5 ways to tackle hidden expenses in your pharma facilities

In an industry facing significant cost and regulatory pressures in research and development (R&D) and manufacturing — where every percentage point of profit margin matters — pharmaceutical companies are turning their attention to an often-overlooked goldmine of potential savings: their facilities. 

Nearly half of life sciences companies worldwide are pursuing cuts to their facilities’ operating costs, according to JLL’s Future of Work research, as even small savings can bolster their bottom line.

This emphasis on cost control is becoming more pronounced as facilities management (FM) evolves into a critical business expense. Recognising the complexity of these non-core operations, many pharmaceutical companies are outsourcing FM to concentrate on their core business.

Beyond the obvious costs, a silent drain on profitability often lies in the hidden expenses within FM and procurement operations.

Equipping real estate leaders and procurement experts with actionable strategies is essential to uncover and eliminate these commonly overlooked costs. 

Smart technologies and effective space management can significantly enhance pharmaceutical facility operations. Simultaneously, adopting data-driven procurement strategies with strong negotiation techniques allows companies to streamline costs. Together, these approaches improve operational efficiency and maximise value. 

1. Identify and reduce operational inefficiencies

Uncovering hidden costs in pharmaceutical facilities begins with a thorough review of workflow problems that occur in everyday activities. These often-overlooked inefficiencies can significantly impact the bottom line.

A primary area of concern is energy, particularly within the specialised GxP environments crucial for pharmaceutical manufacturing. For instance, clean rooms, with precise requirements for temperature, humidity and air quality control, are inherently energy-intensive. 

These energy demands can be amplified by issues such as suboptimal heating, ventilation, and air conditioning (HVAC) systems, ageing equipment, or the failure to employ automation in building management systems, leading to unnecessary operational expenses.

Beyond energy consumption, the maintenance of specialised pharmaceutical equipment represents another significant source of hidden costs. Unexpected breakdowns can cause costly downtime, forcing urgent and unplanned expenditures on specialised parts or skilled technicians. For critical equipment, transitioning to a targeted, proactive maintenance approach is vital to ensure business continuity and prevent incidents that could impact licensing or regulatory compliance.

Inefficient planning also inflates costs. A prime example is the delay of access for cleaning crews, resulting in after-hours work and overtime expenses.

To effectively mitigate these financial risks, pharmaceutical companies should prioritise standardising equipment and maintenance protocols across all GxP and non-GxP environments. 

2. Enhance space utilisation

Smart space enhancements offer another potent strategy for combatting hidden costs in pharmaceutical facilities. By using advanced technologies like sensors and heat mapping, companies gain crucial visibility into operational flow and occupancy patterns, revealing underused or dead spaces. 

With this understanding, companies can adopt targeted strategies to update their space and extract greater value. One example is on the manufacturing floor, where analysing production line space allocation and process flows can uncover opportunities to maximise space usage.

Armed with this data, companies can strategically repurpose underused areas into collaborative workspaces or adjust maintenance schedules in low-traffic zones to cut operational costs.

These proactive space enhancements not only reduce hidden costs but also foster a more efficient operational environment.

A pharmaceutical company analysed its office occupancy data and discovered that only 30% of their workforce typically came into the office on Fridays. Consequently, they made the decision to shut down on those days for scheduled maintenance during standard working hours, a far more economical approach than overtime shutdowns.

3. Introduce smart building technologies

As pharmaceutical operations become increasingly data-driven, the integration of sophisticated systems provides profound insights into facility performance, going beyond mere cost-cutting.

These technologies act as an audit of current operations, illuminating not only areas of inefficiency and potential cost savings but also highlighting underlying weaknesses and potential risks. This granular visibility allows pharmaceutical companies to identify core failures in their processes and infrastructure that might otherwise remain unseen.

While the immediate appeal of smart technology often centres on cost reduction, its value extends further. For instance, incorporating artificial intelligence (AI) within building management systems holds immense potential for proactive risk management. By continuously monitoring critical pieces of equipment, AI algorithms can analyse patterns and predict potential failures, allowing for timely and targeted maintenance interventions.

Pharmaceutical facilities that still rely on first-generation FM, characterised by reactive maintenance, stand to gain significant cost savings by adopting smart technologies. Conversely, more advanced facilities are likely focused on reinvesting in cutting-edge technologies to further minimise risks and enhance cost efficiencies.

4. Strengthen contract negotiations

Smarter, more strategic contract negotiation forms a crucial strategy in tackling hidden costs within pharmaceutical facilities. Unclear deliverables, poorly defined clauses and a lack of pricing transparency in these agreements create many hidden expenses.

To counter this, it’s essential to bring the FM team in early for contract negotiations. 

Their practical insights into operational requirements, from understanding production lines to equipment lifecycle and warranties, coupled with their specialised GMP (Good Manufacturing Practices) knowledge and grasp of regulatory standards, are invaluable. This expertise also helps them to identify potential compliance issues related to procurement decisions and to accurately define the scope of work and performance metrics.

When you engage the FM team early in negotiations, you can ensure that the agreed-upon terms closely align with your facility's operational needs. Furthermore, their benchmarking knowledge, informed by extensive industry data from multiple sites, allows for a more accurate assessment of ideal service costs and performance levels.

5. Employ data analytics

Mountains of transactional data often obscure hidden costs. However, by meticulously examining various data streams, companies can gain invaluable insights that directly inform better procurement decisions and reveal previously unseen spending patterns.

Here’s how data analytics can enhance procurement practices:

• Spend analytics: Thoroughly examining expenditure data pinpoints unexpected cost centres or significant price variations across suppliers, allowing for targeted investigations into potential overspending or inefficient procurement processes.
  
  

• Trend analysis: Analysing historical data reveals critical patterns such as seasonal fluctuations in demand for certain supplies or long-term cost increases in specific categories. Understanding these trends sets up proactive planning and more effective budget forecasting.
  
  

• Compliance data: Scrutinising regulatory information highlights areas where evolving regulatory changes may introduce new cost implications, allowing for proactive adaptation of procurement strategies and avoidance of potential penalties.
  
  

• Utilisation data: Tracking resource and asset usage informs capacity planning and resource allocation, leading to opportunities for consolidation, reduced maintenance costs and more efficient resource deployment.
  
  

• Performance data: Evaluating supplier performance based on quality metrics, delivery timelines and adherence to contract terms strengthens supplier selection and contract negotiations, leading to more favourable terms and reduced risks associated with unreliable vendors.

Ready to boost your bottom line? Connect with a JLL expert today for a personalised assessment of your pharmaceutical facility and discover the cost-saving opportunities hiding in plain sight.