Current biotech manufacturing plants are capital intensive, with yearly depreciation costs sometimes as high as raw materials
costs. In such an environment where indirect costs dominate direct charges, a single metric becomes important: throughput
of sale-able product. In this article, we examine a return-on-investment case study for processing a high titer product in
a large-scale biopharmaceutical plant. In this case, modeling the altered unit operation in the context of the existing unit
operations was essential to establish accurate throughput metrics and overall valuation. We argue that such process-focused
economics models are essential in the biopharmaceutical industry.
The key goal of any manufacturing economics study is the accurate evaluation of the processing costs for a particular manufacturing
facility against the projected demand stream for the products it will produce. Typical economic analysis in the 1980s and
1990s was based around the value of custom-built plants for a single or a small number of products. Such economic evaluations
were relatively simple, because they were based on building a "greenfield" facility that matched the required process specifications
and projected demand with the minimum capital outlay. However, with a proliferation of capacity in biopharmaceutical production,
manufacturers have shifted focus away from building large-scale single-use facilities and more toward retrofitting existing
facilities to produce new or process-improved products. Economic evaluations are more difficult in this context for a number
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First, retrofit options typically involve value destruction as well as value creation. Although value destruction is typically
thought of as the damage caused by construction, in biotech the most significant modes of value destruction are the downtime
associated with plant shutdown and requalification.
Second, greenfield facilities are inherently right-sized, whereas retrofitted facilities are not. Retrofitting requires the
comparison of legacy equipment in the plant, such as, steam and clean in place (SIP/CIP) skids and existing media, and buffer
preparation tanks, with new technology. Such decisions inevitably involve design compromises, and these can have unintended
effects on throughput and equipment utilization.
Finally, cost-saving retrofits are not typically justified solely on direct cost reductions, but on metrics like flexibility
or capacity increase. As an example, the adoption of disposables in many existing plants is either based around process standardization,
decreased contamination risk, or increased flexibility (either in changeover or in utilities). Given existing tanks and CIP
or SIP handlers, there is little or no motivation in direct cost-savings to move to new technologies, and thus retrofits typically
use one or more indirect cost savings metrics in their justification. Such metrics also may be more qualitative than quantitative,
such as the flexibility of a plant to produce multiple products in the future.
Figure 1 shows the cost allocations in a typical large-scale mammalian cell culture production facility. Raw materials, direct
support costs, and direct production labor costs account for around 33–50% of the total yearly operating cost of such a facility.
Indirect labor, quality, corporate overheads, and depreciation account for more than 50% of the total costs. Such indirect
costs are semi-variable in the sense that they are not directly run-rate–dependent and are difficult to control in the short-term.
Indirect labor, for example, includes project work that may be an integral part of the plant even if its run-rate is zero.
Figure 1. Yearly operating cost breakdown for a typical mammalian cell—based biotech plant1
Such a fixed-cost infrastructure is uncommon in most other manufacturing sectors, where raw materials costs and direct-support
costs far outweigh indirect cost considerations. One of the few exceptions to this is in semiconductor manufacturing, where
significant infrastructure costs and the requirement for a controlled environment create higher indirect costs on a scale
similar to biopharmaceuticals.
In such an environment where indirect costs dominate the direct cost of manufacturing, only relatively small improvements
in performance can be achieved through direct cost reduction. For example, a 15% reduction in raw materials cost—roughly equivalent
to completely removing the most expensive recovery step in most biopharmaceutical process operations, Protein A—reduces overall
operating expenses by less than 2%. Such direct cost reductions are typically outweighed by the need to shut down the plant
to perform installation and testing of retrofit options: an expensive proposition because most costs are not run-rate dependent.
Far more important in most economic studies is the ability for biopharmaceutical manufacturers to maximize the number of kilograms
of material they can manufacture (and subsequently sell) in a year.