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Transcript of Leadership in Manufacturing and Engineering Organizations
Reliable, cost-effective production
Leadership in Manufacturing and Leadership in Manufacturing and Engineering OrganizationsEngineering Organizations
Patrick Y. Yang, Ph.D.
Executive Vice President, Product Operations
January 26, 2006
ISPE Bay Area Subchapter Meeting
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Genentech - a cool company by the bayGenentech - a cool company by the bay
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Thirty Years Science-based Thirty Years Science-based GrowthGrowth
GenentechFounded
(for use with the Nutropin AQ Pen Cartridge)
‘76 ‘85 ‘87 ‘93 ‘96 ‘97 ‘98 ‘99 ‘00 ‘01 ‘02 ‘03 ‘042005 & Beyond
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$6,633
$4,621
$3,300
$0
$2,000
$4,000
$6,000
$8,000
2003 2004 2005
Total Operating Revenues
Total Operating RevenuesTotal Operating Revenues
• For the full year 2005, total operating revenues exceeded $6.6 billion, doubling our total operating revenues in the 2 years since 2003.
($ in millions)
A 44% increase over 2004
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Our CultureOur Culture
• As of December 31, 2005, we have ~9,500 employees, an approximate 25% increase over 2004.
• In 2005, we were named by Science magazine as “the top employer and most admired company in biotechnology and the pharmaceutical industries” for the fourth year in a row.
• This month, FORTUNE magazine named Genentech as the #1 company on the 2006 list of "The 100 Best Companies to Work For". We have earned a place on the FORTUNE list for eight consecutive years.
• We remain focused on working to protect and nurture our culture.
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Genentech’s Executive CommitteeGenentech’s Executive Committee
Richard Scheller Art Levinson Ian Clark Pat Yang
Sue Hellmann David Ebersman Steve Juelsgaard
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Genentech’s Executive Committee Genentech’s Executive Committee Dressed up for HalloweenDressed up for Halloween
Sleepy Grumpy Snow White Happy Sneezy Doc Bashful
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Our key business challengesOur key business challenges
• Successful new product launches• Pricing/Reimbursement• Manufacturing execution• Supply chain risks• R&D Productivity• Culture: being innovative and efficient• Competition/Follow-On Biologics
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Excellence Means Excellence Means Being Innovative Being Innovative andand Disciplined Disciplined
(The key word is “(The key word is “andand”, not “”, not “oror”… The risk is we become a ”… The risk is we become a “big pharma”)“big pharma”)
Innovative / Entrepreneurial
Dis
cip
lined
/ E
ffic
ien
t
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Genentech’s Cell Culture Capacity Growth Genentech’s Cell Culture Capacity Growth ChallengeChallenge
0
100,000
200,000
300,000
400,000
500,000
600,000
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Ca
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Oce
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200
0
200
9
200
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200
5
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Big Pharma vs. Great BiotechBig Pharma vs. Great Biotech
• What are the differences?–Sizes and scales
–Success rates
–Priorities
–Cultures
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Big Pharma’s ManufacturingBig Pharma’s Manufacturing
• Complex Supply Chain• High Inventory• Long Cycle Time• Non-responsiveness• Good/Fair Customer Service• Islands of Excellence• High Priority of Quality and
Compliance• Over capacity
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Typical Big Pharma “Reengineerging” or Typical Big Pharma “Reengineerging” or Cost Cutting Solutions (usually too late)Cost Cutting Solutions (usually too late)
Order-to-Cash Process Reengineering
Procure-to-Pay Process Reengineering
Clinical Process Cycle Time Reduction
Research productivity improvement
Capital effectiveness improvement
IT project effectiveness improvement
Leadership development Improvement
Performance management improvement
Cost structure improvement (capital, headcount)
Order-to-Cash Process Reengineering
Procure-to-Pay Process Reengineering
Clinical Process Cycle Time Reduction
Research productivity improvement
Capital effectiveness improvement
IT project effectiveness improvement
Leadership development Improvement
Performance management improvement
Cost structure improvement (capital, headcount)
Simplify. Mandate common processes.
Create one source of global information
Provide ease of access to key operational data
Focus resources on high-value added activities
Analyze expeneses and eliminate wastes
Eliminate redundant functions
Apply Six Sigma and Lean Manufacturing
Reduce Work
Close plants, cut overhead, sell assets.
Simplify. Mandate common processes.
Create one source of global information
Provide ease of access to key operational data
Focus resources on high-value added activities
Analyze expeneses and eliminate wastes
Eliminate redundant functions
Apply Six Sigma and Lean Manufacturing
Reduce Work
Close plants, cut overhead, sell assets.
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Typical Big Pharma “Reengineerging” or Typical Big Pharma “Reengineerging” or Cost Cutting Solutions (usually too late)Cost Cutting Solutions (usually too late)
Simplify. Mandate common processes.
Create one source of global information
Provide ease of access to key operational data
Focus resources on high-value added activities
Analyze expeneses and eliminate wastes
Eliminate redundant functions
Apply Six Sigma and Lean Manufacturing
Reduce Work
Close plants, cut overhead, sell assets.
Simplify. Mandate common processes.
Create one source of global information
Provide ease of access to key operational data
Focus resources on high-value added activities
Analyze expeneses and eliminate wastes
Eliminate redundant functions
Apply Six Sigma and Lean Manufacturing
Reduce Work
Close plants, cut overhead, sell assets.
Order-to-Cash Process Reengineering
Procure-to-Pay Process Reengineering
Clinical Process Cycle Time Reduction
Research productivity improvement
Capital effectiveness improvement
IT project effectiveness improvement
Leadership development Improvement
Performance management improvement
Cost structure improvement (capital, headcount)
Order-to-Cash Process Reengineering
Procure-to-Pay Process Reengineering
Clinical Process Cycle Time Reduction
Research productivity improvement
Capital effectiveness improvement
IT project effectiveness improvement
Leadership development Improvement
Performance management improvement
Cost structure improvement (capital, headcount)
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Other Big Pharma Reactions when Things Don’t work: Where did Other Big Pharma Reactions when Things Don’t work: Where did all the money go? How do we spend it?all the money go? How do we spend it?
IT Systems Support $600
$1021Up $101 / 13% Human Resources $68
Finance/Bus. Dev./Licens. $109
9% Of Total Executive/Admin $159
MRL Other $264
$1,600 Up $176 / 13 % Administrative $142
Depreciation $121
15% Of Total
$4,300 Up $766 / 22 %
42% Of Total
MMD Period Costs $1,176
$3,176 Up $97 / 4 % Manufacturing Expenses $700
Other Division Support Exp. $127
33% Of Total Depreciation $350
$10,000 Up $1,140 / 13 % $5,000
Sales & Marketing
$3,000
Benefits
$1,600
Other
$317
Administration (G&A)
$443
Clinical Development
$994
Basic Research
$342
Administration/Other
$740
BUSINESS INFRASTRUCTURE
DRUG DISCOVERY/DEVELOPMENT
ORDER GENERATIONMARKET DEVELOPMENT AND Promotion
$1,446
Clinical Programs
International
MATERIALS & PRODUCTION
TOTAL EXPENSES
Direct Selling
$1,686
Cost of Sales
$2,111
Payroll
Why wait until
you are
in trouble?
Why wait until
you are
in trouble?
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Two perspective of Genentech’s cultureTwo perspective of Genentech’s culture
• Informal• Genuine• Authentic• Intensive• Hard working• Nimble• Fun• Fair
• Informal• Genuine• Authentic• Intensive• Hard working• Nimble• Fun• Fair
• Patients• People• Science
• Patients• People• Science
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What’s hard to imitateWhat’s hard to imitate
1. Employee’s passion for their jobs
2. Productive dialogues
3. Effective decision making
4. Follow Through and Feedback
5. Operating system
6. Innovation (not just creativity)
7. Leaders at all levels
8. Right people in the right jobs
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What does success for me look like?What does success for me look like?• Best place to work
• Most admired manufacturing organization
• 10X productivity in 10 years
• Strong pipeline: many new molecules into Development
• Many new products successfully launched
• #1 in Oncology in the U.S.
• High annual earnings growt
• Significant positive cumulative free cash flow
• Most innovative, most efficient company
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The Ultimate Measure of Our SuccessThe Ultimate Measure of Our Success
• We are committed to developing products that address significant unmet medical needs
• We are committed to ensuring our marketed products are available to qualified uninsured or underinsured patients in the United States
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Final Thoughts: Manufacturing and Final Thoughts: Manufacturing and Engineering Leader’s ProfileEngineering Leader’s Profile
• Passion for what they do.
• Ability to facilitate, teach and lead.
• Principle centered - thus, ethical and predictable behavior.
• Trustworthy, candid and transparent.
• Responsible and responsive 360 degree - always connected with reality.
• Flawless follow-up - always meeting commitments.
• Attention to details - nothing falls through the crack.
• Great judgment and excellent decision making.
• Emotional strength – having the courage to make tough decisions and the heart to implement it thoughtfully.
• Emotional intelligence – having the skills for interpersonal productivity, conflict management, collaboration and team achievements.
• Always learning
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In conclusion…In conclusion…• What are my best learning experiences:
– General Electric• Execution: get the job done• HR development processes• Speed, simplicity, self-confidence• Management as a feedback control system• Employability: always learning
– Merck• Passion: “medicine is for the patients”• Integrity and honesty• Systems thinking• Curse of the Most Admired: lessons learned• Globalization
– Genentech• Real passion• Authenticity: being self and genuine• Work hard, play hard• Feet on the ground