Change Management for Life Science Companies

Effectively managing product- and process-engineering change is important to life-science companies, but formal structures for managing that change are not widely used. A recent study by BearingPoint and AMR benchmarked management practices of 120 life-science companies, including pharmaceutical, biotechnology, and medical-device companies as well as contract manufacturers to evaluate how their organizations deal with engineering changes.

The survey found that companies that take an integrated approach to managing change can innovate more quickly, promote compliance with global regulations and better support a profitable, enterprise-wide response to customer demand. Among some of the key findings:

• Only 55% of in-line life science product enhancements launched in 2007 were rated a success. For purposes of the survey, in-line operations refer to operational activities post technology transfer through commercial manufacturing and sales.

• Roughly 40% of regulatory issues, including warning letters, regulatory inspection observations or compliance observations were attributed to engineering changes.

• Significant gaps exist in performance, financial-planning, regulatory-assessment and documentation-management processes between life-science companies and their third-party manufacturers.

The study showed that life-science companies managed an average of 22 in-line products in 2007, and more than three-fourths of the products were less than six years old. The study suggested a correlation between the ability to manage change, particularly in light of limited resources, and the success of in-line introductions. Biotechnology companies reported that 70% of new or in-line extensions were successful. Pharmaceutical companies reported that 64% of new and 51% of in-line extensions had successful launches.

The study also provided insight into contract-manufacturing activities. Twenty-three percent of survey respondents said that their current focus is to better manage strategic suppliers and contract manufacturers. Twenty percent said their current focus was to improve transfer from new-product development to commercial manufacture.

This focus, however, is expected to change. By 2011, companies said that their top priorities would be to invest in technology to better support engineering change management for improving the handoff from new product development to commercial product support and to develop specific engineering change-management functions. To meet these demands, companies may invest in technologies such as product life-cycle management and product data-management systems.

Each industry segment had different priorities. For example, 30% of biotechnology companies said improving the handoff from new product development to commercial product support was their top priority. Another 30% of biotechnology firms said reducing the risk of noncompliance with product-quality standards or regulatory filings as their top priority. Twenty-five percent of pharmaceutical companies said outsourcing engineering change management or execution to offshore service providers was their top priority, according to the study.

The study suggests that life-science companies are shifting to an enterprise-wide approach to managing product- and process-engineering change to cope with increasing rates of change. By 2011, 46% of the companies surveyed expect to manage change globally and manage the execution processes centrally.

The study also showed that even though life-science companies recognize the value in planning and are prepared to spend more to better manage product-manufacturing change during the coming years (i.e., 38% growth by 2011), significant barriers remain. Fifty percent of the companies surveyed that have change-management practices said their teams meet just once a quarter or less frequently, and these teams do not always use an appropriate set of metrics to track changes and drive process improvements.

“In so many organizations today, no single group has the authority or resources to respond to changing market demands. Change is tackled on a project-by-project basis, a resource-intensive and impractical approach,” said Ellen Reilly, a managing director in BearingPoint’s life-science practice, in a company press release. “To effectively deal with change and increasingly complex compliance and regulatory pressures, life-science companies need to be more agile and have an organized, enterprise-wide response to change. Effective management of product- and process-engineering change can lead to reduced cycle times, swifter responses to changing market conditions, and increased rates of product innovation.”