Back to How We Help Clients

Operations

Using our operations expertise to drive performance, increase revenue, and enhance the bottom line.

What we do

As competition intensifies and payors restrict reimbursement, more pharmaceutical, biotech, and medical product companies are trying to maximize profits through operational improvement. But their efforts are often complicated by the increasing complexity of the healthcare landscape, such the shift of manufacturing to low-cost countries and the need for more intricate supply chains to meet growing demand in emerging markets.

McKinsey has decades of experience in all aspects of pharmaceutical operations, allowing us to help clients identify opportunities for revenue enhancement, efficiency improvement, and cost reduction throughout the entire production cycle. Over the past five years, we have served pharmaceutical, biotech, and medical product clients in more than 850 operations engagements, giving us a detailed understanding of all industry trends and challenges. We take a hands-on approach to working with clients, creating practical strategies that generate bottom-line impact. To sustain long-term improvement, we emphasize helping clients build their internal capabilities, providing tailored training programs for all organizational levels.

Our work covers six main areas:

Manufacturing

We improve shop-floor production efficiency through lean manufacturing methods. For instance, POBOS allows us to benchmark manufacturing costs and productivity to comparable peers for many different areas, including multiple fill/finish technologies, synthesis of active pharmaceutical ingredients (API), and production of biologics.

Supply chain management

We take the customer's perspective to develop an end-to-end view of the supply chain, working with companies to define strategy, redesign distribution networks, benchmark performance, identify problems, improve service levels, manage risk, reduce backorders, and lower inventory.

External supply

We have a thorough understanding of external suppliers and contract management organizations (CMOs), including their capabilities and typical costs. Through our market knowledge and experience, we have helped clients capture both immediate and sustainable value in multiple projects. Our approach entails working with clients to create a comprehensive external supply strategy, segment suppliers, develop metrics for vendor performance, and establish clear management guidelines to optimize value from third-party suppliers.

Quality, compliance, and remediation

In a world of increasing complexity and regulation, quality is an often untapped source of competitive advantage. Superior quality and flawless compliance can help companies dramatically reduce quality-related costs, improve their brand perception, and improve revenues. We help clients achieve significant and sustainable improvement in their quality performance, customer satisfaction, and regulatory compliance. Our areas of quality expertise include development of quality and compliance strategies, quality performance and cost benchmarking, optimizing the quality management system (QMS), delivering compliance and remediation services, fostering a quality culture.

Network strategy

We help clients determine if their networks are aligned with their overall company strategy and goals. We also help clients capture value by optimizing global plant configurations, identifying opportunities to shift production to low-cost countries, assisting with plant closures or transfer of operations, ramping up production at new sites, and selecting locations for greenfield projects.

Product development and lifecycle strategy

We support clients throughout the end-to-end product lifecycle. Our areas of expertise include enhancing operations during the development of new product and platform strategies, conducting diagnostics to determine readiness for launch and acceleration, developing strategies for mature products, and optimizing costs. For medical product companies, we also offer tools that enhance quality, improve manufacturing processes, and increase their products' appeal to customers.

Featured capabilities

We have developed a set of tools and databases specifically for pharmaceutical operations, focusing on benchmarks. For instance, POBOS benchmarks manufacturing cost, productivity, supply chain, purchasing and quality performance across more than 70 pharmaceutical, biotech and medical device companies. We also have procurement benchmarking tools with data for more than 400 companies, and a plant networks database for the top 30 pharmaceutical companies.

For more details about our expertise, please visit the Operations Practice page.

Featured experts

Vikas Bhadoria

Senior Partner, Gurugram

David Keeling

Senior Partner, Chicago

Martin Lösch

Senior Partner, Stuttgart

Related insights