Pharma 

Case Study: Successful Turnaround of the German Site in the Pharmaceutical Industry

Initial Situation

 A global leader in the manufacturing of drug delivery systems (asthma inhalers, insulin pens, syringes etc.) was facing significant challenges at its German production site. Despite a decade of strong growth (+350% in revenue and headcount), financial performance remained unsatisfactory. High operating costs, exacerbated by quality issues, delivery delays, and insufficient customer orientation, were threatening the plant’s long-term competitiveness.

At the same time, internal morale was deteriorating: employee turnover increased, especially towards better-paid positions in the neighboring Swiss pharmaceutical industry, and relations with the works council were strained. The organization suffered from a lack of leadership, ineffective structures, and poor discipline, while operational inefficiencies continued to weigh on profitability. Against this backdrop, the new owners seriously considered relocating production to lower-cost regions.

Key Issues

An in-depth analysis showed the following issues:

• Structural Deficiencies: Unclear responsibilities, lack of leadership strength, ineffective meetings, and a weak execution culture
• Financial Challenges: High operating costs, stagnant revenues, and insufficient profitability
• Customer and Delivery Performance: OTIF (On-Time-In-Full) well below expectations, rising complaint rates, and declining customer satisfaction
• Lack of Employee Motivation: High turnover, increasing absenteeism, and low identification with the company
• Lack of Methodological Excellence: No established problem-solving methods, poor lean discipline, and inefficient production planning

Strategy for Intervention

To stabilize the plant, targeted measures were implemented following a three-phase turnaround strategy:

Stabilization Phase: Immediate measures for crisis management

• Focus on financial results: Identification and implementation of immediate cost reduction measures
• Immediate improvement of OTIF performance: Restructuring of planning and control to increase delivery reliability
• Comprehensive communication concept: Introduction of regular stakeholder updates to restore trust among customers, owners, and employees

Struktural Realignment:

• Reorganization of the management level: New management structures with clearly defined responsibilities
• Restructuring of production: Alignment of production with core processes
  
• Implementation of a modern meeting and reporting culture: Introduction of KPI-driven performance reviews and problem-solving sessions
• Establishment of a lean culture: Implementation of 5S programs and process optimizations to increase efficiency
• Improvement of employee retention: Introduction of an employee engagement program to strengthen the corporate culture

Sustainable Transformation:

• Strategic growth: Implementation of a program to unlock new business opportunities
• Talent development: Intensive training programs to enhance leadership skills and problem-solving methods
• Sustainable customer focus: Introduction of the program “Knowing today what our customers will need tomorrow”

Results & Impact

The consistent implementation of these measures led to a significant transformation of the plant within five years:

• Increase in company (site) value from €90 million (2014) to €390 million (2019) = 362%, CAGR: 36%
• Revenue growth from €84 million (2014) to €115 million (2018) with a stable headcount = 37%, CAGR: 8,17%
• Improvement of profitability (EBITDA) from €9 million (2014) to €26 million (2018) = 189%, CAGR: 30,4%
• Significant efficiency gains
• OTIF improvement from 89% to 97% = 9%, CAGR: 1,74%
• Reduction of quality defects and customer complaints
• Strengthening of employee retention:

• Employee Survey Engagement give me the  from 5.7 (2016) to 7.8 (2018) = 37%
• Employee survey participation rate increase from 52% (2016) to 95% (2018) = 83%
• Acquisition of new customer projects worth €30 million, annually

Through the combination of these factors, not only was the site’s survival ensured, but it was also able to establish itself as a high-performing and future-proof production unit within the group.