chemicals. Higher yields mean higher profitability and less effluent or/and emissions in our eco system.
In my recent trip to China, I saw electrically charged bikes to move around town. Similarly in Europe and China they have low cost and simple solar water heaters on their rooftops to provide them with the hot water for their daily use. Roof top heaters do not look esthetically bad but tell us the inherent character of inhabitant’s and their nature to conserve and use nature’s gift of sun’s heat. A missing rooftop heater suggests a “missing link”. Communities in US have prevented such installations with the thinking that they look ugly and will lower real estate value. Esthetics is more important than conservation.
Chinese company BYD is introducing an electrical car and an Indian company TATA is introducing about $2500.00 car. This suggests innovation is possible if we step up to the challenge.
We need to move from a “consumption zealots” to “conservation zealots”. Conservation and preservation will not result in any hardship but will lead to innovation that will improve profitability. Present slow down is the best time to innovate and we need to spend effort so that we can reap benefits in future.