Value for life in the pharma capex boom

With the life sciences sector committed to invest a staggering $350 billion in US capacity over the next decade, the stakes for leaders placing big capex bets on a new generation of facilities have never been higher. In dollars, the investment commitment is second only to the tech sector, while the front-loaded capital requirements for life sciences are second to none, since biotech and pharma processes are federally regulated, and the industry invests far more in R&D.  

Spanning a five- to ten-year timeline, this investment boom signals not only a reshoring of the supply chain but also a response to rising geopolitical uncertainties. The US, long a hub for pharmaceutical innovation, is rapidly becoming the driver for advanced production as well. 

While capital is flowing, questions remain about supporting infrastructure, workforce and construction capacity to meet surging demand. For example, biomanufacturing facilities require high volume service utilities including water, wastewater, and electricity. 

Keep in mind that this is uncharted territory. It’s unprecedented that a dozen major pharma players are pursuing mega-scale builds at the same time, in the same country, and in some cases, the same states. Amid fierce competition for resources needed to build and operate new facilities, constrained capacity of skilled trades supporting construction and scientific professionals to run development and production processes put added pressure on timelines.  

The urgency to progress planned facilities to operation is their value to society. Delivering them is about moving vital medicines to market. We need to fly. But to succeed in these competitive circumstances, we need to do things differently.  

What changes are essential to ensure these programs realize their full potential? That’s the billion-dollar question addressed in our Future of Major Program Delivery research, an extensive examination of more than 5,000 present-day megaprojects (>$1 billion) across public and private sectors worldwide. The findings point to critical considerations that I’ll address here in three lifecycle phases: Preflight capital planning; delivery in flight; and landed value in operations. 

Preflight planning 

Up-front planning, more than any other phase in the lifecycle, sets the stage for successful execution yet often is paid inadequate attention when there’s heightened pressure to start construction.  This is a point of caution for companies propelling this investment wave: It’s easy to get swept up in the bias for action when everyone is building and competing for resources. But keep in mind that it’s never worth shortcutting sound planning to make a show of progress. Without thorough consideration, a rush to execution creates a false economy and flawed baseline, which ultimately leads to misguided decisions. 

While nobody sinks billions into capital investments without expecting to generate positive returns, few actually consider the critical question of causality, ensuring that the program as planned will bring the outcomes envisioned to fruition. This is the first order of project success, verifying clear cause-and-effect correlations to outcomes. Involving operational teams early can help with consideration and validation of causal correlations.  

For example, for pharma and life sciences programs, beyond the financial return thresholds, what are the specific success measures the program will drive for patient outcomes and supply chain resilience?  

A fully considered plan embeds flexibility and readiness to re-prioritize or pivot to contingencies when problems arise during execution.  For example, if we know the area where we’re building has a limited number of electricians, this is the time to get creative, such as requiring contractors to put securement measures in place for critical trades, like sharing arrangements or traveling professionals. 

A concerted preflight plan spans a range of activities for which early engagement pays long-term dividends, including site selection and a portfolio approach leveraging resources across planned projects, workforce and supply chain planning for the project and resulting operations, costing and baseline, design review, predictive analytics strategic procurement, and early establishment of a robust controls and project management organizational (PMO) framework.  

For complex programs, a professional PMO and controls partner that’s design-, engineering- and contractor-agnostic is best placed to represent owner interests throughout the lifecycle, while also imparting valuable experience to the in-house organization in the course of delivery as a development benefit for future programs. 

Delivery in flight 

With preflight provisions in place, alignment, trust and agility are the three most important enablers to drive high-performance delivery.  It’s a management approach unlike conventional project and construction management processes that maintain separation between discrete parties, phases, packages and contracts and rely on hierarchal command and control.  

This is more about instilling a culture than running a process, wherein the aim is to break down silos that typically exist between parts and parties to get everyone on the same page, with transparent information and reporting that provide clarity about everyone’s importance to the program’s success.   

By building alignment among project players with common purpose, we foster trust and reduce frictions that otherwise fuel conflicts. Then, as team members get to know and trust one another to do their part, the project benefits from quicker, more agile execution, with improved adherence to schedule, efficiency and performance measures.  

As performance shifts into high gear, it also signals certainty of delivery that bolsters the confidence of investors and other stakeholders to garner support for the program.  

Landed value in operations 

Next to planning, this is another phase that gets less attention than it deserves. It’s an opportunity to embed operational excellence and interventions to maximize the performance of newly delivered assets and extend their capacity to generate value over the long term and improve sustainability and resilience.  

With always-on digital connectivity, machine learning, digital twins and AI, we can move beyond monitoring and operational analytics to boost operating efficiency and capacity with predictive intelligence to unlock value in process improvements and asset utilization.  

These measures also provide insights to inform best-value considerations throughout the asset’s service life, such as operating improvements, reconfigurations, re/decommissioning or disposal.  

Experience 

Underpinning these recommendations, there’s no substitute for direct experience and deep understanding of industry-specific demands of biotech and pharma, like Integrating GLP and GMP from the project's outset, and in review of changes in the regulatory landscape throughout development, commissioning, and validation intervals.  

Experience informs our ability to help industry leaders adapt to market changes and accommodate new modalities and life-changing innovations that are sure to emerge from this era of investment.