Note: This transcript has been auto-generated and lightly edited for clarity. It may contain minor errors.

Sustainable Healthcare Podcast. My name is Joachim and welcome. We have a real treat for you today. I’m here in the studio with Arne Kloke, who is the head of Service and Sustainability Management at SCHOTT, and also the president of Alliance to Zero.

And Arne will tell you more about what those two organizations do. And today we are going to talk about practical examples of how Arne and his team has worked with pharma companies to use recycled material materials and also what the challenges are and how Alliance to Zero supported by others have made a suggestion for.

The EU Circular Economy acts for changing the regulation around working with recycled materials. Arne, welcome to the show. Thanks for having me. A pleasure to be with you, Arne. What got you hooked on sustainability?

That’s a good question. It came as a job to me. First I was in the strategy department and we were seeing the topic as a trend and had to analyze.

So I analyzed it and we came up with a concept. The management liked the concept, so I took the concept and started a new department in our organization on it.

How entrepreneurial. A few quick questions first. When you’re not working with sustainability in pharma and healthcare, what do you like to do?

Oh, my favorite hobby is skiing. Partially sustainable, maybe not in the doing, but in sensitization. You see how the world can be, how beauty nature is and it makes something with you. It creates a certain awareness of what you have to protect.

It’s funny you say that, that so many of our guests reference being in nature as one of the things.

And second question what gives you hope about sustainability?

It’s a really tough challenge and what gives me hope is that when I look in particular into the pharma industry, where I have the insights, I see that a lot of companies are getting together. The pharma companies are forming a kind of an alliance on setting the pace. And by this they’re emphasizing that the targets is something they have to deliver.

And also as an industry, we came to the conclusion that it is more important to act together here than to differentiate between the different pharma companies. And we see the same also, we now have a group on the group actions you mentioned. President of the Alliance to Zero. We have regular meetings with other organizations like PSCI, which is the Pharma Supply Chain Initiative, with the Sustainable Markets Initiative, with Bio Forum and others that are playing there so that we can avoid duplication of activities.

But in addition, we can also see how can we support the other organizations to create bigger impact. So what makes me hope is we are getting together,

that’s definitely one of my hopes too. And last quick fire question. If you could only give one message to our listeners in pharma and healthcare around how to act on sustainability.

What would that be?

Yeah. Not only think of your incoming materials, also think of what happens in the backyard and what you prepare in the backyard. And we’ll talk about that later, is a requirement in order to change your in-feed materials to something that is sustainable.

Excellent. That was really nice.

Arne. So,

the backyard doesn’t feel, the backyard doesn’t feel as a productive area, right? Currently it’s, it’s the site exit of the materials you don’t want. But if we want to close loops, this needs to become an area where you also feel that you’re part of value creation.

Yeah. Close loops that’s the dream.

And what a segue over to, if you could tell us a bit about you created a department around sustainability ’cause it was missing. I love that. And so what does that department do and do you. Any examples of how you have worked with pharma companies to do more sustainable solutions? ‘Cause you are supplier to the big pharmaceutical industries.

Yeah, so obviously we also did an IPO for SCHOTT Pharma three years back, two years back. So we had to prepare also for the stock market. That means we had to generate. A sustainability report. And then there is other questions that form like a compliance based work around sustainability, which are the must deliveries and the other things.

And we are doing that by more than 50% is working on projects. Those can be internal projects to sharpen the capabilities we have in-house. But the most important is to work together with customers and suppliers on projects that are changing the situation. And it’s so important to do that with external partners because.

We cannot solely decide on our in feed materials. Someone needs to build them for us, and then the product goes somewhere. So our suppliers need to be able to deliver what we want and our suppliers need to be ready and willing to receive what we want. So there is just a few.

And Arne just really quickly.

What is it that SCHOTT produces and delivers to the pharma companies?

Ah, I was not aware that there is anybody outside who has not been involved. But maybe you have not seen the logo. So we are manufacturing glass and high quality polymer syringes, vials, m peels, and cartridges. So the pharmaceutical companies are our customers to draw to store the liquid drugs.

The specialty is to have low interaction between the drug and the packaging. That’s why we exist, and if you wait for a minute, it’s about 20 to 25,000 injections that are using our products around the globe. That’s why I think if you want or not, probably most of our listeners have been in contact with our products before.

Excellent. Yeah. But that was really nice setting the scene and we also have nurses and doctors and listening and all across the value chain. So thank you. That was helpful. And that makes total sense then why you are. So concerned with sustainable materials and recycling and that enormous scale that you mentioned.

I think you said 20,005,000 injections every minute. That is a lot of also injectors and syringes and so on. So how have you worked with that, with your pharma clients to make that more sustainable? Yeah,

it started with two personal experiences in two weeks. First I was at a customer and at the customer.

We also walk through the waste area, and I was seeing such a large container, large as a truck, and in there is just the high quality polymer packaging material that we and our competitors are feeding to them. So totally different compared to consumer waste where you have a mix up, or if you think of the bins in the hospitals, you have a mix up of materials.

Here it was mostly pure. In terms of the materials. And a short time later it was planned to discuss about recycling with Coplex. Anyway, who is the supplier with us? And we talked about how can we transform the experience I had before. And we walked through their facilities and they were showing what they can already do in terms of recycling, but they claimed they do that for every industry, but not for pharma.

And so that was the point where and they really said, don’t worry. We will put nothing into your products. And then I said, I worry that we have to put that into our product in future. And that was kind of the start of the close calibration with Plex. And then we. Yeah. Like you do in innovation, you have an idea how you could bring that, and we tested it as a quality story to five of the big pharma organizations because so far really there was no acceptance or other than virgin material in those packagings.

’cause they then go to the septic filling. So that’s a very sensitive area. But we pitched the idea how we would control. The material composition that is in there and with that plan, then all five we’re saying, where’s the problem? So we said, okay, we are on the right path then let’s start a project.

Yeah. Wow. That’s super interesting and it’s a good example of sometimes we are just. Doing things in one way because we’ve already done it in that way, or because we have a misconception of what somebody wants or about some design criteria. I think it’s so interesting what you said that you came out to the client and or your collaborator there and they say, don’t worry, we will not use recycled materials.

Yeah. And then what happens? So you, well done, I mean, getting pharma companies to buy into innovation like that. I know that takes a lot of groundwork. We’ve done some of that ourselves sometimes. So how did you take it then from. An interest and an accepted idea to a pilot project or whatever the next step was.

Yeah, we

unfortunately had some criteria from the pilot execution to restrict what material we can work with and, and therefore with whom. We then went to the few candidates we, we, that were still in scope and we pitched. If you’re participating in that project, this is what you can get out of it.

Including what we know you will get out of it or what you will learn. Maybe some things won’t function, but we also made in a very clear way, this is what you have to bring into the project, and we signed that up on a contractual basis to ensure the commitment that is there. And this way, we then ended up to run a pilot together with Coplex and on the one hand side with Takeda on the other hand side with Pfizer.

And also within a short side, which is also having quite some of that kind of waste. And based on that, we were then refining how does a pickup process works or look like. To make it handy. We were running different. Lab scale tests to see how does the material behave during recycling. We then organized the first pickups and moved materials on tons scale, and then ran it in full production size.

We analyzed a lot and brought that all back into the story of how quality management works in the pharma industry. So an FMEA and a related report that luckily came to the conclusion investigating all the toxic side effects and so on around that the material is adding no additional harm to what is there, and that can therefore be used equivalent to the virgin materials.

By having that done together with our customers and suppliers, we obviously knew, okay, that can work. So we went then to the stage at the CPHI in Milan last year together with Takeda and Plex, and presented it there to send the message to other pharma companies. I see this is something we have done in that small ecosystem already.

We are ready for you to join.

That’s always really nice when the results come out the way you want it. And, is that then that test project is that now in continuous production with Takeda for subset of their production.

We needed some elements in order to scale and make it handy for routine operations.

So Takeda did further investment. Into machinery that compacts the material so that it’s easier to store and also for the workers to work with. And now, starting with next year, we will go into routine production. So we’ve executed the change management things and this is ongoing, so we’re now in a scaling phase.

And was it was it one material? What, what material was it again? And are you, or was it multiple types of material?

Yeah, we made it simple so that we were looking just for a transparent polypropylene material, and also we were looking for simplified manufacturing concept, so no paper labels allowed.

That was another limitation to the pilot, and that’s how we are starting now. But the limitations that we have set, they’re obviously not customer centric. So as part of the scale up work, we are now looking for how can we live with paper labels? How can we live with colored materials?

Super interesting.

And again, just to double click then, the recycled materials that you used for input, was that scraps taken from the factory? No. Or was it collected? Post use from

All post use, all collected from, from pharmaceutical companies. We did the tests with 98% of recycled content in order to have a worst case, and we were passing it with that.

The supply chain obviously is having several losses and so on, and so we will be starting. With 50% recycled content. And we’ll try to scale that up over the years.

That’s super interesting. And I think potentially a very big step forward also from the other, the ReMed solution that is also being done with autoinjectors where they are collecting.

But to my knowledge that material. But they collect moid, pens, pens and others. It’s not ending back up in pharma also in injectors but being used in lesser value items like furniture and other things. When you. When you collect, let’s just say, one unit of that particular polymer from a used pen if we say that one collected one is a hundred percent, how much of it do you, can you, reuse?

And how, what’s the percentage you can take back then? So the,

the difference between the remit program where you are taken back, insulin pens and what I described is big because we are in a B2B setting. So we’re working with a professional corporate waste manager in a pharmaceutical company and he has quite a pure stream.

Of the waste. If we talk about collection of pens back, that is coming back from consumers and is way harder to organize the takeback and then to collect. Are having all the different polymer materials at the inside to bring that together. That’s why the colleagues have started with open loop applications and the industry is also here getting together and seeing how can we get more out of those pen or autoinjector tech materials.

But that’s a longer mile to run. We’ll see how to close loops with that. With the tray material that we collect we only have very low losses. Whenever you start your, your shredding process, your extrusion process, some of the initial material, your forwarding to the bin in order to be pure and the same also at the end, you have some losses.

That, that are there, but you can recover more than the 90% of the material

that’s a lot. And so one of the challenges you have to overcome to scale this.

Now scaling means further products as we already touched, but of course also further pharmaceutical customers that feed into it. And when we look to that, they are very different in their maturity, how they look at waste to resource transformation.

And typically they’re having two or three KPIs. Which is the total volume of waste, which is the total volume that is diverted to recycling, which includes incineration in the most cases, and sometimes it’s also cost for the waste department. If we now look to our story. We say you feed the material into our system so that it gets back to your in feed, then typically they say, yeah, but it’s still recycling, right?

So it is still waste, it is still recycling In those two KPIs, nothing changes. And so that the definition of the waste hierarchy is just recycling, is not really supporting those discussions, and we see that there is a few companies that immediately do understand the difference. But for the others it’s very different to fight.

So we are sorting them in into kind of a diagram where we say what are the, the first followers that we can work with and who are more on the laggard side in terms of the innovation timescale. So that perception, the KPI system is something that makes it difficult for us.

Very common issue we found as well in in economy and materials as well that.

That are just, whether that is just in, in internal governance decided by the pharma companies or the external regulation around hygiene or other things where sometimes there are good reasons why something can’t be done. But a lot of times it’s, it’s back to what we talked about before as well, that it’s just because, well, we’ve always done it like this or some decision was made.

Yeah and obviously the KPI, which is on the cost is something that for us is also very difficult. We are offering a service that includes a bit longer logistics, which includes processing at smaller, specific volumes. That brings us to higher cost compared to. Standard recycling where a local company just makes a local distance transport and then the polymer is processed there.

The obvious other distance is the value for us is higher because it has been that polymer material that was once a food grade or medical grade certified raw material. So if we keep it in the separated loop, we can reapply it according to the risk assessments and so on what we have been doing. So if we bring it back into the chain, it has the same value as that food or medical grade polymer granulate, and therefore a bit more than the standard commodity material.

But there is not a lot of financial buffer to close the loop. We only have the money that is related to the virgin material and all the loss we have in between is also lost money. So we cannot say, you get a hundred Euros today per ton. We just give you double or triple of it because it’s worth for us.

No, we also have the problem. We have more complicated leg, reverse logistics, so we really need to convince. The companies on the difference. And there we see that the people working in the waste department are typically not linked to the people working on the Infe procurement. And often there is further companies in between.

So if you. If you take the example of you have a pharma company, then you have, with their backyard. Then first the material goes to someone making a tray for SCHOTT Pharma. Then it goes to SCHOTT Pharma, and then SCHOTT Pharma delivers to the procurement people of the pharma company. But what happens now is the procurement person of the pharma company goes to SCHOTT Pharma saying, Hey, you need to help us to get more sustainable.

The way how you are feeding in your products is not sustainable. And so that’s kind of the backward loop and closed loop, and in particular if you bring the people together in the system is you interconnect. The entrance and the exit of the pharma company so that the one who is at the exit is helping to prepare the sustainable feedstock for the one at the entrance.

Yeah, no, that’s, that’s spot on. We, we had the exact same experience and then invasion project we did with, of the device division in a pharma client of ours. Where they, together with an external vendor, it was found out that they could make, bioplastic from the, some waste component in their API production.

That’s all good and well, but it was, like you say, it was the device, company. Had nothing to do really with the A API production guys who had that wave stream, which again, had nothing to do with the procurement, and sourcing department that were sourcing plastic. And none of them really had in incentive to, to solve that.

And then, as you say, the. I mean, there were a lot of eagerness just ’cause the people involved were in investing a lot personally, but, but structurally, there were just no incentives. Which brings us to the second important point you had about the business case. You can. Invest something for sustainability reasons at pilot level.

But, but once you reach scale, you, there has to be a bit good business case also. And unfortunately CO2 is still priced at zero in so many places. So you, you don’t get any help from the price externality. So you actually have to compete with a handicap in that sense. So I think my question is.

Do you see a path to being, I mean, not necessarily a better business case, but just reaching the same level of cost at scale? If you had enough volume, do you think you could get there where it would make sense financially?

Yeah, and in our case it’s actually working. It is just plus minus zero at the end.

If you compare the virgin material price to the cost that we have to close the loop, but depending on the distance, and so if we scale that, maybe even a few Euros is there to. Put money into further scaling. And the reason for it is what I said before, we are not procuring standard polypropylene.

It is food grade and so it is a bit more expensive. Okay. And the other reason is we can run the reverse logistics quite efficient because we’re not in a B2C environment where you have many, many spots with just a tiny bit of that waste. No, we have hotspots on the European map that we all know because they’re the customers of SCHOTT Pharma and so we can.

Have a very focused collection of those bigger hubs.

That’s amazing. I really look forward to hopefully watching you, you scale this and one of the. Initiatives that you are working on, also as president of Alliance to Zero is to try and structurally help recycling solutions, like this by coming with a suggestions to the EU Circular Economy Act, closing out on the podcast could you, share that and then also if people are interested, where they can find more about that initiative?

Yeah. Yeah. So it’s about the butterfly that doesn’t fly for high quality materials. We, we talked about the KPI discussion with pharmaceutical companies that in waste management, they often struggle to see the difference between the systems and therefore we said at the end, it needs a different classification that makes it obvious what is.

Standard recycling and what is that? Kind of recycling, where the private sector goes the extra mile in order to close loops. And why did we do that in SCHOTT Pharma? Because we cannot buy secondary material on the market that has the full traceability in terms of the control against potential contaminations.

We can only achieve that with a closed loop where we have the full process control over it. So we put in a lot of extra effort. We close it totally in the private sector. It is no dual system with extra money required, where you have a public private partnership, like in the extended producer responsibility schemes.

And so please help us with a differentiation. That is the core idea behind our initiative to say there is standard recycling, which is a good thing. And makes sense for most of the cases. But there is other cases where you cannot extract the material from the large collection concepts in standard recycling, maybe industrial or, or community recycling.

What we have is one example. We cannot source it from there. So that means the butterfly from the Ellen MacArthur Foundation, which is on the one hand side standing for the organic metabolisms, but on the other, on the industrial metabolism, it does buy its reuse, recycled repair, and so on, not. Deliver those in feed materials.

If you think of our colleagues in at SCHOTT making cooking plates, the cooking plates go into mixed industrial waste, and then on they only make a very tiny fraction. How will you get those specific materials out there? Never. So also for those materials, the standard recycling does not help. It only works if you have additional efforts, specific means by the private sector to get those materials back.

And there is further examples out there, which we are now trying to also. Collect to create kind of a playbook on those applications to help then also the European Commission to have a better feeling from an abstract concept that we have submitted now to something that is more solidified by examples that are out there from automotive industry to materials industries and so on.

I think it’s, it’s super exciting and, and like you said in the beginning, that’s really one of the things that gives me hope as well, that many people have to. Impression that no collaboration is going on in pharma because of IP concerns and so on. But I, I really see the opposite.

In sustainability. See that there’s a big appetite to create these pre-competitive environment, core cross industry collaborations. And your work with Alliance to Zero is a great example of that, but also that. You’re coordinating with the other forums for collaboration. And I think this, yeah, who knows what goes on in the eu, but to me it’s super powerful, that when an industry gets together privately like you have done here and says, we will, we actually.

We, we, you’re not sold it completely. It’s not at scale, but you have a very good solution and you actually did that on your own account and you did that, like I said, without having the priced externalities of, of CO2 and water. So fingers crossed. We’ll, we’ll see what happens in Brussels.

Yeah, I hope we will be, we will be heard. We submitted our concept, I think two weeks back, beginning of November. And, we’re looking forward to maybe get a hearing and, and see, How the concept can be considered so far from, from companies we talked to. We had very positive feedback. Fortunately, we did it all very much on short notice when we realized it.

But we will continue and, and collect some, some examples and even if it’s not coming up with that legislative legislative initiative, then we’ll follow up on it.

Yeah, well done. For coming on, Arne I learned a lot like I always do. And do you have, any, parting remarks for remarks for our listeners?

Last

advice. Yes. Sure. So on the one hand side you said, where can I get more information on that? The website of the Alliance to Zero, is something that we’re currently updating, but on our concept for circular material use as a additional category in the waste hierarchy. There you find all the information on Alliance to zero.com.

So that’s the one thing. And then we are looking for use cases. So if you have the feeling you cannot solve your material in feed or secondary material that you can easily buy on the market and you need such a private system that closes the loop for you I would be keen. To hear of your use case and exchange on.

Also, we would be very happy to get into contact with academic partners to investigate how much sense is that circular material use doing as a category, and what can the future role be in solving all the circular economy activities across the different industries within Europe and for Europe? So any ideas, thoughts, contexts that you’re having on that, please shoot to Joachim or to me.

We would be more than happy to follow up on.

Yeah, definitely. You are on LinkedIn. And, if it’s easier for people to find me, I’ll be happy to pass them on to you. I should also mention you have a, a nice case study on the, recycled materials case with you did with Takeda and Pfizer on a SCHOTT Pharma’s website.

If you, if you Google SCHOTT Pharma sustainability, it comes up as one of the first ones. Yeah. Thank you so much for coming on, Arne, and best of luck in all your endeavors. I hope people reach out to you to share notes and, build some more use cases.

Let’s do So

it

only happens if we do it.

Yeah, exactly. That’s the, it has to start, it has to start somewhere. That, yeah, just great job building the the department as well on, that’s just always makes me happy to see when somebody sees that there’s a gap in their organization and they. To, to fill out that, gap. Well done. Thank you.