Costing Issues in the Production of Biopharmaceuticals - Manufacturing costs are crucial to overall profit margins. - BioPharm International


Costing Issues in the Production of Biopharmaceuticals
Manufacturing costs are crucial to overall profit margins.

BioPharm International

New technology is not always easy to adopt and must be proven in a pilot plant. This may apply to the use of general adsorbents (such as ion exchangers) rather than biospecific ligand capture or elute technologies; the use of soft gels rather than rigid matrices; and the use of traditional fixed-column beds in preference to expanded-bed adsorption or multiple-column arrangements (such as swing-bed or simulated moving-bed chromatography). Membrane chromatography may finally be coming of age and should have a positive cost impact in removal of low-concentration impurities and contaminants.

Oliver Kaltenbrunner: Biopharmaceutical Costs are Different Cost estimation for biopharmaceutical processing has its basis in standard chemical engineering practice. First, a model representing the intended process is created. Second, this model estimates the equipment needed. And third, overall capital cost requirements are projected based on equipment needs and typical multipliers for piping, instrumentation, construction, and installation.

Table 2: Frequently used cost terms
In addition to fixed capital investments, variable costs are estimated based on raw material needs of the process and typical labor, laboratory testing, and utilities costs for the particular unit operations. Labor and utility costs are treated as fixed or variable costs, depending on the particular manufacturing situation. For example, it may be more expensive to shut down and restart utilities in a regulatory-approved manufacturing site than to keep those utilities running during non-productive times.

The classical estimation method needs refinement to be suitable for biotechnical processes because it underestimates variable costs when using a singular metric like direct materials costs, COGS, or unit manufacturing costs. An alternative is to consider several metrics. Table 2 (presented as an input-output table) summarizes what expenses to include togenerate specific cost estimates. In this table an input item affects a cost only if "YES" is in its corresponding box. Input and output terms should not be used interchangeably to avoid complicating the comparison of estimates. Unlike conventional chemical process estimates, the inventory levels of both work in process and finished goods for biotech products are held significantly higher.

The costing terms in Table 2 work well for estimating costs of a particular production year and are therefore useful to estimate taxes. However, the results may vary dramatically from year to year. For any multi-year project the timing of expenses can be critical, and only NPV analysis can capture the true nature of the activities. The comparison of capital-intensive production versus high operating costs, or of stocking upfront large amounts of expensive raw materials versus large consumption over the life of the project, can only be assessed when the timing of expenses is considered in more detail.

Another recurrent difficulty is omitting or combining the success rates of process steps. Failure rates of cell culture bioreactors can be significant and in many cases should not be neglected. But failing a bioreactor production step does not necessarily fail the downstream process and cannot be lumped into an overall success rate. Reprocessing or waste disposal units in the process model usually indicate this has been accomplished.

Cost of consumables is one factor that complicates the analysis of typical biotechnological processing considerably and is very different from standard cost estimating methods.

In contrast to classical chemical processing, consumables like resins and membranes can be a significant portion of the raw material costs in the production of biopharmaceuticals.

For example, in a typical monoclonal antibody production process, the resin cost for an affinity-capture column can overwhelm raw material costs. If a monoclonal antibody were to be captured directly on a typical Protein A resin from a 10,000-L cell-culture broth at a product titer of 1 g/L, resin costs of $4 to $5 million would arise for one packed column. Common sense recommends reuse of resins despite the complications of reuse validation. Additionally, cycling of columns within one production lot to increase utilization of expensive consumables seems advisable. Also, the projected inventory of material on hand will add significantly to the projected process costs. To determine the optimum number of reuses and cycles of a particular resin, cost of production must be calculated for each scenario under consideration.

Another big problem for establishing a reliable production cost estimate arises from the fact that consumables typically have both time- and use-dependent expiration criteria. If expiration could be defined just by number of uses, consumables costs would simply behave as variable costs. If expiration of resins and membranes could be defined just by an expiration time, they could be depreciated as a fixed asset. However, having criteria for both time and cycles makes their cost contribution sensitive to the annual production demand. An average production capacity cannot adequately describe production costs for products ramping up in demand after launch or during conformance lots. During the early production years, a resin may never experience its maximum number of validated reuses before it expires.

To make a reliable production cost estimate, the entire projected production campaign must be taken into account, because the use of single-year estimates results in high manufacturing variances. As a result, it is not enough to estimate production costs based on an average production year. Every year of production must be estimated separately while keeping track of consumables' cycles and age. This is in stark contrast to traditional chemical engineering cost modeling, where the cost for each unit produced is virtually identical and process costs can be reasonably estimated without having to draw up detailed production demand scenarios.

Estimating has certainly become difficult as consumables costs depend on the demand scenario. Cost estimates must be repeated for demand scenarios of varying optimism. The complex behavior of consumables costs must be considered when trying to determine the optimal process scale or number of consumables reuses and cycling within lots.

Unfortunately, commercial software does not allow consideration of this level of complexity. At present, there is no way around a tedious aggregation of model scenario outputs or the tedious development of custom tools. Eventually, commercial vendors will acknowledge this as a shortfall of their products and implement solutions that are modified towards the unique circumstances of cost estimation in biotechnology.

Elements of Biopharmaceutical Production This article is the third in a series in BioPharm International coordinated by Anurag S. Rathore. This series presents opinions and viewpoints of many industrial experts on issues routinely faced in the process development and manufacturing of biopharmaceutical products. Earlier articles were: "Process Validation - How Much to Do and When to Do It," Oct 2002 and "Qualification of a Chromatographic Column - Why and How to Do It," March 2003.

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5. Warner TN, Nochumson S. Rethinking the economics of chromatography. BioPharm International 2003; 16(1).

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7. Mullen J. The position of biopharmaceuticals in the future. IBC: Production and Economics of Biopharmaceuticals; 2000 Nov 13-15; La Jolla, CA.

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