Digitization, automation,

and online testing:

Embracing smart
quality control
The smart quality approach allows pharma companies to digitize,
automate and integrate their quality controls, making them faster,
more effective, and more efficient.
by Norman Carra, Evgeniya Makarova, Jeff Morell, Matthias Ringel, and Vanya Telpis

© diyun Zhu/Getty Images

April 2021
 In the next five to ten years, new technologies However, few pharmaceutical companies have seen
that characterize Industry 4.0—from connectivity such significant benefits yet. This is usually due
to advanced analytics, robotics, and automation— to the sometimes-significant upfront investments
have the potential to revolutionize every element required, and the fact that some labs are simply
of pharmaceutical quality control labs. The smart not large enough to justify such investments. Many
quality approach allows pharma companies to lack the granular performance and costing data
deploy these technologies and to integrate their necessary to build adequately sized digitization and
quality controls in development and manufacturing.1 automation business cases, and their efforts do
(see sidebar, “Smart quality at a glance”). Well- not meet expectations for creating business value.
performing manufacturing facilities have started to Organizational silos and misaligned objectives
create paperless labs, optimize testing, automate between analytical method development and
processes, and shift testing to the shop floor. quality control labs often slow down innovation
These moves have enabled well-performing labs to in both the mid- and long-term. In addition, since
substantially improve speed. These technologies pharma product portfolios—and therefore pharma
typically boost productivity by between 50 to companies’ technological needs—evolve over time,
100 percent.2 Average-performing labs could it is sometimes hard to ascertain the right, clear,
achieve an even larger productivity improvement long-term lab-evolution strategy and blueprint
of 150 to 200 percent of their current rates. needed for a clear long-term business case.

Beyond these effects on efficiency, digitization and Before implementing and capturing benefits from
automation specifically can also ensure better quality new technologies, companies must first set clear
and compliance by reducing manual errors and goals, define robust business cases for any level
variability. They enable faster and more effective of investment, and create rapid pilots of emerging
problem resolution and a risk-based approach to technological solutions. Then, they must quickly
optimizing testing volume, tools, and methods. In some scale-up the pilots that deliver promising results.
cases digitization and automation have resulted in a To succeed, pharma companies need both the
more than 65 percent reduction in overall deviations foresight to make long-term strategic investments,
and over 90 percent faster closure times. They can also including those in R&D for developing and filing new
prevent major compliance issues, which can in them- test methods, and the agility to adapt those plans as
selves be worth millions in cost savings. Furthermore, technologies rapidly evolve.
improved agility and shorter testing time can reduce
lead times for quality control labs by 60 to 70 percent
and eventually lead to real-time product releases.

1
A previous version of this article was originally published on January 4, 2019 as, “Digitization, automation, and online testing: The future of
pharma quality control,” on McKinsey.com. The current updated version introduces more holistically the smart quality approach and outlines key
success factors for its implementation.
2
Estimates in this article are based on McKinsey models leveraging proprietary POBOS pharmaceutical manufacturing and quality benchmarks,
industry use cases, and diagnostic observations in quality control labs.

These technologies typically

boost productivity by between
50 to 100 percent.

2 Digitization, automation, and online testing: Embracing smart quality control

Smart quality at a glance

“Smart quality” is a framework — to deploy user-friendly processes The new ways in which smart quality
that pharma and medtech companies built organically into business achieves its objectives can be categorized
can apply to redesign key quality control workflows, reimagined with leading- in five building blocks (exhibit).
processes and create value for the edge technologies
organization. To learn more about smart quality and how
leading companies are reimagining the quality
— to leapfrog existing quality function, please see “Smart quality: Reimagining
Smart quality has explicit objectives: management systems with the way quality works,” on McKinsey.com.
breakthrough innovation, naturally
— to perceive and deliver on fulfilling the spirit—not just the letter—
multifaceted and ever-changing of the regulations
customer needs

Exhibit
The ‘smart
There quality’
are five approach
ways in consists
which smart of can
quality fivebe
building blocks.
categorized.

Direct sources of value

Enablers
Quality controls optimized end-to-end, automated,
digitized, and integrated into product development “Smart quality”
and supply-chain workflows controls

Quality systems and processes Advanced analytics and

reimagined with design risk-based decision making to
“Smart quality” Process and
thinking approach, enhanced with predict and prevent quality
assurance product mastery
advanced analytics, AI and automation issues along end-to-end
value chain

Pan-enterprise collaboration and “Smart” Joint innovation with regulators focused

“Smart quality”
quality capabilities naturally built into compliance on process and system maturity, and
ways of working
daily work foundation new-technology enablement

Three horizons of lab evolution evolution. However, these horizons are not mutually
Multiple digital and automation technologies have exclusive and may not follow a linear path. In fact,
created opportunities for change in pharmaceutical pharma companies can create a compounding
laboratories, and this transformation typically effect when they implement an element from
evolves over three horizons (Exhibit 1). Most pharma another horizon at a different stage: for example,
labs have not yet achieved full technological testing automation can be implemented in paper-
transformation, but labs can start by aiming for based labs.
one of the three future horizons of technological

Digitization, automation, and online testing: Embracing smart quality control 3

 Exhibit 1

As pharmaceutical
As pharmaceutical labs
labs incorporate
incorporate new
new technologies,
technologies,they
theywill
will evolve
evolve to
to
become more digitized, automated and distributed in nature.
become more digitized, automated and distributed in nature.
Pharmaceutical lab evolution

Digitally Automated Distributed

enabled labs labs quality control

Location of ● 90+% of testing in labs ● 60-80% of testing in labs ● 0-20% of testing in labs
quality control ● Some limited testing ● 20-40% of testing on (eg specialty)
test execution done online shop-floor ● 80-100% online real time

testing,review by exception

Use of data ● Automated data ● Full automation of ● Automated transcription of

and advanced transcription between testing and non-testing testing and product quality
technologies equipment and systems lab processes relevant process data
● Advanced data analytics ● Artificial-intelligence-enabled

for real-time data insights equipment and robots

and optimized schedules ● Parametric release

● 80% Paperless lab ● 100% paperless

New capabilities ● Data engineers and ● Lab super-technicians with ● Engineers to maintain
data scientists knowledge of advanced and enhance of automated
● Advanced IT systems to
technologies systems
support data capturing ● Advanced automation/ ● Lab skills on shop floor

and analytics robotics engineers

Availability today ● 100% available ● 70-80% available (not ● 50-60% available (may
all investments may differ by type – eg more
be cost-effective yet) options for biologic sites)

Source: McKinsey analysis

At the same time, some elements of one horizon improve the quality of inputs upstream, minimizing
may be a prerequisite for elements of another. For the need for often redundant raw-material testing,
example, without having digitally enabled labs in and accelerating the release of incoming materials.
place, a company would not be able to fully capture Digitally enabled labs use advanced real-time
the benefits of automated labs. data analytics for ongoing process verification
to track trends and prevent deviations or out-of-
Horizon 1: Digitally enabled labs specifications, and for optimizing scheduling and
This horizon is comprised of the transition from capacity management. These labs employ digital
manual data transcription and second-person tools such as smart glasses to explain standard
verification to automatic data transcription between operating procedures with step-by-step visual
equipment and the laboratory information- guidance on how execute a process. A digital twin
management system (LIMS). Integrating quality can help predict impact before making physical
control systems and sharing data with internal and changes to a lab. All these technologies have
external suppliers by automating data transcription already been available for at least a few years, and
creates better visibility and helps reduce risk. This the time to impact for each case can be as short as
integration also allow for targeted investments that three months.

4 Digitization, automation, and online testing: Embracing smart quality control

 By becoming digitally enabled, an average the lab, while also capturing a similar amount of
chemical quality control lab could reduce costs savings outside the lab. Likewise, in chemical
by 25 to 45 percent, and an average microbiology labs automation can produce 10 to 20 percent
quality control lab 15 to 35 percent. Productivity incremental savings inside the lab.
improvements come from two main sources:
The productivity improvements come from
1. the elimination of up to 80 percent of manual automating up to 80 percent of sample-taking
documentation work and the requirement that and sample-delivery tasks and up to 50 percent
two people must review everything (the four- of sample-preparation tasks. Improvements also
eye principle); come from reducing equipment-maintenance costs
through remote monitoring and failure prevention.
2. the automation, and especially optimization, of Outside the lab, automation reduces the number of
planning and scheduling to improve personnel, sampling and related logistics tasks performed by
equipment, and materials utilization. operations, which saves the equivalent of up to
25 percent of lab costs for microbiology labs and up
After the lighthouse plant of one large global to 8 percent for chemical labs.
pharma company transitioned to a digitally enabled
lab, for example, their lab productivity jumped by There are additional benefits: remote-monitoring
more than 30 percent.3 This increase was largely and predictive-maintenance capabilities built
due to dynamic schedule optimization achieved into the equipment will decrease downtime and
with a modular and scalable digital-twin platform. ultimately enable companies to reduce their use of
The site also used advanced analytics to reduce expensive devices, such as chromatographs, near-
deviations by 80 percent, eliminating reoccurring infrared spectrometers, and isolators. By shifting to
deviations altogether and accelerating deviation instantaneous microbial detection for environmental
closure by 90 percent. monitoring, companies may also reduce their overall
lab lead time by 40 to 75 percent.
Horizon 2: Automated labs
In this horizon, pharma companies use robots, Technologies already exist—in healthcare and
such as collaborative robots or other advanced research labs and in manufacturing operations—
automation technologies, to perform all repeatable that can be adapted to pharma quality control labs
tasks such as sample delivery and preparation and in a relatively straightforward way to reach the
other lab-specific automation techniques. At the automated-lab horizon. Vendors offer solutions
automated-lab stage, some high-volume testing such as sample-distribution systems, online
(for example, instantaneous microbial detection in and instantaneous microbial-testing systems,
water for injection and air) can be performed online automated sample-preparation stations, workflow
instead of physically in labs. Automated labs can optimization with visual guidance, and remote
also use predictive-maintenance technologies to equipment monitoring and assisted maintenance.
plan for infrequent tasks such as large-equipment Next-generation analytical testing technology
maintenance, which can be performed by lab such as Ultra Performance Liquid Chromatography
analysts with remote expert support. (UPLC) and Raman spectroscopy, often offer a more
industrialized design with additional automation
Automated labs can build upon a horizon 1 level features or design for more and faster throughput.
of digitization to deliver greater value and higher
cost savings. Automated microbiology labs can Since 2018, additional technologies have emerged,
reduce costs beyond that achieved by digital such as remote equipment monitoring to reduce
enablement—10 to 25 percent savings inside downtime and failures, advanced sterility testing

3
According to the World Economic Forum, lighthouses are “the world’s most advanced factories, which are leading the way in the adoption of
Fourth Industrial Revolution technologies.”

Digitization, automation, and online testing: Embracing smart quality control 5

 techniques, and advanced analytics for faster release. Because of the significant R&D-investment
and more effective lab investigations. Moreover, requirements, as well as the need for equipment and
parallel to the evolution in the general robotics operational changes, existing sites with stable or
and collaborative robot space, lab-automation declining volumes are unlikely to make a compelling
technology has become more cost effective. business case for distributed quality control in the
short and even medium term. However, sites that
Horizon 3: Distributed quality control have been rapidly growing or under construction
The third horizon represents a true disruption to may be able to capture significant value from
traditional quality control, where nearly all routine reducing capital-expenditure investment for
product testing takes place on the production building or expanding traditional quality control
line, enabling real-time release testing (RTRT). To labs if they can move a significant share of routine
date, pharmaceutical manufacturing facilities have testing online. Distributed quality control and
been slow to adopt process analytical technology real-time release, as well as supplier-produced
and RTRT—both essential to Horizon 3—due to certificates of analysis as a form of distributed
complex regulatory requirements. To be able to quality control, would also enable true continuous-
make a smooth shift to online testing in the future, manufacturing processes.
operations need to start collaborating with R&D
in earlier development stages to define an optimal As pharma companies start exploring ways to build
quality control and filing strategy, especially for new distributed quality control facilities, they may be
products and manufacturing sites. At distributed able to pull in relevant technologies from adjacent
quality control facilities, equipment and robots have spaces. For example, platforms that can provide
artificial-intelligence capabilities, and labs continue the advanced process control necessary to enable
to perform specialty and stability testing. This testing parametric release are now available. Meanwhile,
can take place on- or off-site, such as in a centralized artificial-intelligence systems could allow pharma
and highly automated location. companies to automate tasks that historically have
been performed by highly trained expert employees.
Distributed quality control facilities add value by
significantly reducing the physical footprint and The COVID-19 pandemic has levied new constraints
costs of a traditional lab and accelerating product on quality control operations—such as social-

This testing can take place on- or

off-site, such as in a centralized and
highly automated location.

6 Digitization, automation, and online testing: Embracing smart quality control

distancing requirements in often-crowded Key success factors in implementing a
laboratories, restrictions on having analysts present smart quality control approach
on-site, and requirements to document all close, While pharma companies continue deploying
interpersonal contact for contact-tracing purposes. traditional operational-excellence levers, they have
A “smart” approach to quality controls offers an opportunity to do so in tandem with their journey
practical solutions to manage testing with fewer toward smart quality. As they progress in their
analysts present in the labs, as more work can be digital quality control transformations, most pharma
completed remotely (Exhibit 2). companies face five challenges: clearly articulating

Exhibit 2

Digitization and
Digitization automation will
and automation will transform
transform quality control work
quality control work in
in the
the lab
lab and
and on
shop
on floor
shop by introducing
floor newnew
by introducing ways of working.
ways of working.
Digitally enabled labs Automated labs Distributed quality control

Quality control lab Future pharma manufacturing line

Voice/AI controlled lab assistant LES eQMS

Smart glasses Advanced analytics enabled Cloud Automated Instantaneous microbial Real-time
with SOPs lab planning and scheduling data lake compendial detection for water and air capture of
EMS gLIMS
and work testing process and
instructions Digitally enabled lab inventory Automated Parametric real- product
Digital Lab
management, digital Kanban settle-plate time release parameters
performance
management handling

Connected
high-accuracy
digital sensors

Electronic lab
note-books

Gravimetric Advanced Real Automatic Robotic Process Automated AI/machine

laboratory analytics time sample Automation for learning enabled
information problem trending preparation certificates of process and product
management solving and processing analysis creation parameter control
systems
Paperless lab (GLIMS) Automated
direct data interface inventory
transcription management
control

Source: McKinsey analysis

Digitization, automation, and online testing: Embracing smart quality control 7

 a vision, defining a business case, scaling up with for chemical labs versus microbiology labs, and
an agile approach, formulating a technology plan, therefore different sets of levers may need to be
and ensuring they have the change-management deployed. Also, organizations often define their use-
capabilities they’ll need to transform. case scope too narrowly. For example, scheduling
automation can deliver 2 to 3 percent of the quality
Developing a cross-functional vision control cost savings, but automation plus dynamic
Quality control leaders often struggle to envision scheduling optimization can yield a more than
a comprehensive future state, such as what we 20 percent efficiency improvement.
describe in our horizon model, that combines a
number of technologies and use cases to create the While most labs can make a solid business case for
most impact. There are a few possible explanations working toward the digitally enabled horizon 1, not
for this phenomenon. First, in many organizations, all labs have sufficient volumes and operational
analytical method development and operational setups to justify reaching horizons 2 (automation)
quality control are separated so they often have and 3 (distributed quality control). For example, it
different objectives, and even report into different could be hard to justify an investment in automating
functions. Second, quality control innovation projects a smaller lab where the potential cost savings might
are chronically deprioritized in favor of individual be less than $200,000 a year, whereas the same
innovation projects in other areas, such as in investment at a large sterile-manufacturing facility
production, or in favor of lab-digitization programs with significant environmental-monitoring volumes
triggered by regulatory requirements that usually would quickly generate positive ROI.
focus on compliance and data integrity. Third, most
innovation focuses on the narrow parts within quality In our experience, a good early place to start is
control (such as reducing incoming inspection and establishing both a clear, holistic performance
automating in-line testing) and therefore misses baseline and a clear target state with the tailored
an opportunity to create end-to-end impact by use cases for each lab, and then launching use
redesigning the entire quality control approach. cases in waves. By deploying use cases in waves,
companies can track how much value is captured
To break existing silos and define a shared, cross- along the way, and reinvest the savings toward the
functional vision for delivering quality controls in a next set of use cases. This approach helps capture
new way and that span the entire value chain, quality value faster and with lower initial investment.
control leaders can start by sharing perspectives
on possibilities offered by new technologies with Using an agile approach to design and scale
their peers outside as well as within the quality up pilots
control organization. Setting aspirational business- One common misstep is targeting a fully tested,
performance targets helps send the signal to the potentially overly complex end-to-end future state
organization that change is imminent. Visiting other that takes a long time to design and even longer
lighthouse quality control labs can showcase the to test and implement. An alternative approach
potential benefits of amalgamating these innovative that has been proven successful is based on the
technologies and create further excitement within lighthouses established by the World Economic
the organization. Forum to advance progress in scaling Fourth
Industrial Revolution technologies: rapidly testing
Defining a compelling business case for possible solutions, identifying high-value ones,
the transformation then rapidly scaling them up to capture benefits
To build a compelling business case, companies faster. When companies take this approach, they
must define the right set of use cases for each can, for example, implement schedule automation and
lab—and the cases work best when they are optimization quickly and start generating significant
integrated. Note that the baseline cost and the value even if a lab is not fully paperless nor fully digitized.
impact of improvements may differ significantly

8 Digitization, automation, and online testing: Embracing smart quality control

Companies who are most successful in their up-skilling and re-skilling programs, and forging
smart quality control journey focus on identifying strong links between business and IT functions.
the innovative tools that can have the greatest
immediate impact, and then rolling them out quickly For example, a typical pharma lab does not have
across multiple sites. the advanced analytical capabilities needed to
get the maximum value from its data sources. As a
Creating well-considered plans and structures result, the labs collect a lot of useful data, but fail to
for rolling out new systems and technologies generate the insights that could prevent problems,
While some use cases can be built using existing IT improve test methods, or optimize testing volumes.
systems, many require additional investment into IT It is critical to define the right operating model for
infrastructure. In extreme cases, it can take pharma impact. For example, when labs build internal skills
companies several years and more than $100 for defining advanced analytics use cases, they
million to implement a LIMS. Given this lengthy time can work with specialized advanced-analytics
frame and the fast pace of technological change, specialists, often outside of labs, who can execute
some of the LIMS capabilities are liable to become the complex analyses and help gain deep insight
obsolete before they’re even rolled out across an into specific cases. Clearly understanding future
entire network. A poor rollout can cost five to ten capability needs, investing in training high-potential
times more and take three to five times longer than a employees, and -hiring employees with the new
properly planned and executed investment. required skill sets (for instance, advanced data
To avoid these issues, pharma companies analytics) during early stages will enable faster
need skilled resources, in the form of a project scale-up. And where labs are unable to develop
management office (PMO) and formal change- the right skills in house, they will need to effectively
management programs for helping workers acquire recruit talent from outside their organizations.
new skills. A PMO will help accelerate technology
rollout by eliminating the temptation to excessively
customize technology at each site.
The latest technologies and digital solutions can
Investing in robust change-management make quality control faster, more agile, more
capabilities reliable, more compliant, and more efficient. By
Digital transformation requires radical changes setting appropriate goals, choosing the right
in mindset. This has major implications for the technologies, and developing the right capabilities,
organization and for individual employees who must pharma companies can transform the way they do
develop new skills and competencies. To succeed, quality control to deliver safer and more efficacious
companies must invest up-front effort in creating products in a cost-efficient way.
buy-in across the organization, defining and launching

Norman Carra is an associate partner in the Montreal office, Evgeniya Makarova is a partner in the Chicago office, Jeff Morell is
a consultant in the Atlanta office, Matthias Ringel is a senior expert in the Paris office, and Vanya Telpis is a senior expert in the
New Jersey office.

Copyright © 2021 McKinsey & Company. All rights reserved.

Digitization, automation, and online testing: Embracing smart quality control 9