Disposables Cost Contributions: A Sensitivity Analysis

April 1, 2009

BioPharm International

Volume 22, Issue 4

Cost modeling provides valuable insights to support strategic decision-making when implementing disposable technologies.

The current financial crisis is adding to the pressure on the pharmaceutical industry to reduce the costs of new drugs. For example, recently the UK's National Institute of Clinical Excellence (NICE) complained about the industry making excessive profits from new treatments.1 Concerns about the balance between costs and benefits have spread to the US and these will be high on the agenda of the Obama administration as it considers healthcare reforms.2

Miriam Monge

Although manufacturing costs are not the only cost contributor to the total drug price, they are a significant (estimated to be 10% to 20% of the sales price) and a growing component.3 This, coupled with the large capital expenditures required for these facilities, means that the issue of manufacturing costs is rapidly assuming visibility and prominence. Over the last decade, Biopharm Services has observed a major trend in companies wanting to have a better understanding of manufacturing costs. This is particularly the case amongst large biopharmaceutical companies, who want to understand manufacturing costs early on in development. Costs are now one of the key criteria for evaluating process options.

So what does this mean for disposable technologies? In an earlier column, we talked about how to evaluate the cost of disposable technologies.4 In this article, we will look at the various effects of implementing a wide variety of disposable technologies on manufacturing costs. We will also discuss how the costs vary with scale, vendor, and process. This is important when designing cost-effective operations.

Andrew Sinclair

COST ANALYSIS

We are basing this analysis on a cost of goods (CoGs) model using Biopharm Services' BioSolve cost-model package. This model allows us to quickly evaluate options with methods that are transparent and available for external scrutiny. Figure 1 describes the modular structure of the model. Its most important feature is the ability to modify the process definition, including technologies, and to propagate those changes immediately throughout the model. For this analysis, a commercially relevant monoclonal antibody (MAb) production process was used as the basis for evaluating disposable technologies.5 Within the BioSolve framework we have the ability to decide whether to include or exclude specific technologies for particular applications. In this exercise, we will evaluate the following single-use technologies:

  • bioreactors

  • mixers for media and buffer preparation

  • hold bags for product and buffers

  • membrane absorbers.

Figure 1

The base case for the comparison is a 2,000-L production bioreactor scale with three bioreactors feeding one purification train, with all systems in stainless steel. The cost data for the main cost categories used for the analysis comprise the following (note all costs are list price and do not include discounts):

  • Raw-material components based on standard commercially available raw-material pricing

  • Capital equipment costs derived from vendor data from recent projects. These data are used to estimate equipment costs. The accuracy of the capital project predictions has been checked independently by DSM.6

  • Consumable pricing for filters, disposables systems, and resins. These are average prices sourced from multiple vendors.

  • Labor costs are based on standard US rates for the Massachusetts area.

SCENARIO ANALYSIS

The key purpose of this type of analysis is to provide insight into the manufacturing technologies' overall contribution to CoGs at the product level. Simply running these seven scenarios and comparing the outcome to the stainless steel facility allows for a quick assessment of the financial benefit. In Table 1, the results show that for this case, the big cost wins are the following: (in order of priority):

  • use of hold bags for buffers (reducing CoGs by 8.3%)

  • bioreactors: greater throughput is seen as a result of the faster turnaround of these systems compared to stainless steel (reducing CoGs by 5.2%)

  • mixer with open liners for buffer preparations (reducing CoGs by 4.8%)

  • use of hold bags for product (reducing CoGs by 3.7%)

  • disposable membrane absorber for the flow-through chromatography column (reducing CoGs by 3.2%).

Table 1. Disposable technology options (MAb, 3 x 2,000-L bioreactors at 2 g/L, 90% utilization)

More importantly, this analysis also highlights technologies that do not have a significant impact on cost, which in this case is the use of sterile mixing systems for buffer and media preparation (items 2 and 4 in Table 1).

Finally, the overall impact of all the component contributions can be assessed. In this scenario, using all the disposable technologies at once achieves an overall CoGs savings of 22.8% and an overall reduction of 36.8% in the capital. When adding multiple disposable technologies together in a process, it is not necessarily true that the savings seen will match the sum of the savings seen when each is added individually, because the savings can overlap. It is important therefore to assess the combined effect to evaluate the overall impact.

Analyzing in detail how and where the cost savings arise allows us to use this information during supplier negotiations. For example, though disposable bioreactors save significant capital (a reduction of 12%) this only equates to a CoGs saving of 5.2% because of the high cost of the disposable bioreactor components. Therefore, you should focus discussions with the supplier on reducing the cost of consumables.

SENSITIVITY ANALYSIS

The analysis of the individual technology contributions is only the start of the assessment. We can now explore how these savings are affected by changes in plant utilization, scale of operation, and processing technology.

Plant Utilization

One of the significant benefits of disposable technology is that it allows risk mitigation. The stainless steel facility has a higher proportion of upfront fixed costs whereas the increased consumable costs for disposable technologies are activity based and are only incurred when the facility is operational. Figure 2 illustrates the impact of facility utilization on the savings of the disposable option compared to a base case of using stainless steel. At low utilization rates, the relative savings of the disposables option is high, with peak savings of 31% at a utilization rate of 10%. With either stainless steel or disposables, the cost of goods is higher at low utilization rates, but in the case of the disposables facility, the difference is not as great in cost between low and high utilization rates, which means that upfront risk is lower.

Figure 2

Scale of Operation

By combining the impact of titer and bioreactor scale (Figure 3), maximum savings are seen at low volume and low titers. Some savings are seen even at a very large scale of operation. As the batch moves through downstream operations, the scale reduces such that even for the large-scale operations, some of the final purification stages can use disposable technologies.

Figure 3

Processing Options

We can examine not only scale but also methods of operation. In this final example, we examine the impact of using concentrated buffers to see how this varies with scale. In this case, we are looking at the impact of reducing buffer hold volumes. Given that the buffer hold bags contribute significantly to the operation, as we make more use of concentrates we shift more of the hold capacity into disposable systems for any given plant capacity. As the use of hold bags increases, the savings increase. For the 2,000-L case, using concentrated buffer provides an additional saving of 3% (Figure 4). The benefits of using concentrated buffers are seen throughout the scale range; for large-scale biorecators at 2 g/L, storing concentrated buffers in disposable bags reduces CoGs by 10% compared to storing them in stainless steel containers.

Figure 4

CONCLUSIONS

Our aim in this article is to show how cost modeling can give valuable insight into the cost impact of disposable technologies on biomanufacturing operations. It allows you to quantify the benefits and understand how savings arise and how savings are affected by changes in scale or operation. More importantly, it can aid decision-making by focusing on the technologies that provide the maximum benefit, because you can then use this information to negotiate with suppliers to further reduce costs. In an article of this nature, we can only highlight some of the applications. There are many more opportunities analyzing the impact of these technologies on specific processes and evaluating different vendor offerings for the same application. The actual savings seen will depend on the specific process, geographical location, local costs, and technology mix. As we have demonstrated, however, a cost analysis provides insight to support strategic decision-making when evaluating all these options.

Andrew Sinclair is the managing director and Miriam Monge is the vice president of marketing and disposables implementation, both at Biopharm Services, Chesham, Bucks, UK, +44 1494 793 243, disposables@biopharmservices.com Miriam is also the European chair of ISPE's Community of Practice for Disposable Technologies.

REFERENCES

1. NICE turns nasty. The Economist. 2008 Aug 21.

2. The evidence gap. British balance benefit vs. cost of latest drugs. New York Times. 2008 Dec 3.

3. Biopharm Services estimate.

4. Sinclair A, Monge M. How to evaluate the cost impact of using disposables in biomanufacturing. Biopharm Int. 2008;21(6):26–30.

5. Morrow KJ. Industrial-scale antibody production strategies. Gen Eng News. 2002;22(17):8–71.

6. Hoff R. The manufacturing benefits of combining PER.C6 high density cell culture with disposable technologies. Disposable Solutions for Biomanufacturing. London, UK; 2008 Nov 10–11.