ESTIMATE OF OPERATING COSTS
To calculate operating costs based on raw materials and consumables, a detailed mass and energy balance evaluation was carried
out to estimate the consumption of chemicals, culture medium, disposable materials, and pharmaceutical water for both technology
alternatives, according to a manufacturing schedule of 75% plant capacity usage involving more than 200 purification cycles.
Figure 3 shows the profile of daily pharmaceutical water consumption over 90 days. This analysis was used to estimate utility
costs and the capacity of water production equipment. As can be observed, the daily water consumption in the hybrid project
was significantly lower than in the stainless steel alternative, as a result of much lower demand for clean-in-place/steam-in-place
(CIP/SIP) operations after 90 process vessels were replaced with disposable bags (as shown in Table 1).
Table 2 shows the cost of various elements included in the calculation of the total annual expenses for both projects. Because
the breakdown of costs in biopharmaceutical production operations is often different from the breakdown in other industries,
the second column in this table shows percentage values of cost items reported elsewhere, for comparison with our calculations.4 In our case study, the cost of raw materials and consumables were obtained separately for the two technology alternatives
from the mass balances and adjusted to account for the prices of each item. As expected, the hybrid alternative had a 19%
higher cost of consumables and raw materials compared to the stainless steel project.
Table 2. Estimated operating costs for both project alternatives.
To simplify the comparative analysis, the operating costs for labor, quality control/quality assurance (QC/QA), and waste
treatment were assumed to be the same for both project alternatives because in previous studies we conducted, the use of disposable
materials did not have a significant effect on these costs. Utility costs, however, were 50% lower in the hybrid alternative
than in the stainless steel model, as a result of a 57% decrease in water and steam demand.
Equipment-dependent costs have been reported to be one of the largest cost elements in biopharmaceutical production because
of the highly sophisticated nature of biopharmaceutical manufacturing facilities.4 Our estimate showed this cost item to be 30% of annual manufacturing expenses for the stainless steel alternative, which
is roughly in the middle of previously reported ranges of 10–70%. In contrast, the integration of disposable technology in
the hybrid project reduced equipment-related costs to 18% of annual operating expenses.
Overall, the data in Table 2 show that for this plant, with an annual production volume of 75 kg, the use of the disposable
technology lowered total annual operating expenses by 16% compared to the stainless steel alternative. This represents a reduction
in the cost of goods from $768/g to $647/g.
ECONOMIC EVALUATION OF PROJECT ALTERNATIVES
To compare technologies, several profitability indicators can be used. In addition to the commonly used net present value
(NPV), other indicators that can be used include internal rate of return (IRR), discounted break-even point (DBEP) and discounted
interest-recovery period (DIRP).5 As pointed out by Sinclair, NPV can be used effectively to estimate the long term economic benefits of introducing disposable
technology in the context of a project alternative evaluation.6
Figure 4 shows the evolution of NPV of the hybrid and stainless steel investment projects. For this calculation, the start-up
time, market penetration, financial terms, and product selling price were all assumed to be the same for both models. The
introduction of disposable elements reduced the time required to recover the investment by almost two years. If calculated
over a ten year period, the hybrid project alternative showed an NPV almost US $92 million higher than the stainless steel
project, because of the lower capital expenses and operating costs.