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34 Pharmaceutical Technology ® Regulating Innovation, Quality, and Risk eBook January 2024 PharmTech.com Qualit y A recurring theme in such incidents is inattention to emerging quality and safety issues while short- term gains were instead prioritized. A 2013 study of more than 1000 board members and C-suite execu- tives was conducted to assess their progress in efforts to take a longer-term approach that would be most beneficial to their company(52). The study found: • "79% felt especially pressured to demonstrate strong financial performance over a period of just two years or less" • "73% said they should use a time horizon of more than three years" • "86% declared that using a longer time horizon to make business decisions would positively af- fect corporate performance in a number of ways, including strengthening financial returns and increasing innovation." The last two bullets do hold promise for increased executive receptivity toward compelling value propo- sitions. But, for now, the researchers state that "short-ter- mism" too often "dominates decisions in boardrooms" (irrespective of whether the company is publicly or privately held). They emphasize that allocating more capital to "real asset classes like infrastructure and real estate" is beneficial to the sustained health of a com- pany—but the decision to make such investments usu- ally requires an especially enlightened leader with long- term vision. This leader truly has the long-term strategic success of the company as the overarching priority even as they recognize that the "longer term horizon" of these more sustainable benefits might provide higher value to later leaders, employees, and investors in the company. Barton and Wiseman state there is of ten an im- balance in executive incentives that is focused on financial gain in the short-term, and they join other researchers in promoting a shift to a system that re- wards corporate executives for "delivering superior long-term return" (53). Overcoming inertia The ability to demonstrate the value of manufactur- ing improvements to company leaders is fundamen- tal to overcoming potential inertia that stands in the way of allocating the needed resources. Importantly, the willingness to consider accepting higher upfront costs starts when a leader is confident the investment is strategic and will create long-term value. But the long-term value of investing in technol- ogies proven to be of higher capability is often not demonstrated in the pharmaceutical industry. Meth- ods have not been fully integrated, matured, or dis- seminated to create a routine practice of fully calcu- lating long-term benefits of manufacturing upgrades. Therefore, it is apparent that more effort is needed to elaborate the value creation accrued from manufac- turing quality investments. A Temple Universit y sur vey conducted in 2021 (54) explored ROI practices by the pharmaceutical industry. The survey found that sufficient ROI anal- yses are not common in the industry. The survey also revealed that companies frequently fail to fully cap- ture the business benefits of manufacturing quality improvement proposals (Figure 1). Industry publications emphasize the need for manufacturing facility modernization Much has been written over the past 20 years indicat- ing that the pharmaceutical industry can often be re- luctant to enhance facilities, equipment, and processes. The continued use of outdated equipment at many facilities has been questioned, as superior equipment choices have largely been available for many years. The existence of too many high-variability operations, and consequent unnecessary quality defects, low yields, and supply shortfalls, has been a central part of this discus- sion. In recent years, more extensive studies of the state of the industry infrastructure have produced insightful reports on its current state and the future vision. FIGURE 1. Results from the Temple survey (ref). The Temple survey asked "Regarding infrastructure (facility, equipment, process) upgrade proposals, how in-depth and holistic are the estimates typically used by your organization?" 73% (30 of 41) of respondents stated that only basic (standard) return on investment (ROI) analyses were done, with a focus on shorter term financial return. Companies only infrequently perform comprehensive ROIs that calculate long term (e.g., total cost of ownership) benefits of a technological upgrade in comparison to the status quo operation. FIGURES PROVIDED BY THE AUTHORS.