Product Circularity – A Roadmap to Implementation

Our first article identified the considerable implications and potential benefits of the Circular Economy model for pharma and medical device industries in greater business sustainability and improved efficiencies: the case for ‘Why Go Circular.’ In the second, we identified the substantial obstacles and challenges in the way: the case for ‘Why Not.’

Since the arguments for circularity are compelling, and the challenges are surmountable, we devote this final article in the series to our thoughts on the best ways for life science organisations to move forward and the specifics of implementation to form a Roadmap to Circularity.

Again, we are summarizing findings from our report Creating Circularity in the Pharmaceutical Industry, based on Erdmann Solutions’ in-the-field experiences with helping companies transition to circular device programs.

Addressing the Challenges

We saw how the challenges to achieving greater circularity fall into four main areas: Logistical, Regulatory, Economic/Technological, and Organizational/Cultural. Addressing these various problem areas will require a multi-faceted approach that involves some or all the following:

• Developing Trust and Collaboration Frameworks: Building trust through pilot projects, joint ventures, and industry consortia.
• Establishing Clear Standards and Guidelines: Advocating and adopting industry-wide standards and guidelines for circular practices, data sharing, and reprocessing.
• Investing in Design and Technology and Infrastructure: Enhancing IT systems for better interoperability and data security.
• Regulatory Harmonization: Working with regulators to harmonize regulations across regions.
• Promoting Transparency and Communication: Open communication and transparency about goals, processes, and outcomes.

These are the basic priority focus areas, with different combinations required to address each challenge area.

Logistic Responses

For new products and logistics, for example, the focus will need to be primarily on developing collaborative frameworks and networks, since this is essentially an outsourced area, with third parties holding key skills, capabilities and infrastructures required in collection, transport, delivery, reprocessing/ sterilize, recycling and disposal that are outside the remit of a life sciences company.

Further, the industry will need to develop standardized solutions to ensure effective collection and redelivery. Individual solutions are too complicated and will likely be rejected by different stakeholders as too time-consuming. Part of the answer may come with the entrance of new players, such as plastic producers, who specialize in this area.

Reimagined logistics will also demand greater regulatory harmonization to coordinate circular device take-back and recirculation across regions.

IT improvements are also part of the mix here, with upgraded inventory management, tracking and tracing all required to cope with products that have extended lifecycles and ‘second lives.’

Regulatory Responses

We saw how the basic regulatory problems are a mix of inconsistent rules that hamper multinational scale problems and guidelines, such as the EU’s MDR regulations that don’t take account of a more circular world. This has been a classic ‘Catch-22’ or ‘chicken and egg’ dilemma – adoption held back by regulations that don’t adapt because circularity isn’t being adopted in a widespread way. Overcoming this will require a combination of advocacy and leadership in championing the most appropriate guidelines, together with collaboration with regulators in developing more harmonized standards.

Most of all, it will require a proactive outlook because the regulatory outlook is changing quite fast.

Based on market experiences, Erdmann Solutions is firmly expecting changed rules and regulations from EU regulators in favor of device circularity. As the EU moves to promote the circular economy to address environmental concerns, reduce waste, and improve resource efficiency, several initiatives and regulatory frameworks are in the pipeline.

One is the Circular Economy Action Plan as part of the European Green Deal framework that focuses on the entire lifecycle of products, encouraging reuse, repair, and recycling, setting specific targets. Other likely measures include a Sustainable Products Initiative (SPI) that will revise the Ecodesign Directive to cover pharma products, a new Waste Framework Directive that will likely impose higher recycling rates and stricter controls on waste disposal, and expansion of Extended Producer Responsibility (EPR) schemes to make manufacturers responsible for the entire lifecycle of their products, including take-back, recycling, and disposal.

Perhaps the single most influential measure might be the adoption of Green Public Procurement (GPP) criteria encouraging public authorities to prioritize sustainable and circular products in their purchasing decisions, along with stricter pressures on suppliers to meet specific sustainability and circularity standards.

Changing the Organization and Culture

Perhaps the most complex challenges of all in the transition to circular thinking are the organizational and cultural ones involved in moving to a mindset in which ‘more’ gives way to ‘leaner’ and ‘smarter.’ This will probably be part of an attitudinal shift on the part of the whole industry.

It is the proudest boast of long-established pharma companies that they are ‘ethical’ organisations with a mission to do nothing but benefit their patients and consumers. That ethical mission now needs to be expanded holistically to consider the long-term interests of wider society and the environment. This paradigm shift parallels the one needed in economic thinking to expand the notion of profit to take in other forms of capital beyond finance.

Again, a multi-pronged approach will be needed. Probably the most important single element here is top-down leadership, with the need for clear commitment from company leaders to sustainability and the circular economy, setting a clear vision and direction for the organization. Riding shotgun on this, should be a formal Sustainability Governance structure that includes at least one dedicated officer.

This declared commitment also includes willingness to openly advocate for regulatory policies and changes that support sustainability and the circular economy.

This commitment and structure imply a strong degree of Strategic Planning: integrating circularity into the core business strategy and operations, with clear, measurable goals to define objectives, accompanied by Key Performance Indicators (KPIs) to measure progress.

The new strategy will be based on an overall program of optimizing resource use by reducing waste, improving energy efficiency, and conserving water, within which circular processes can focus on opportunities for recycling, remanufacturing, and refurbishing to extend product lifecycles. This goes hand-in-glove with R&D in product development that is now driven by Eco-Design principles. Service and support offerings are also relevant in developing new business models such as product-as-a-service, where customers lease or rent products instead of purchasing them, encouraging product returns and reuse.

New technologies will play key roles in enabling circular economy practices, such as advanced recycling technologies, digital platforms for product tracking, and energy-efficient systems. Data and Analytics, for instance, are needed to track resource usage, waste, and other sustainability metrics, with insights from metadata driving continuous improvement.

All of this will of course require investment and again this should be declared visible with a formal budget for sustainability projects. The investment case can consider sustainability improvements as long-term drivers of shareholder value. Monetary investment should include incentives and reward schemes to motivate employees and teams towards achieving sustainability goals.

This brings us into the area of Cultural Change, making sustainability and circular thinking work from the bottom up as well as top down. Employees need to be educated on the importance of sustainability and circular economy practices, including workshops, training sessions, and awareness programs. Fostering widespread engagement, the new culture should make all employees feel responsible for contributing to sustainability goals with IT and internal communications used to foster innovation, initiatives, and ideas from all levels of the organization.

Changing the culture also extends outwards to collaboration and communications, recognizing that success can only come from wider engagement and support from all stakeholders, including customers, suppliers, local communities, and governments. Within the pharma industry, collaboration with other organizations (including competitors) and pan-industry groups is required to share best practices, develop standards, and drive collective action towards a circular economy. Primary focus areas will be supplier practices and the logistics chain.

Building trust and individual engagement also requires transparency on the challenges involved and actual progress achieved, so regular and open reporting is required, both internally and using established frameworks such as the Global Reporting Initiative (GRI) or the Sustainability Accounting Standards Board (SASB).

It is a lot of work, but we believe the long-term gains are well worth the effort. By making these changes, organizations can not only contribute to environmental sustainability but also achieve long-term economic benefits, enhance their reputation, and meet the growing demand from consumers and investors for responsible business practices.

To read the other articles in this series, follow the links below:

• Part 1: Embracing the Circular Model in Life Sciences: What is the Circular Economy and what is its relevance to pharma?
• Part 2: The Challenges of Circularity: the main issues to be overcome in adopting this model

References

1. Novo Nordisk Global – Introducing ReMed™: Driving change to avoid plastic waste.
2. Johnson & Johnson Sustainability.
3. European Federation of Pharmaceutical Industries and Associations – EFPIA White Paper on Circular Economy.
4. Pharma Manufacturing Magazine – Pharma’s shift towards a circular economy.

Resources

Click on From Idea to Innovation for further information.
Click on Johnson & Johnson Environmental Sustainability to learn more