As part of my continuing efforts to stay apprised of the shape of the internal and external manufacturing network of the biggest company in our Top Companies list, I recently spoke with John F. Kelly, newly named vice president of Strategy and Transitioning Sites at Pfizer Global Supply.  —GYR

Contract Pharma: You were recently appointed to the position of vice president of Strategy and Transitioning Sites. Tell me about your role.

John Kelly: My major responsibility within PGS is to strategically support our business, which includes sourcing processes, site network strategy, alignment of PGS with Pfizer’s strategies, and leadership of our transitioning sites. We’ve created an operating unit specifically focused on the sites we will be exiting as part of our Plant Network Strategy, including the operation of those transitioning sites for a period of time, perhaps as long as several years after the decision is made. Presently, there are seven sites in this unit, five of which report to me. I particularly enjoy that part of it, because most of my 28-plus-year career at Pfizer has been in manufacturing sites.

CP: How difficult is it to manage facilities where it’s public knowledge that things are going to be sold or shut down?

JK: It’s a special challenge, but we have the same expectations for transitioning sites as we do of our ongoing sites. It’s just that their role in the short term is very different. Ongoing sites may have five-year or ten-year strategic plans, but the role of a transitioning site is very different. That’s why we put them together into this operating unit. A lot of the short-term role for these sites is not only to provide quality supply and customer service, but also to prepare them for their next state. And this can mean divestiture to another company as an ongoing operation, retooling for another type of operation, or closure.

CP: What’s the shape of PGS’s internal network?

JK: Last year, we announced that we would be exiting 10 manufacturing sites and reducing the size and scope of several other sites. We’re in the process of executing on that decision. That takes many shapes. We’re working toward divestitures, such as the Dublin site that we divested to Amgen recently. We’re proud of that because our colleagues in Dublin will have an ongoing role with a new company. We’re in the process of looking to divest or exit other sites. That process will be ongoing for the next two to three years.

CP: Was there a trailing supply agreement tied into the Dublin site?

JK: Yes. Typically these sites do have manufacturing supply agreements to make them more attractive to a buyer. It gives buyers the runway to build their business, while enabling PGS to develop a value proposition that is attractive to us and good for colleagues and the communities in which we operate.

CP: Are you seeing more interest for specialized facilities from fellow innovator pharmas, contract manufacturers, generics?

JK: It’s a little bit of everything. Amgen’s an innovator, of course. For example, we’re talking with some CMOs that are looking at getting into new geographic areas. And generic companies have also expressed interest in some of the capacity that we have available.

CP: Would you call PGS’ internal network . . . “stable,” in its current configuration?

JK: It’s a question that we’re often asked. Our network has evolved over time. We’ve made major acquisitions, and we’ve also made smaller, bolt-on ones. The recent King Pharmaceuticals acquisition brought in a number of manufacturing sites. As the business evolves, we need to evolve our network to support our needs.

So, are we “done?” Well, we’re probably never done, because the business will continue to change. My role in strategy is to promote our mission to have a globally competitive internal/external supply network that supports all of Pfizer’s businesses and provide them with a distinct competitive advantage.

CP: Well, would you say the major revamping is complete?

JK: The announcements we made last year were for a larger number of sites than we’ve ever done at one time. That was an outcome of our Wyeth integration where we brought together both of our networks, which resulted in excess capacity in small molecule solids and aseptics. There was a compelling need to rationalize that capacity. We review the network on an annual basis, to look at it and see what needs to change. Technology changes, product mix changes, and we need to have the network to support it all.

CP: What’s the percentage-breakdown of the network? Pre-Wyeth, it was essentially one-third Pfizer legacy, one-third Warner-Lambert and one-third Pharmacia. How does it break down now?

JK: I’m glad you asked that question! Following our announcements of last year, more than a third of the network is made up of legacy Wyeth sites; about a quarter are legacy Pfizer plants; and a lesser amount are either legacy Pharmacia or Warner-Lambert.  The caveat is that the King acquisition brought in another 12 facilities. It’s a small acquisition, relative to Wyeth, but includes a large number of sites in both human health and animal health. Those sites are under review now. We’re around 90 sites in the network, at present.

CP: Why did they change the name of your group to Pfizer Global Supply from Pfizer Global Manufacturing?

JK: Pfizer Global Supply simply acknowledges who we are and how we are operating. We are a fully integrated supply organization with both an internal network and a growing network of external partners. Although we’ve changed our name to better represent the full scope of our business, our purpose remains the same – to supply quality products for a healthier world.

CP: How does Pfizer manage that external supply network?

JK: It’s become an increasingly important component of the business. About 30% of our volume on a cost of goods basis is externally supplied. As this amount has increased, we’ve elevated the role of external supply to a separate operating unit reporting directly to the Pfizer Global Supply president. The merger with Wyeth meant that we were integrating two full sets of external suppliers. It’s an ongoing process to rationalize the external network, just as we do with our internal network. We’re engaged in a process of Strategic Supplier Collaboration, recognizing that we have a large number of external partners.

CP: Similar to the preferred provider notion elsewhere in the industry?

JK: Somewhat. We have put together an organization to support that external network, and where we’ve seen opportunities to consolidate, we have. The other aspect is what we talked about earlier: divesting sites with trailing supply agreements. There’ve been a large number of those in recent years, and those all become external suppliers to us for shorter or longer periods of time. That’s a component of our external supply growth.

CP: Do you see the company making any sort of public announcement of strategic supplier relationships with CMOs? We’re seeing more of those announcements in the CRO side of the industry, but not so much within manufacturing.

JK: We’re in the process of identifying who we should partner with, and better understanding how strategic supplier collaborations work.  We would need to understand the rationale and value of making any public announcements in this area.

CP: How much of a contribution do you think Wyeth has made culturally on Pfizer?

JK: Wyeth was a major integration. As with any integration, we identified Wyeth’s best practices and concepts so that we could build on the base at legacy Pfizer. If you look at the biotechnology network, it essentially is from Wyeth. Most of the bio facilities, technology and operational expertise have come to us from Wyeth. In fact, that term “operating unit” comes from Wyeth. Just as you adopt practices, you also pick up on the language and terminology. There are approximately 30,000 PGS colleagues including a significant number from Wyeth so there’s still a lot of interaction between those cultures.

CP: You mentioned being near 30% on a cost of goods basis, in terms of outsourcing and external supply. Is that number a goal, or is it a floating target?

JK: We are not working towards an outsourcing goal. Our decisions on internal/external sourcing are based on a comprehensive strategic review in line with our mission to provide Pfizer with a distinct competitive advantage.

CP: Where do you see PGS in five years?

JK: We’re looking to be fast, flexible and innovative, customer focused and network driven. We want to have the right capabilities in our network, internally and externally, to support the business.

CP: How difficult is it to be innovative when you’re managing such an extensive network?

JK: As we make our network decisions, the sites that are going forward are constantly working to innovate, through technology, continuous and breakthrough improvement, lean manufacturing techniques and a variety of other improvement focused strategies. We work to improve manufacturing processes and robustness. Innovation has always been part of PGS and will continue, going forward.

We even see innovation at transitioning sites. They’re trying to engineer their future. It can be innovation in terms of how the site is organized, how it’s prepared for a divestiture, how HR is organized. Innovation is more than just technology.

CP: And those lessons make their way back into ongoing PGS?

JK: They do. Not only for future transitioning sites, but we also share innovative ideas across the network with our Network Performance Team, which focuses on the efficiency and effectiveness of our internal network.

PGS has a rich history that we’re building upon. We’ll continue to evolve and innovate to support the needs of the business. Our challenge is to have the right capacity, the right technology and the right capabilities to provide our business with what it needs through our internal and external supply network.

---

Biographical Note

John F. Kelly
Vice President, Strategy & Transitioning Sites, Pfizer Global Supply
Mr. Kelly joined Pfizer in 1982 as Plant Services Engineer at the Brooklyn, New York site. In 2011 he was appointed Vice President, Strategy & Transitioning Sites for PGS in New York. His responsibilities include driving PGS strategy and global sourcing, and leading the Transitioning Sites Operating Unit. Prior to his current position, he held assignments in New York (Technical Services, Plant Network Strategy), Brooklyn, New York (Engineering, Manufacturing), Barceloneta, Puerto Rico (Manufacturing, Quality Operations) and Vega Baja, Puerto Rico (Site Leader). John holds a B.S. in Chemical Engineering from Worcester Polytechnic Institute and an M.B.A. in Operations Management from Pace University.