The world’s leading manufacturers—including producers of semiconductors and of goods for the automotive, aerospace, and electronics industries—constantly refine their processes for measuring and controlling product quality. In pharmaceuticals and medical products, however, quality control has historically taken a backseat to innovative science and compelling marketing, the standard drivers of the industry’s profitability. Recently, though, industry executives have had no choice but to sit up and take notice, as poor quality and related compliance issues have cost the industry more than $700 million in fines since 2001 and billions more in lost revenues. Addressing compliance matters eats up big chunks of management’s time and attention and, in some cases, has led to increases of more than 20 percent in the cost of goods sold.

While some pharma companies are improving their manufacturing quality substantially, many more have been slow to study and achieve world-class practices. They may not feel the imperative for change until a major compliance issue occurs. Rather than building quality into and across manufacturing processes themselves, many companies have used the risky and costly method of trying to ensure quality by removing defective products during inspections. This approach is not sustainable, especially as the Food and Drug...