Bit by bit, Lundbeck trims fat from production costs

Outsourcing to cut costs? Shipping work to China? No need, says Lundbeck. The Danish drugmaker has slashed its own manufacturing costs 25% over the past 5 years, the Financial Times reports, saving about $341 million. Now, its production costs are about 20% of sales, compared with 25% across the industry, the company estimates.

There's nothing like desperation to light a fire under a company's feet. As SVP Lars Bang told the FT, Lundbeck was forced to act for the same reason that most of the pharma business has been cutting costs: Loss of patent protection on key products, including the antidepressant Celexa. "We had a burning platform," Bang said. "We were under more pressure than we had ever been before."

The cost-shaving process was very much that—a process, with one improvement after another after another. The company used video cameras to analyze work flow, for instance. It introduced larger packing containers. It solicited and acted on employee suggestions, and put production managers under intensive training, the FT points out. Now, it turns out 700,000 packs of meds per employee annually, compared with 380,000 in 2006.

Now, the company does all packing in-house, when it used to outsource two-thirds of that. As for API manufacturing, which it handles at two plants in Europe, the company is "producing in competition with companies in China," Bang told the FT.

- check out the Lundbeck release
- get more from the FT

Suggested Articles

The FDA is bracing for drug and medical supply shortages in the U.S. as the COVID-19 outbreak from China continues to spread globally.

Astellas and Seattle Genetics are out with Padcev-Keytruda combo data that may be good enough to snag an expedited regulatory review, analysts say.

Distributors had offered billions of dollars to wrap up opioid litigation, but that effort has suffered a major setback, WSJ reports.