McKinsey: How Pharma Manufacturers Can Decarbonise

Within the sectors of life sciences and healthcare, there's a pressing challenge that dwarfs others: its carbon footprint contributes to about 5% of the planet's total emissions, a significant figure that cannot be ignored.

The crux of the issue lies in the manufacturing of active pharmaceutical ingredients (APIs), the core components of medications, which largely depend on fossil fuel-derived chemicals, creating a heavy carbon burden.

A revealing survey by McKinsey highlights a gap.

While API manufacturers are setting emissions reduction targets, many lack the concrete plans needed to hit these marks. “This is a significant challenge that many companies in the industry face and we are committed to finding sustainable solutions,” states Maria Cheryl Fernandez, a Partner at McKinsey & Co.

Raising the bar for API decarbonisation

Downstream stakeholders in the pharmaceutical chain are demanding greener practices, pushing API producers towards emissions cuts not just in-house but throughout their supply chains.

With leading pharma giants targeting net-zero emissions as early as 2040, the message is clear: sustainability requires unity and innovation beyond traditional borders.

Kai Beckmann, CEO of Electronics and Executive Board Member at Merck, echoes this sentiment, stating, “The entire value chain is called upon to explore new, joint paths in order to achieve even more together.”

Major health agencies, including the NHS in the UK and the US Department of Health and Human Services, are also embracing net zero, highlighting the universal push for sustainability.

Unveiling the challenge of API decarbonisation

In a meticulous examination by McKinsey, the focus turned to API manufacturers in the UK, revealing a concerning picture: while half to 70% have decarbonisation in their sights, less than 20% boast the detailed plans necessary to enact significant change.

Manufacturers face hurdles like opaque solutions and unclear carbon footprints in their products. The reality of API production, generating substantial waste and end-of-life emissions, only compounds the challenge.

Yet, McKinsey remains optimistic, projecting that API manufacturers could slash up to 90% of their emissions by 2040 with the right steps.

Reaping the rewards of green pharmaceuticals

Cong Luo from McKinsey's New Jersey base sheds a positive light, “Our research reveals that 30-40% of decarbonisation initiatives can simultaneously reduce both carbon emissions and costs.” Such efforts could not only enhance ESG ratings but also provide a competitive edge, attracting vital investments.

The path towards sustainability can align the API manufacturing sector with rising regulatory and public demands, strengthen supply chain relationships and build resilience against future challenges.

McKinsey's roadmap to greener API production

To turn ambitions into reality, McKinsey lays out four foundational steps:

• Enhancing process efficiency – innovative heat integration like heat pumps can minimize carbon dependence by recycling waste heat.
• Adopting green chemistry – redesigning processes, recovering solvents and moving towards continuous manufacturing can cut waste and resource use significantly.
• Embracing renewable energy – a shift towards renewables could curb emissions by 5-10%.
• Sourcing sustainable materials – working closely with suppliers to secure eco-friendly feedstocks and solvents is key to massive emission reductions.

****** 

Make sure you check out the latest edition of Manufacturing Digital and also sign up to our global conference series - Procurement & Supply Chain 2024 & Sustainability LIVE 2024
******
Manufacturing Digital is a BizClik brand.