SubscribePharmaceutical companies are spending more than ever before on research & development (R&D) but that is not reflected in the number of drug approvals.
There was a time when drugs that were discovered cured a wide spectrum of diseases and due to the patent protection, those drugs always used to generate huge revenues during their entire lifetime.
Even as the market exclusivity for the drugs decrease, most pharmaceutical companies are focusing on very few therapeutic categories thus further increasing the competition and applying pressure on the margins.
Traditionally the pharmaceutical industry has been beset with problems of poor utilization, high fixed costs and lower productivity. Hence pharmaceutical manufacturing companies are looking at increasing the efficiency and productivity of not only their R&D programs but also that of the manufacturing process. Increasing pressure on margins has forced the manufacturers to look at restructuring their operations 'to do more with less'. Pressure is building up on their production, quality assurance and quality control departments to reduce operational costs.
With the drug market becoming increasingly challenging with competition from generics and stricter regulatory approvals, it is inevitable that the number of newer drugs coming into the market will be lower. Hence there emerges a need for implementing lean and flexible concepts within the pharmaceutical industry to reduce wastage and bring drugs to the market faster.
This in turn drives the need for a pharmaceutical manufacturing environment where a successful lean implementation along with the Current Good Manufacturing Practices (cGMP) can have regulatory approval. As the pharmaceutical market moves from being a high volume, high margin, supply driven industry to being a low volume, low margin, demand driven customized industry, the need for manufacturing software will keep increasing.
As the 'blockbuster' drug pipeline dries up and drug discovery becomes more targeted towards specific ailments, pharmaceutical and biotechnology companies are focusing on small molecules that target highly specific therauptic targets. As the pharmaceutical industry is using biotechnology in drug discovery, it will likely maintain its dominant position in small molecules, but the development and manufacture of protein based therapeutics requires a completely different set of core competencies.
As the boundary between pharmaceuticals and biotechnology diminishes, pharma companies are investing heavily in molecular biology and genomics, biopharmaceutical firms are moving into small molecule therapeutics because of production and delivery advantages, and platform companies are entering the drug development field because of the prospects for higher returns.
II. Market Assessment
Traditionally the pharmaceutical manufacturers have relied on trial and error or experience to gauge operational conditions. The real benefits are realized only when the operational parameters are measured in real time and on-site at the manufacturing plant itself. Numerous supply chain delays are caused as in most cases, the pharmaceutical product is on hold because of quality testing. The need has emerged to integrate the quality aspect into the pharmaceutical manufacturing process. In order to infuse increased innovation and reduce rejection, The Food and Drug Administration (FDA) has encouraged the use of Process Analytical Technology (PAT) and the Quality by Design (QbD) initiative coming along with the risk based approach.
Traditionally, the Pharmaceutical manufacturers have invested heavily in research and development (R&D) and marketing. Manufacturing was one area where they were investing selectively. Once the pharmaceutical manufacturing plants had obtained approval from the FDA, the manufacturers did not make any modifications in the plant in terms of automation throughout the lifetime of the drug being manufactured. Moreover, due to the significant consumer risks associated with rapid changes and innovation, the FDA and pharmaceutical manufacturers were unwilling to implement newer practices and technologies until they have been accepted as standard practice in the industry.
However, today there are fewer drugs being discovered and those that are being discovered are also very specific to particular diseases. Hence, pharmaceutical companies are unable to obtain huge returns on their R&D as well as manufacturing investments. In such cases, to increase profit margins, pharmaceutical industries must look at improving time-to-market, efficiency and cost-containment. Since 2001 the FDA has tried to initiate policies that would accelerate drug development so that the general population has rapid access to new medicines at affordable rates. This is an effort at facilitating continuous improvement and innovation in manufacturing by allowing pharmaceutical manufacturers to make certain types of changes in their processes without previous FDA approval and focusing FDA resources on inspections that will have the greatest public health impact. Pharmaceutical companies are aware that the earlier they adopt PAT, the greater the advantage they hold over their competitors.
As the record keeping requirements of the pharmaceutical manufacturers increase, they are increasingly moving away from paper based records to electronic batch recording (EBR). As PAT aims to increase the likelihood of defect-free pharmaceuticals, pharmaceutical manufacturers are scouting for tools to integrate resources with the production process. Manufacturing Execution Systems (MES) acts as the perfect tool to incorporate PAT as it can help pharmaceutical manufacturers improve manufacturing efficiency and product quality, while at the same time lowering manufacturing costs and developing products that meet FDA regulations.
Werum Software & Systems AG
The recipient of Frost & Sullivan's 2007 Company of the Year Award in the manufacturing execution systems (MES) space for the pharmaceutical and biotechnology industries is Werum Software & Systems AG. Werum has carved a niche for itself in the MES space by providing a unique range of software products and services. Its flagship solution, PAS-X helps customers gain benefits out of the box. Specializing in the pharmaceutical industry characterized by tighter margins and slower time-to-market, Werum has understood its customers' unique requirements and has consistently provided them with solutions that have driven process efficiency to higher levels and resulted in significant increase in profitability.
Customers laud Werum's stupendous capability in providing solutions that drive productivity by seamlessly integrating across all levels of automation throughout the entire breadth of a pharmaceutical enterprise. While there has been widespread consolidation in the MES space, Werum has differentiated itself by being one of the very few employee owned vendors to have consistently shown tremendous growth over the years. While the pharmaceutical MES market itself has grown at close to 15 percent globally, it is to Werum's credit that it has managed to ratchet up growth rates upwards of 25 percent globally.
In a global industrial climate characterized by competitive pressures and tight profit margins, pharmaceutical companies are forced to drive operational efficiency to increase their bottom-line revenues. They have discovered the need to leverage Information Technology (IT) in a huge way to optimize processes and drive operational efficiency. Banking on years of experience in providing solutions for the pharmaceutical industry, Werum has always been quick to identify vertical specific challenges and has come up with focused MES products that address those unique challenges. While most peer companies provide standard solutions that work well in multiple environments, Werum was quick to identify that individual company challenges require customized solutions. Werum follows a unique approach whereby the customer site is installed with a standard solution so that the customer can assess the benefits in real-time.
Based on individual customer feedback and requirements, Werum adds modules in accordance with their needs. Customers appreciate PAS-X's modular architecture that enables them to choose components based on their immediate requirements and mix and match those components to satisfy their specific needs. Thus Werum places its customers in an enviable position from where they are able to monitor the benefits through sequential deployment of its modules. The sheer scalability of the PAS-X solution allows for modules to be added at anytime in any number of sites during or after the duration of a particular deployment subject to customers' requirements. Werum's architecture also leverages ISA 95 standards that enable easy integration with the various existing enterprise solutions.
The inherent flexibility within the solution is clearly visible not only during deployments in different companies but within diverse user groups within individual companies as well. The unique work center concept provides tailored user functionality depending on the specific user group within the company.
Customers also appreciate the ease of use associated with Werum solutions. In most cases, customers can order a complete rollout using their own resources and also maintain those systems without any help from outside. Werum's 'in-house' developed quality management tool ProQuMaS has also been widely appreciated by customers. This tool provides a complete traceability of all documents in the validation process thus allowing for user inputs to be incorporated in real time.
Werum provides a complete array of solutions for solving all pharmaceutical manufacturing business problems. The high 'value-to-price' ratio of its complete solutions has strengthened its position as an economical and viable partner to the pharmaceutical industry. Customers have vouched for the low cost of ownership and high return-on-investment (ROI) associated with Werum's solutions.
The cost of implementation is reduced drastically during subsequent installations after the initial implementation much to the delight of the customer. Its unmatched expertise in the pharmaceutical domain has enabled it to provide solutions in line with the customer's needs. Its extensive industry experience is reflected in its applications knowledge and the ability to provide innovative solutions.
While most software companies face massive attrition, Werum has been able to successfully retain senior employees. Thus the customer invariably gets to work with the same core team in Werum throughout the period of their partnership. It does not come as a surprise that Werum has been able to successfully forge long-term partnerships with its customers for a lifetime of mutual growth and development. In a highly regulated industry like pharmaceuticals, the need to balance risk and compliance with innovation is a colossal challenge.
Werum has successfully managed to develop solutions that allay all customer concerns regarding compliance, tracking and tracing and PAT/QbD. Following one of the most rigorous quality management systems in the industry, Werum's GAMP 4 V conform lifecycle model has helped it to consistently grow its market share in pharmaceutical MES solutions globally amidst stiff competition from peer companies. Evidently with a highly impressive customer profile comprising the leading global pharmaceutical companies, Werum holds a substantial share of all current pharmaceutical implementations globally.
The very fact that large pharmaceutical companies like Novartis and Merck are partnering with Werum on their global implementation projects is testimony to their ability to roll out applications at large installations globally. The PAS-X User Forum formed by Werum customers is part of its all inclusive strategy of involving customers to keep a tab on the pulse of the market and formulate ideas and solutions that address the future requirements of its customers.
Considering the fact that Werum is focused only on a single industry unlike its peer companies which have a wide coverage, it is to Werum's credit that it has managed to grow at a rate higher than the market by providing quality products delivered with superior execution skills. It's highly effective combination of products and services along with its pre-conceived best practices concept for the pharmaceutical and biotechnology domains has enabled it to consistently outperform the market. The reputation of Werum's installations in Europe was reason enough for major pharmaceutical manufacturers in the US to embrace its solutions in a big way. Operating only in the pharmaceutical domain, it's to Werum's credit that it has not only been able to generate high volumes of repeat business but attract new customers as well.
With strategic technology partnerships with major solution providers like SAP, Werum has demonstrated flexibility in its applications which can seamlessly integrate with any existing software landscape. Since the development strategy behind the SAP Netweaver platform and the PAS-X platform is the same, technical integration is seamless. Werum also has long standing relationships with large pharmaceutical machine builders which enables easy and smooth integration with the shop floor. Its strong functional relationships with selected strategic channel partners and system integrators in various regions have also enabled Werum to develop a foothold in markets in Asia. A case in point is that it has successfully deployed one of the largest running paperless manufacturing systems at its customer sites in Japan.
In recognition of its increasing market share and capability to create customer value, Werum is a worthy recipient of the 2007 Company of the Year Award in the MES space for the pharmaceutical industry.
Manager: Sath Rao
Analyst: Sanjeev R Sridharan