Article | July 10, 2017

Total Cost of Ownership Considerations for Biopharmaceutical Manufacturing Facilities

Source: G-CON Manufacturing
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By Peter Makowensky, Dennis Powers, Maik Jornitz

Total Cost of Ownership Considerations for Biopharmaceutical Manufacturing Facilities

It’s no secret biopharmaceutical manufacturing isn’t what it used to be. Today, whether you’re building a plant for a small molecule drug or a biologic, you need to be able to do so faster and in a more agile manner than ever before. High-volume, product-specific facilities are becoming a thing of the past, replaced by those that can expand or be relocated on-demand, handle multiple products, and shift from a centralized to decentralized model as the market dictates.

This paradigm shift has led to the evolution of the modular-built and prefabricated facility-manufacturing methods, especially in relation to clean rooms. Both of these methodologies offer significant benefits — the most important of which is total cost of ownership (TCO) — when compared to traditional “stick-built” facilities. But before we assess the cost implications and ROI of all three options, let’s first look take a closer look at what each method entails.

Stick-Built Facilities

The oldest and most common of the three types of manufacturing methods involves a facility designed by an architect and approved by a client before any manufacturing begins. The materials are brought on-site, cut to specifications, and assembled. Facility construction typically involves manufacture of the outer structure/main supports, interior fit outs, and finally clean rooms. Process equipment is then installed, and the site is ready for operation and commissioning.

Modular-Built Facilities

In modular construction, components are predesigned in a factory (i.e., “center of excellence”), which often leads to enhanced productivity and safety at the final construction site (as well as consistency in component quality). Potential mold issues, as seen with hygroscopic materials in stick-built facilities, are avoided, since the modular wall panels are an aluminum honeycomb. The on-site construction process is similar to the one employed for stick-built facilities: outer structure, interior fit outs, and then clean rooms. However, the timelines are somewhat shorter when dealing with prefabricated components.

Prefabricated Facilities

One of the newest and most unique approaches is to completely prefabricate everything at a center of excellence with the clean rooms being mobile and also completed off-site. Such autonomous clean rooms undergo an off-site factory acceptance test, which further enhances productivity, safety, and manufacturing consistency. Additionally, with these facilities, design, construction, and assembly are truly done in parallel with a project’s shell building so that timelines are significantly reduced.

Financial Comparison

DPS Engineering, a 42-year-old engineering firm with a team dedicated to the pharmaceutical/biotech industry, compared the costs of building a 2,000L Mab process at a stick-built, modular, and prefabricated facility. The table below summarizes the cost buildup of those three types of facilities.

Table 1: Summary Of Cost Buildup For Three Manufacturing Methods Of Clean Room Technologies

As expected, the stick-built facility had the least overall cost to build. The modular and prefabricated options were 7.3 percent and 15.8 percent more expensive respectively. However, the cost per square foot or initial investment is not what drives the overall value of a facility option — it’s the Total Cost of Ownership and the lifespan of such facility.

Graph 1: Illustration Of Time To Completion And On-Site Manpower Required

The above graphic reiterates the power of concurrently manufacturing the facility shell and clean rooms. This method minimizes project timelines and the amount of time personnel (e.g., environmental, safety, supervisors, insurance) spend at the facility site. Another study showed that the productivity of on-site work averages <80 percent, meaning man-hour capacities are not fully utilized. Laydown areas and other logistics items have not been assessed in this comparison, but should be included when planning these projects. Off-site prefabrication will void these productivity and logistics issues.

Time-to-run is a key value driver and requires the most attention when comparing different clean room or facility infrastructures. But using cost per square foot isn’t an apples to apples comparison; it skews the Total Cost of Ownership to an extremely limiting degree. To discover the real value creation, move away from the pure investment cost to the overall financials assessment of such a facility. To do so for this 2,000L mAb example, we are assuming the following:

  • Batch Size: 2,000L (two production reactors)
  • Titer: 2 g/L
  • Process Yield: 65%
  • Revenue/Gram Mab: $10,000
  • Overall Cycle Time/Production Reactor: 21 Days
  • Net Profit: 40%
  • Facility Size: 45,455 ft2

Table 2: Summary Of Financial Findings Based On DPS Engineering’s Evaluation

The above table reinforces the criticality so many companies stress when it comes to time to market. The impact on a company’s top and bottom lines vary dramatically depending on which site-manufacturing methodology they employ. Additionally, this table assumes that revenue is time independent, which is clearly not the case. First-to-market drugs have a major advantage over those that follow since they establish market share and potentially inhibit second-to-market drugs from gaining a foothold. Such an analysis is critical when evaluating site-manufacturing methodologies or other similarly important criteria as Total Cost of Ownership drives home value for your company and most importantly, the patients. 

Focus On Total Cost Of Ownership — Not Initial Investment

While initial investment will always be considered when deciding on facility design, this metric has taken a back seat to return on net assets, ROI, and net present value — and Total Cost of Ownership. Sure, depreciation allows a company to partially recoup its investments at a later time, but you will never be able to recover lost revenue or market share after being late to market.

Indeed, time to market is a primary driver of many projects — but it’s not the only one. As mentioned above, facility drivers are changing, consequently, there is more need for innovative ways to erect and design sites. Facilities need to be capable of being easily and cost-effectively relocated, repurposed, and expanded as well as decentralized to deal with various geographical factors. Prefabricated clean room units have been at the forefront of this evolution, touching upon all the critical drivers many biotech and pharma companies are now facing.