Panacea Purveyor
By Joe Boomgaard | MiBiz
jboomgaard@mibiz.com
ALLEGAN — Across the world, Perrigo Co. produces more than 44 billion solid dose tablets per year, and that ibuprofen tablet has to be exactly the same and go through a similar precise process whether it’s produced in Allegan, Mich., Ramos Arizpe, Mexico, Bnei Brak, Israel, or Shandong, China.
That’s the responsibility of John Hendrickson, EVP of global operations and supply chain at Perrigo, one of the largest manufacturers of over-the-counter pharmaceutical products for the store brand market.
The Grand Rapids native worked in engineering, logistics, operations and other areas over his more than 20 years at the company. In 1989, Perrigo was a $100 million company making 3 billion tablets per year. Now, it’s a $2 billion global player in the pharmaceutical industry that will make between 45 and 47 billion tablets at its nearly 20 worldwide locations.
In Allegan alone, Perrigo manufactures more than 1,000 different formulations of drugs.
“We have a very broad product line, so we don’t have any plant that just makes five things. Every plant makes 100 different items,” Hendrickson said.
When Hendrickson got hired into Perrigo in 1989 from Procter and Gamble, former Chairman Mike Jandernoa said the company didn’t have a job opening, but rather created a position specifically so it could land Hendrickson’s talent.
“John was one of a handful of people where we said, ‘we’ve gotta hire this guy,’” Jandernoa told MiBiz. “The plan worked out very well.”
Riding the regulatory wave
Now more than ever with increasing regulatory pressures on the pharmaceutical industry, Hendrickson said part of his responsibility is to ensure that all Perrigo sites are executing according to the corporation’s overview guidance structures, designed to standardize practices and procedures across the company.
“Keeping aligned, when you have 20 manufacturing sites across the world, is a big challenge,” he said.
To stay abreast of the regulatory environment, representatives from Perrigo sit on various industry association boards that work with the government regulators to help create rules that work. Very rarely does his group get surprised by some new regulation because in most cases, they help write the rules, he said.
For the past three years, Hendrickson has served as chairman of the Consumer Healthcare Products Association, a not-for-profit association representing the makers of over-the-counter medicines and nutritional supplements. His tenure marked the first time a store brand manufacturer held a leadership role at the organization.
“Our interest, in the end, is that we want things that are good for consumers, that are safe for consumers,” he said. “We’re certainly in the top five in the world in the over-the-counter products. Interestingly, because we make so many different products — if you think of all those companies, we make an equivalent to every product they have — that when it comes to FDA perspectives or legal or DEA, a lot of times they will come to us because we see it from a very broad perspective.”
Operations honed into quality
Perrigo and other drug makers are operating under the purview of a U.S. Food and Drug Administration that is getting more and more conservative, Hendrickson said. Whereas in the 1980s, the trend was in favor of getting consumers access to drugs, today the body has shifted to more of a focus on consumer protection. Their watch has heightened import restrictions in the wake of issues with foreign-sourced products in recent years.
“You see more and more constriction and control being put on to provide a safer environment for people,” Hendrickson said, noting the trends are somewhat cyclical.
“The pharmaceutical world is a very global world. Raw materials come from all over the world. You can’t buy…the raw material for aspirin…today in the States. There isn’t a manufacturer that makes the raw material. People make tablets like we do, but you have to buy the material outside the U.S. We’re a global pharmaceutical industry. The global part is good, being integrated globally is good, but how do we ensure the supply chain is safe and effective?”
The focus on safety leads to a discussion of product quality. Hendrickson said the company really views quality, compliance and efficiency as all part of the same driver within the organization.
Ten years ago, Perrigo handled all the quality control out of Allegan and other U.S. facilities, but now it has similar functions overseas to ensure all aspects of the supply chain are performing as needed.
“You really can’t test it once it comes in (to your facility), so you really have to be engaged out there. It’s been a big evolution of how do we put the people where they need to be,” Hendrickson said.
Testing and double-checking products is an inherent part of the pharmaceutical industry, but the industry is also “built on the principle that you can’t test for everything.” Every tablet tested is a tablet destroyed, Hendrickson noted. Thus, it’s up to the manufacturers to validate their supply chains and every step of the product handling process.
While the most time is spent on auditing and validating the supply chain, Perrigo also operates its own round-the-clock testing facilities employing a couple of hundred chemists per shift.
Hendrickson said over 10 percent of Perrigo’s workforce is in quality control and quality assurance.
Prescription for success
As a company, Perrigo is in a sweet spot. Customers increasingly opt for the products it makes given the value proposition of store brand products over name brand products, especially amid a national recession. In February, the company announced record quarterly revenue and earnings for the quarter that ended on Dec. 26.
While having the right products matters a great deal in driving Perrigo’s success, Hendrickson had high praise for the company’s people.
“The execution by the employee base has been phenomenal. Everything we’ve thrown at them, they’ve handled well…and it shows in the marketplace,” Hendrickson said. “A new product gets launched every week out of Perrigo. We change 100 items every week, and when I say items, I mean specific products. Think about the complexity of execution — always launching new product and always in (a state of) change — and to execute against that in higher growth and higher profitability is pretty good. New products are great, but the people have been phenomenal.”
The company usually doesn’t have any issue finding hourly employees in West Michigan, but attracting high-end scientists can be a challenge. Still, Hendrickson said the local colleges and universities are turning out qualified people, and over time, as Perrigo’s reputation grows, the company will have an easier time in talent attraction.
“West Michigan is a good place to be,” he said. “We’re kind of hidden here in Allegan, and we like that.”
