Building a new pharmaceutical facility can feel like tracking a moving target. A new production site can involve a five-year timeline and a billion-dollar budget, meaning a plant opening today comes online in a world that is quite different from the one in which it was planned.

At the same time, these capital projects seem more important than ever. With upcoming patent cliffs and the need to seize opportunities from new therapeutic modalities, the industry's manufacturing footprint must evolve. In other periods, mergers and acquisitions might have supported this shift, but recent trade uncertainty has muted the Mergers and Acquisitions market.

And whether we look at billion-dollar plants or the myriad of smaller capital projects, better capital project execution offers significant potential gains. McKinsey found that a typical large drug manufacturer could reduce spending by 20%, or around $200 million, by eliminating low-value projects. This freed-up budget could be reinvested in Research and Development (R&D) to enhance the company's market position and competitive edge.

This article examines how to adopt a value-based lens for pharma projects and how approaches like Enterprise Project Performance can provide a unified framework with a tangible impact on project success.

Acknowledging Global Uncertainty, Compliance Requirements and More  

Pharma leaders are confronting a disruptive era marked by global uncertainty, where patent cliffs, post-pandemic shifts, geopolitical tensions, and cost pressures are converging to reshape the industry's financial and operational landscape. As McKinsey highlights, these challenges bring rising complexity, heightened risks, and significant demands for capital investment, including the development of new facilities.

In the first half of 2024, 23 new plant openings and expansions were announced, including nine major sites in Europe. However, properly constructing and delivering these manufacturing facilities takes ample time and resources. Building a new production facility can take around five years and often experiences several disruptions because of siloed processes and extenuating factors.  

Additionally, precision and compliance are critical. The rise of new therapeutic modalities, such as cell and gene therapies, mRNA platforms and personalized medicines, adds even greater project complexity. These therapies often require smaller batch production, ultra-clean environments and tightly integrated digital systems to ensure traceability and regulatory compliance.

Beyond these large-scale efforts lie a substantial volume of smaller capital projects (such as maintenance and/or expansion of current facilities within the portfolio), representing a significant portion of total spending and carrying their own unique challenges.

McKinsey found that while companies pay attention to large, multi-million-dollar projects, it is often in the smaller, recurring expenditure projects to maintain or improve existing facilities that the most value potential resides. This is because big capital projects tend to be sparser, while pharma companies might be managing thousands or hundreds of smaller capital projects, which account for 70% of total capital expenditure in the industry’s most mature sectors. Even in biopharma, one of the sectors enjoying rapid growth, smaller projects like these still represent 50% of all total CAPEx spend.

To address these challenges, organizations are working to centralize and standardize previously siloed capital project activities and data to ensure smoother planning and execution, and drive greater collaboration across teams. Standardizing how work gets done and automating routine tasks helps ensure best practices are followed and gives people more time for strategic decision-making.

At the same time, companies are rethinking how they manage data. When critical information lives in spreadsheets or disconnected systems, it’s hard to get a clear picture of project performance. But with connected data and a single view across the entire project lifecycle, teams gain the insights they need to stay on track and align execution with business goals, delivering results on time and on budget.

A value-based approach to capital planning ensures project portfolios are optimally managed, cost and schedule overruns are minimized and companies achieve higher rates of return as resources are properly allocated and optimized. In an environment where pharma companies are facing a growing volume of small and mid-sized projects while needing to maintain their competitive edge, standardization, automation and integration of all project-related data empowers them to achieve quicker time to market and supports their place as market leaders.

The Consequences of These Challenges

The main consequences for the individual project level are delays and budget overruns. According to a survey by KPMG, more than 4 in 5 project owners reported experiencing moderate to significant delays and budget overruns in recent capital projects. 

The absence of centralized ownership also hampers the ability to optimize at the portfolio level. Projects are handled as one-of-a-kind efforts, with little reuse of best practices or evaluation of areas of improvement that could retain the project value while lowering costs or pooling resources. 

Additionally, poorly handled capital projects tend to have ripple effects when the facility is in operation. Key steps in the construction process, such as completions and commissioning, are rushed and left to be handled too late. Limited take-on and contextualization of key project data, such as P&ID and 3D Models, can saddle the operations team with massive work needed to retrieve, digitize and organize information. And, for extensions, retrofitting or other projects that affect an existing facility, a delayed project can also affect manufacturing capabilities.

Lastly, siloed systems hinder effective project portfolio management. Organizations that fail to track and measure project success rely on guesswork. This results in an inability to identify high-value projects vs low-value projects, causing organizations to unknowingly prioritize projects that do not best support overarching business goals. Effective tracking requires complete data integration and visibility, allowing progress to be assessed using the most accurate and comprehensive information available.

How Enterprise Project Performance (EPP) Can Help

An Enterprise Project Performance (EPP) approach provides a unified framework to address these pain points by connecting people, processes and tools across the full project lifecycle.  

At the core of the EPP approach is the idea of creating a unified source of truth that integrates all project-related data across the enterprise from ERP, scheduling, cost control risk, asset management and other critical systems. This consolidation helps deliver real-time insights, empowering teams to make better decisions and support greater standardization across the organization. An EPP approach also increases stakeholder visibility by providing portfolio managers, project managers, finance teams, executives and other roles with access to tailored dashboards that present the data most relevant to them.

At the scale of large pharma companies, standardized procedures with built-in adaptability are needed to ensure compliance while allowing for local nuance, helping organizations succeed in regional markets.

The Shift Toward Value-Based Project Portfolios

Centralizing project management, project controls and the vision across the complete portfolio also helps bring a value-based vision to projects and find where to lower costs or make trade-offs where they make the most sense.

This way, companies have the visibility to adjust their project portfolio to yield maximum value at the lowest total cost. Complete visibility allows companies to understand whether resources at a specific site are appropriately managed and deliver the most value, or they should be better off reallocating part of them to a site for greater ROI potential.  

The adoption of EPP also enables pharma firms to reduce costs and schedule overruns by identifying risks early and enforcing process adherence. It shortens time-to-market for new products or facilities by streamlining planning and execution. Capital allocation improves through accurate, forward-looking data. Regulatory compliance is enhanced with traceable, standardized workflows. Continuous improvement is supported by building a historical library of lessons learned and performance trends.

Tangible Business Impact

Perhaps more importantly, in this time of rapid changes and disruptions, EPP enables more flexibility while offering scalability as Pharma organizations grow and change. With live data fed into multi-year plans, organizations can run scenarios, prioritize investments and dynamically adjust based on evolving conditions.  

An EPP solution, such as EcoSys™, gives you a unified view of the project and asset lifecycles, enabling a unified and clear vision that helps teams spot deviations early. The result is a more dynamic capital plan that can quickly adapt to changes and deliver faster time-to-market results.

In this period where capital projects are gaining strategic importance, a pharmaceutical organization’s enterprise performance will increasingly depend on its project performance.

Learn more about how EcoSys helps pharma leaders capture value from their projects.  

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