Madhu Balachandran tells Next Generation Pharmaceutical why persistence is key to implementing an operational excellence campaign.

Originally published in Next Generation Pharmaceutical, Q3, 2010

Madhu Balachandran

Madhavan Balachandran had a great time in Puerto Rico, but he wasn't there on vacation. Before taking up his current position as Amgen's SVP of Manufacturing, Balachandran was based for five years at the company's manufacturing site in Juncos.

Juncos is the company's largest and most complex manufacturing site, representing every element of the manufacturing process, from receiving components from the far corners of the world, to warehousing them under the appropriate conditions, and to making recombinant proteins. Balachandran went to Juncos to set up the bulk manufacturing operation, and he found the experience invaluable.

"The entire manufacturing supply chain is represented in Puerto Rico. What we call the formulation, filling and packaging operation—where we formulate for use as a human therapeutic and then fill it into containers for injection – has been there since 1994," he says.

"In 2002, we decided to expand that operation to include the upstream bulk manufacturing. The bulk is formulated for use as a human therapeutic and filled into primary containers –vials or syringes – before being labeled and packaged. 

"I was dispatched to Puerto Rico to oversee the engineering, design, construction, and commissioning that would lead to the documentation and demonstration  to ourselves and to regulators that what we'd engineered and constructed met operational and regulatory requirements.

"All that was done, and we set up the operation to  produce commercial product. In the meantime, we, as a company, were growing and introducing new products. We decided to  expand our existing formulation, filling and packaging operation at the same time that we were building and licensing the bulk protein manufacturing operations."

During this process, Balachandran was exposed intimately to all these aspects of operations – not only the different kinds of manufacturing, but also its different stages, from engineering to licensure to commercial operation. He says he feels privileged and lucky to have had that exposure and believes that it prepared him well for his current position.

Going Lean

When asked about the challenges that might arise during a Lean implementation, Balachandran cites the need for frequent communication, as well as the need to be persistent. "Out of my own experience of over 30 years, I would say that if there is one single factor that predicts success in anything a company might undertake to do that has far-reaching consequences, it would be persistence.

"That one single characteristic, along with producing strong results – more than genius, more than creativity, more than anything else – the sheer need to be persistent, dogmatic and unrelenting in what you decide to do is the ultimate predictor of success.

"It's also a challenge. That probably applies in most endeavors, and certainly no less so in the case of Operational Excellence or a Lean approach. In general, there could be times along the journey that will be challenging: people could get disenchanted. But those are not reasons to discontinue the journey; those are reasons to redouble your efforts."

Three years ago, Amgen developed a customized Lean deployment strategy that took into consideration the relative youth of biotechnology, Amgen's unique culture, and the recommendations of Lean experts. The team achieved monetary savings in the first six months and created enough positive momentum to widen the net in its next phase.

This move toward greater operational efficiency did not come about completely spontaneously, but arose from the circumstances the company was facing at the time. "In some ways, it was thrust on us," Balachandran explains. "Until late 2007 we were growing quite rapidly, as a company, and also within operations. Some of that changed in 2007, for a number of reasons."

Those reasons included the related sales impact of the introduction of black box warnings for Amgen's anemia drugs, the erythropoiesis stimulating agents Epogen and Aranesp. A black box warning – the strongest the FDA requires – is implemented when medical studies indicate that a drug carries a significant risk of serious adverse effects.

"Our manufacturing plans  had to be adjusted," Balachandran says, "We had to change our way of thinking. It was important for us to keep quality high, but in addition we had to gain additional efficiencies, and we had to get faster in the way we made and supplied products to our patients.

"Some of the growth plans, behind which we were preparing our own operations plans, had to be adjusted, which, in turn, resulted in us having to modify our plans for manufacturing. We had to do it cost effectively, by introducing additional, important business dimensions into our thinking. When I say 'our thinking', I don't mean the thinking of only the management team, but, in fact, through the breadth and depth of the organization."

Balachandran explains that his team was keen to engage everyone in the enterprise in the whole endeavor, rather than have it be something that came only out of the minds of people sitting in corporate headquarters in Thousand Oaks. They wanted it to have its origins with the people making the product or fulfilling various roles across the company, particularly in operations.

"We did this to unleash the energy and creativity of all our staff," he says. "That was, looking back on it, a fairly significant moment, when we realized that was the way to achieve Operational Excellence."

Many companies use the terms 'Lean manufacturing' and 'Lean operations' to describe the changes they introduce into their organizations, in search of efficiency and effectiveness. By contrast, Amgen uses Lean as merely one way of achieving Operational Excellence.

According to Balachandran, Lean is a set of tools and techniques, methods, analyses and approaches that they decided they would train themselves and their staff in, to achieve Operational Excellence. The aim was to enable the people who had ideas to improve their operations, as fully engaged staff members representing their company, to better enable them to achieve their goals and ends.

Human touch

Grand plans to ratchet up operational efficiency are all very well, but the human element has the potential to make or break any improvement effort. How can companies manage the effect that people-related issues have on the implementation of Operational Excellence programs?

"With all such discussions on Operational Excellence and Lean and transformational approaches companies undertake, people are always beset with doubts about the probability of success," Balachandran points out.

"The reason that people hesitate, in many cases, is due to their concern that with attempts to be Lean or operationally excellent, there could be a fallout regarding employment, reductions in head count, reductions on growth plans, and so on. Those are natural concerns that many organizations struggle with at the outset of such efforts."

Balachandran admits that Amgen was not immune to these kinds of doubts, but there are a couple of principles that the company recognizes as important for the long-term success of its operational excellence journey.

One is the engagement of people who believe and act as if they are accountable for the success of the company and that the future of the company is in their hands, not just in the hands of the CEO  or the senior managers. Balachandran's point is that all 17,000 Amgen employees collectively and actively contribute to that future success.

"That is something that needs to be repeated and repeated and repeated," he says. "Most people get it, though there are some who don't, who continue to be cynical and skeptical. Those are inherent challenges. But by and large, the majority of the people understand, when you communicate that the fate of the organization is in their hands."

"Having said that, we have to follow that up very quickly and in a determined fashion by giving them the tools and the training and the coaching and the patience and the communication, all of this repeated time and time and time again, in almost a never-ending kind of way, to stress its importance.

"It's a constant stream of life in the organization. There literally is no end. When people think of it as a journey with an end, that journey is fated to failure. We like to think of it as a journey without end. Then people understand it."

Balachandran is quick to underline that this is not some kind of 'Shangri-La journey'. "Always we are confronted with people asking the question: 'If we do this, what's in it for me? Our growth opportunities will diminish if we don't grow, if we get more efficient, if we use resources more efficiently, which means we'll have fewer people, which, in turn, means less employment, which, in turn, means fewer promotions.'

"These are facts of organizational life in any endeavor of the kind that we're talking about. However, on the positive side – and that's the communication challenge that we all face – is the intellectual and professional satisfaction that staff at all levels gain from this. They're better prepared to deal with professional life. They're better prepared to deal with challenges, not only at Amgen, but throughout their professional career."

Balachandran stresses that this is a good thing for staff, as they are better prepared to cope with wherever their careers might take them. He finds it gratifying that the program has gone well during the three years since the beginning of its implementation.

New growth

Balachandran believes the need for increased operational efficiency will continue to grow. He recalls the avalanche of new products that came through in the 1980s, when the priority for the industry was to get them approved, made and launched.

As we enter the second decade of the 21st century, a different set of external business circumstances prevails: there are fewer new products; some believe it is harder to get them approved; there appears to be more pressure on the industry from the regulators and from government regarding safety; and the hurdles for approval, by many accounts, are being raised.

"There's a whole different set of dynamics today compared to 10, 20 or 30 years ago," Balachandran agrees. "And then there's pressure from society to reduce the cost of medicines, which is driving new legislation, not only in the US, but everywhere across the world.

"Out of that will come competition for us from biosimilars and small molecule generics, With that context, it is inevitable that we, as an industry, in addition to not taking the foot off the pedal in innovation and the search for new products, will certainly have to step up our effort on getting operationally efficient.

"That's part of the increasing sophistication that will be thrust on the industry, which has already been thrust on other industries that have predated us. We're going to be following in the footsteps of these other industries that have gone ahead of us, and have dealt with these kinds of circumstances before."

Amgen itself faces some very specific challenges when it comes to ensuring Operational Excellence, with operations in nearly 50 countries, and plans to continue expansion into underserved and fast-growing markets.

All of this has implications for the supply chain – how it is managed, who makes the product, where the product is made, how much is produced, and for which countries. There are also issues of storage, and the amount of differentiation allowed from country to country.

As Balachandran says, "It raises a host of questions that we have to be prepared to deal with and answer in a way that's good for patients and that's good for the countries we do business in, as well as in a way that is cost-effective and affordable, and that allows us to continue to survive as a thriving business."

In Balachandran's view, supply chain optimization is a contradiction in terms, because the supply chain can never be fully optimized – it is always suboptimal. "People say, 'We are going to optimize the supply chain.' But you cannot, because when you say you have optimized the supply chain, it suggests that you've reached perfection, and of course we will never reach perfection.

"For people who are professionals in the supply chain, it's an extremely stimulating exercise. The challenges that stimulate the best minds in the company are quite significant, and are inspiring to a lot of people who work here, because of our ambitions globally." 

Future Trends

There are other  innovations happening that directly affect manufacturing, such as those in the world of medicine, as the physicians and life science researchers come to understand human biology better through biochemistry, cell biology, molecular biology and other the life science disciplines.

More directly, there are tremendous advances in making manufacturing more efficient, which Balachandran says will inevitably mean – not right now, but perhaps in the next 10 or 20 years – that the size of manufacturing plants will shrink.

"It's going to shrink because of the technological innovation that's happening," he explains. "It will also shrink out of necessity, because innovation in medical discovery will drive customized, personalized medicine.

"The more personalized the medicines are, the more likely it is that we'll have to make smaller and smaller amounts of medicine to treat people in the future. And, at the same time, what's fueling innovation in manufacturing – where we can actually make these smaller and smaller amounts in more and more efficient ways – will drive our plants and sites to be much smaller than they are today.

"It's not difficult to imagine a world in which we could make approved, licensed medicine out of a plant the size of my office. It's not possible today, of course, but it's not inconceivable that something like that could happen in the future. As a manufacturing person, I find that incredibly thrilling and exciting."