Half a Billion Dollars of Prevention is Worth the Cure as Pharma-Biotech Industry Protects Manufacturing Investments with Scheduled Maintenance

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Reported by Annette Kreuger, Industrial Info Resources (Sugar Land, Texas)--It is not easy in today's pharmaceutical-biotech marketplace to convince a board of directors to spend hundreds of millions of dollars to build a grassroot manufacturing plant. On the other hand, spending millions annually is essential to protect the sizeable investment already in place. The last thing any drug, medical-device or toiletry manufacturer needs is equipment failure or malfunctions in the production process.

A recent analysis of reported Pharmaceutical & Biotech maintenance, repair and overhaul (MRO) projects in Industrial Info's Pharmaceutical-Biotech database has revealed 508 projects with a total investment value (TIV) of $675 million planned. This figure translates to an MRO average TIV of $1.3 million. The current MRO projects are scattered throughout North America, with the Southeast region at the top with 99 reported projects representing a minimum investment of $135 million. Next up is the Mid-Atlantic region, which currently claims $109 million for 71 MRO projects. Rounding out the top three regions is the Great Lakes, with $89 million being invested into 65 planned MRO shutdowns.

Click on the image at right for a breakdown of active reported MRO projects in the Pharma-Biotech Industry.

These figures are expected to increase as new project schedules are uncovered and reported. Every region that has a commercial-scale production plant will find itself with at least some MRO activity. Some plants do not "shut down" formally at all, as maintenance is performed throughout the year during lulls in production, often in the evenings or on weekends. A declaration made by plant personnel of "never using outside contractors" is invariably followed by the allowance of "sometimes" or "perhaps" using contractors, depending on the job. So "no," in this case, does not necessarily mean "no."

Just one piece of aberrant equipment in an entire production line can incur the wrath of the U.S. Food and Drug Administration (FDA) upon a company and the product in question. When a product has a quality problem, all roads of investigation lead to the plant of origin--even if it is found that nothing in the manufacturing process caused the problem. If the maintenance records are not current, what could have been a limited run of bad PR turns into a corporate nightmare.

When a manufacturer has to pull a product off the shelves, the general public seldom investigates the reasons beyond what is gleaned from the initial headlines and ubiquitous news ticker feeds. Product shortages that occur when production is stopped to fix the problem can cause a company to pull the plug.

Such was the case with sterile injectables contract manufacturer (CMO) Ben Venue Laboratories, a division of German drug-maker Boehringer Ingelheim, in Bedford, Ohio. Following the suspension of operations in 2011 after the FDA cited a number of manufacturing problems, the company restarted production on a limited basis in 2012, but ultimately decided to sell the facility.

Hikma Pharmaceuticals PLC (LSE:HIK) (London, England) completed its purchase of the entire Ben Venue manufacturing campus in September 2014. The plant remains idle while Hikma continues site planning, which includes removing some of the existing equipment and transferring it to other Hikma manufacturing sites. There is no date for a restart of the Bedford plant at this time.

For contract manufacturers (CMOs), the quality and reliance of plant operations are the very foundations of a company's bottom line. For these reasons and a host of others, the majority of traditional manufacturers adhere to a regular MRO program to ensure that process and supporting equipment and utilities will continue working in optimal condition. Typically, but by no means always, the industry's plant shutdowns occur once during the summer and again in late December. Many companies also use the maintenance shutdowns, and sometimes part of the MRO budget itself, to tie in or finish off capital projects.

With fiscal accountability tighter than ever before, it would be a rare company indeed that would not at least consider the qualified goods and/or services of a new provider. These figures only tell part of the story in regard to earnings potential at the plant level. Knowing who, what, when, where and how much is being invested is a great source of potential work for a multitude of vendors, including suppliers and contractors. In addition to performing the maintenance itself, the shutdowns also provide a time that companies can identify equipment that may be nearing the end of its useful life and needs to be replaced.

Knowing who the maintenance planners and schedulers are--and initiating regular contact with them and others at the plant--could lead to inclusion in the maintenance program and future capital projects.

In some cases, other vendors so impress the company with work performed during a maintenance shutdown that they land an alliance contract with the plant. Upon securing such a contract, the vendor is the designated contractor for in-house maintenance operations. In some cases, an office is opened on-site and staffed by the contractor.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.