"The impact of serialisation on operational efficiency and productivity in Irish pharmaceutical sites" by Dan O'Mahony

Objectives:

The purpose of this research is to assess the impact of serialisation on the efficiency and productivity of Irish pharmaceutical sites. The first objective of this research was to determine if the assumptions and predictions outlined in the literature regarding the impact of serialisation on production efficiency were correct. The next objective was to quantify the impact of serialisation on operational efficiency using measurements such as Operational Equipment Effectiveness (OEE) and production line availability measures.

Methodology:

The methodology chosen for the study was a mixed method incorporating both qualitative and quantitative tools. A semi structured interview method was used that was suitable for use with a low respondent population. Ireland’s exports of fully packaged pharmaceuticals are valued in billions of euros. However, there are less than two dozen sites contributing to most of this value. The semi structured interview process was also chosen because of the Covid-19 pandemic. Face to face interviews were not feasible due to Government mandated travel restrictions as well as Covid 19 policies adopted by manufacturers.

Findings:

The average OEE loss reported by the companies surveyed was 2.71%. The ISPE article predicts a maximum loss of just 5% after 12 months. One manufacturer continued to see a loss of 10% compared to its pre-serialisation situation. One contributor described the serialisation process as adding between 10 – 15 minutes to each batch setup. Participants cited several factors for improvements in OEE post serialisation. Operator training, the development of subject matter experts and knowledge sharing between pack-line teams all contributed to better pack-line effectiveness. Four companies in the survey were able to identify a cost per pack associated with serialisation. Cost to serialise a pack ranged from 2.5 cents to 6 cents. The average cost was 4.1 cents. The average increase in cost of goods reported was 2.6%. Most companies interviewed considered the serialisation process to still be in the project phase rather than the business as usual phase.

Analysis:

The research points to a limited implementation of OEE systems in Irish pharmaceutical manufacturing sites. While 89% of the sites surveyed gathered OEE data it seemed there was a lack of benchmarking of OEE data prior to serialisation Nine of the eleven companies (81%) reported that they were actively increasing batch sizes to achieve productivity gains. One participant described how sales and marketing team members needed to understand that pack line machines were built for high volume production rather than small batch runs. Among large volume manufacturers 90% of respondents agreed that serialisation processes had put extra strain on changeover times and efficiencies.

Conclusion:

The impact of serialisation on unit cost and cost of goods is not insignificant. Using a depreciation calculation the researcher could calculate the impact of serialisation on unit cost as an increase of 2.7%. Based on Irish Central Statistics office figures this represents an increase in the cost of packaged pharmaceutical goods exported from Ireland of between €36m - €143m per annum (depending on whether distribution or intra-company pricing is used) Some participants in the survey complained that their businesses were expected to absorb these additional costs. Research would indicate that these additional costs are ultimately passed onto patients and payer organizations. Some companies had calculated a cost per pack for serialisation. The average cost per pack was 4.1 cents. For large volume sites the annual cost of serialisation is significant running to millions of euro per annum.