Dispatches from CPhI

McKinsey consultants help to pull Patheon off the road to bankruptcy

By Zachary Brennan

- Last updated on GMT

McKinsey helped to overhaul some of its practices
McKinsey helped to overhaul some of its practices

Related tags: Management consulting

Patheon brought in McKinsey consultants over the last three years to help overhaul its sagging business and institute a number of simple process changes that resulted in deep transformations.

Harry Gill, SVP of quality and continuous improvement at contract development and manufacturing organization Patheon, told Outsourcing-Pharma.com that two or three years ago, the company was clearly headed towards bankruptcy.  Jim Mullen, CEO of Patheon, apparently even went so far as to say that the company was “executing a quality going out of business strategy​” and were about “two years away from running out of cash​.”

Since then, the company sped up its accountability, shifted around and let go a significant number of its leaders in its plants, dealt with problems earlier, and within a year, saw its “consulting dollars pay off​,” Gill said.

He noted that most of the transformations were simple adjustments that will be sustainable, such as how they deal with deviations, or how they’ve brought more quality experts to the floor of its plants to be close to reviewing batches. He said the result has been a 59% reduction in deviations since the company has gotten back to the industry average of dealing with deviations in 30 days.

As far as the choice of McKinsey, Gill said “they weren’t the cheapest but their operational excellence practice is by far the best​.”

He added that the company figured out its metric scorecards were not aligned with their clients so that when they received lower scores on quality measures, they were consistently surprised. The company has since raised its metrics bar to that of the standards of its top client.

On top of the recent success, Gill noted that he doesn’t think the transformation is even halfway done.

The company is still working with McKinsey at one of its recently acquired Banner sites in High Point, North Carolina, as well as another site in Cincinnati. Another one of its Banner sites was also shuttered​ just following the integration of the companies.

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