Pharmaceutical businesses are high-tech enterprises that develop and distribute drugs at the cutting edge of innovation. However, one area of their business remains remarkably old-fashioned – the compliance work that goes into drug manufacturing remains manual and paper-based, exposing pharma companies to regulatory risk and excessive cost.
New York-based Leucine, which is today unveiling a $7 million Series A funding round, sees this as an opportunity. “We set out to build an easy-to-use digital platform that had built-in compliance guidelines and process interlocks to enable compliance by design,” says Vivek Gera, CEO and co-founder of the company. His sales pitch to pharma companies is that the platform will eliminate their compliance failures and save them money.
It’s quite the promise. The Food & Drug Administration, which regulates US pharma businesses, issues hundreds of warnings and citations each year related to manufacturing problems in the pharmaceutical sector. In 2022 alone, it issued 466 “Form 483 handouts”. From poor compliance with safety procedures and chemical storage to equipment issues and even cleaning failures, pharma companies are struggling to stay on top of compliance
The explanation for that, insists Gera, is that in many cases, pharma companies depend on paper to record their compliance processes; manufacturing facility staff have to manually tick off processes at each stage of production and keep careful records of doing so. Given that a typical manufacturing facility might have 800 to 1,000 processes to track, failures are inevitable. “The scale of non-compliance issues has significant implications for the bottom line,” Gera adds.
Leucine’s solution is digital. Companies that implement its platform start by digitalising their compliance handbooks, scanning paper documents or PDFs. The platform leverages artificial intelligence (AI) tools to identify which processes and regulations it is dealing with so they can be organised more effectively.
Once that work is complete, the platform integrates with the pharma company’s other IT systems to check compliance processes are being followed in exactly the right way and order. Where there is an error or an omission, it issues a warning. The platform also tracks users’ work to identify areas where errors are more common, and then nudges them to take extra care at this stage of the process.
Gera says around two-thirds of FDA warnings are related to procedural areas during manufacturing – and that Leucine’s platform can eliminate these. He also points to the potential for productivity gains; with technicians spending less time working through documents to see what checks are needed and making notes to confirm the rules have been followed, manufacturing suffers far fewer delays. A typical facility can reduce costs by around $350,000 a year Leucine claims.
“Compliance issues really do threaten the value of the business,” adds Gera. “It’s not just the problem of reduced productivity but also the effect that a public warning from the FDA can have; in the worst cases, this can hit the share price.”
So far, Leucine has signed up around 35 pharma companies to its platform; collectively, these customers are using the system in around 300 facilities in 10 countries, twice as many as a year ago. “Now therefore feels like the perfect time to raise funds,” Gera adds. “We’ve shown that the platform can deliver value and accelerated our customer acquisition rates.”
Still, Leucine is not the only company active in this market. It competes with a number of large companies that offer manufacturing execution system expertise, including Rockwell and Siemens. In addition, newer players in the sector include Mastertrack, Kneat and Trackwise.
Leucine’s investors hope its use of AI will give the business an edge, ensuring speedier onboarding and more insightful analysis for users. Today’s funding round is led by strategic investor Ecolab, with participation from existing investors including Pravega Ventures, Axilor Ventures, Techstars.
Rohit Jain, co-founder and partner at Pravega Ventures, says: “This latest funding round will enable Leucine to bring the power of large language models and associated technologies to make significant advances in pharma manufacturing.”
Some of the cash raised will fund product development, with a particular emphasis on building out Leucine’s AI capabilities, Gera explains. But the money will also enable the company to build a sales and marketing function for the first time, with sales to date largely a result of word-of-mouth in the pharma sector.
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