By the Numbers: What it Costs to Operate a Biopharmaceutical Facility - Trend to smaller, less costly cities takes hold - BioPharm International

ADVERTISEMENT

By the Numbers: What it Costs to Operate a Biopharmaceutical Facility
Trend to smaller, less costly cities takes hold


BioPharm International



Table 1. Total Annual Operating Costs (in Millions)
Operating cost differentials between a high-cost city and a more cost-efficient biopharma site can be substantial, running into millions of dollars per year. Annual operating costs in the US range from a high of $11.2 million in San Jose, CA to a low of $8.4 million in Sioux Falls, SD. In Canada, annual operating costs ranged from $9.2 million in Vancouver to $8.5 million in Montreal. Among the European cities, annual operating costs ranged from $13.0 million in Düsseldorf to $10.1 million in Madrid.


Table 2. What It Costs to Operate a Biotech Facility: The Highs and Lows*
Table 1, which ranks the total annual operating cost for each city, is a distillation of our eight-factor analysis. In Table 2 we present a spreadsheet depicting the extreme differences in operating costs. Aside from a constant amortization charge, notice the wide variation in local charges. Space does not permit publishing data for all 50 cities, so they will be available on BioPharm International's website with this issue ( http://www.biopharminternational.com/).

RELOCATION IS REALITY

In Europe, we see increasing corporate mobility as a result of historic business climate reforms and price transparencies brought about by the common (euro) currency. Now, operating cost penalties and conversely, cost savings, associated with the various European Union nations can be clearly perceived and easily quantified without the exchange rate and currency conversion vagaries of the past. Many of the tax initiatives, business attraction incentives, deregulation programs, and free market reforms that were fashioned in North America during the past 25 years are now being rolled out in Europe. Biopharma-related projects in Germany, France, and the UK are one of the fastest growing corporate relocation segments in Europe.


Photo of Sioux Falls, SD, the lowest cost US city in the Boyd study and new home to Connecticut-based biotech transplant Hematech, Inc.
In the US, there is a growing shift of biopharma investment from many of the larger and expensive centers of life sciences industry concentration in New England and California to smaller, more manageable, and less costly metropolitan areas in other regions. A good example of this trend is HemaTech, a pioneer in the development of polyclonal antibodies. Originally operating in Connecticut and Massachusetts, HemaTech has relocated research and headquarters operations to Sioux Falls, SD, (pop. 200,000). Sioux Falls, home of the University of South Dakota Life Science Center, is the lowest cost biopharma site cited in the Boyd study. Other examples include Yamanouchi Pharma's move from San Francisco to Norman, OK; Dupont's relocation of its nutrition division from Wilmington, DE to Des Moines, IA; and San Diego-based Scripp's selection of Palm Beach County, FL, for its newest biomedical research lab.

Canada continues to offer a low cost environment for the biopharma industry, even though the Canadian dollar rose substantially versus the US greenback during the past year. Biopharma companies can save additional labor costs in the area of fringe benefits due to Canada's nationalized healthcare system. Our biopharmaceutical clients in the US typically pay about 35 to 40 percent of their payroll for benefits (mostly healthcare-related). The same figure in Canada is 15 to 20 percent.


blog comments powered by Disqus

ADVERTISEMENT

ADVERTISEMENT

FDA Approves Pfizer's Trumenba for the Prevention of Meningitis B
October 30, 2014
EMA: Extrapolation Across Indications for Biosimilars a Possibility
October 30, 2014
Bristol-Myers Squibb Announces Agreement to Acquire HER2-Targeted Cancer Treatment
October 29, 2014
Contract Research and Manufacturing Organization Paragon Bioservices Raises $13 Million
October 28, 2014
Yale and Gilead Extend Sequencing Initiative
October 28, 2014
Author Guidelines
Source: BioPharm International,
Click here