An Empirical Assessment of Lean Readiness in Pharmaceutical Component Manufacturing SMEs

Introduction

Unlike the pharmaceutical manufacturing sector, which is well-recognized and organized, the pharmaceutical component manufacturing (PCM) industry is still scattered. Moreover, there needs to be a common term depicting the industry responsible for manufacturing various equipment, machinery, and parts produced for handling, packaging, and securing personalized medicines and high-potency drugs. Consequently, gauging the exact contribution of the sector in the global market or capturing data to map its estimated growth is difficult. However, termed variedly as the pharma component, equipment, parts, or medical devices industry,¹ some studies have noted its contribution in providing advanced medical technologies, machines, and allied components further used in pharmaceutical product production, processing, and packaging, thereby assisting the healthcare sector's efficient functioning (Sieckmann et al., 2018). Market reports further estimate the industry to substantially expand compound annual growth rate (CAGR) by 6.47%, reaching $87.09 billion by 2026 from $17.2 billion in 2019 (SpendEdge, 2019, 2023b). Similarly, another report by Markets and Markets (2023) on the pharmaceutical packaging equipment market (a specific branch of the medical/pharmaceutical components) estimated its growth at $11.9 billion by 2027 from $8.4 billion in 2022, at a CAGR of 7.2%.

The industry— primarily comprising small and medium-sized enterprises (SMEs)— is marred with inventory management challenges, gaining optimal pharma market intelligent services, managing volatility, controlled pricing, improving visibility across the value chain, and waste identification and management (SpendEdge, 2023a). Therefore, the industry has adopted lean practices to address the above challenges. However, poor practices have been implemented slowly compared to other manufacturing industries, like pharmaceuticals and automobiles. At the same time, academic research has also long neglected this industry, focusing primarily on the production process and lean administration of the drug manufacturing industry (Chowdary & George, 2012; Cogdill et al., 2007; Gebauer et al., 2009; Khlat et al., 2014; Nenni et al., 2014; Sánchez & Pérez, 2001). Consequently, there is a lack of empirical evidence of lean readiness among the PCM firms and an implementation framework of lean tools in optimizing throughout times and enhancing the quality of processes and products and associated challenges.