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Operations

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. We also have developed a set of tools and databases specifically for pharmaceutical operations, focusing on benchmarks in manufacturing cost, productivity, supply chain, purchasing, procurement and quality performance.

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

Our work covers six main areas below. 

Featured experts

Parag Patel

Partner, Chicago

Thibaut Dedeurwaerder

Partner, Brussels

Katy George

Senior Partner, New Jersey

Featured Capabilities

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.

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.

Manufacturing

Improve performance across key production parameters—including cost, delivery, service, and quality—by developing the capabilities of the workforce at scale.

Quality, compliance, and remediation

Life sciences companies that proactively manage their quality functions can generate value far beyond improved regulatory compliance. Smart quality builds on the existing objectives of unconditionally delivering on patient safety and regulatory requirements in a cost-efficient way. Quality becomes a value-added partner and coach that helps integrate compliance into regular operations while enabling speed and effectiveness. Our extensive expertise includes digitization and automation of quality processes, risk-based process redesign that deploys newest design-thinking methodology, benchmarking of quality cost and performance, optimization of quality management systems, compliance and remediation services, and fostering a quality culture.

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.

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.

POBOS

POBOS provides information on cost, productivity and quality, supply chain performance, and quality performance across more than 35 pharmaceutical and biotech companies. Companies can use the information to understand productivity drivers and their impact and quickly focus efforts on the highest value areas. Visit the POBOS site.

Featured Insights

Emerging from disruption: The future of pharma operations strategy

– To maintain profitable and resilient operations, CEOs and COOs of pharma companies may need to make bold changes to their operations strategy as the industry navigates new challenges.

The future of medtech sales is hybrid

– The medtech industry is at an inflection point in its adoption of remote-sales and support models. Leading companies are embracing hybrid sales and raising the bar for others.

Against the odds: How life sciences companies excel in large transformations

– Life sciences companies pursuing a step change in performance have obtained mixed results. Adhering to five principles can greatly improve the odds of a large transformation program succeeding.

Four ways to make sure your pharma manufacturing strategy delivers value

– COVID-19 disruptions have led many pharmas to reassess their manufacturing networks and strategies. We share four ways that pharma companies can optimize manufacturing and avoid common pitfalls.