The Cost of Pharmaceutical Facilities

Source: http://rmcpharmanews.blogspot.de/2012/12/the-cost-of-pharmaceutical-facilities.html

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By Dr. Scott Rudge

How many of you are trying to scratch up the coin to give your kids a pharmaceutical facility this Christmas? Yeah, me neither. But I had a recent project that required me to come up with an estimate for facility costs, if only to calculate the cost of ownership for a Contract Manufacturing Organization. This can be an important aspect of the cost of goods, as someone has to pay for the construction, operation and maintenance of a pharmaceutical plant.

As you might expect, this cost is highly dependent on the type of facility that gets constructed, its purpose, what it was before, and a host of other factors. Each project is undoubtedly unique but some value can be derived by knowing the range of costs, and some factors that can affect your cost.

For data, I used the Facility of the Year winners in all categories since 2007, when the ISPE/Interphex started to publish this data. Again, the facilities evaluated in this “category” of facilities are highly divergent in scope and purpose. Furthermore, to be a winner, it is not necessary to have the most highly finished, modern facility. There are a few categories, such as Sustainability, Project Integration and Technology that do not focus on the facility itself, but on other aspects that make the project unique. Here then, is the raw data:

Company Cost Sq. ft. cost/s.f. purpose location Year
Chiesi $     117,480,000 236,806 $ 496.10 R&D Center Italy 2012
Eisai $    41,000,000 2,180,189 $ 18.81 small molecules India 2012
Merck $     315,000,000 214,000 $ 1,471.96 vaccines USA 2012
Rentschler $   9,900,000 9,800 $ 1,010.20 biologics api Germany 2012
Roche $     209,871,400 161,458 $ 1,299.85 R&D labs Germany 2012
Irish Government $   46,400,000 69,965 $ 663.19 biologics api Ireland 2012
MedImmune $     588,389,000 337,000 $ 1,745.96 biologics api USA 2011
Merck $   216,000,000 240,666 $ 897.51 small molecules USA 2011
Novartis $     242,000,000 257,042 $ 941.48 vaccines Germany 2011
Pfizer $   42,300,000 173,837 $ 243.33 small molecules Germany 2011
Pfizer $     188,700,000 54,465 $ 3,464.61 biologics api Sweden 2011
Hoffman LaRoche $   11,891,102 3,444 $ 3,452.70 fill/finish Switzerland 2011
Shire $     230,000,000 200,000 $ 1,150.00 biologics api USA 2011
Biogen Idec $   39,100,000 50,000 $ 782.00 biologics api USA 2010
Genentech $     194,000,000 102,000 $ 1,901.96 biologics api Singapore 2010
MannKind $   163,100,000 251,876 $ 647.54 inhalers USA 2010
Pfizer $     189,613,542 133,000 $ 1,425.67 biologics api Ireland 2010
Pfizer $   254,674,792 177,066 $ 1,438.30 fill/finish Ireland 2010
Aseptic Technologies $       4,980,000 12,917 $ 385.54 fill/finish Belgium 2009
Centocor $   586,000,000 264,000 $ 2,219.70 biologics api Ireland 2009
Centocor $     24,900,000 7,219 $ 3,449.23 fill/finish Switzerland 2009
hameln $   44,500,000 99,028 $ 449.37 fill/finish Germany 2009
Orchid $     35,720,000 107,642 $ 331.84 small molecules India 2009
Roche $   370,000,000 209,896 $ 1,762.78 biologics api Switzerland 2009
GSK $       6,300,000 150,695 $ 41.81 fill/finish Italy 2009
Pfizer $   55,000,000 83,958 $ 655.09 solids Germany 2008
BI $     64,700,000 95,357 $ 678.50 R&D labs Germany 2008
BMS $   90,687,000 132,410 $ 684.90 solids USA 2008
IDT Biologika $   37,470,000 50,568 $ 740.98 vaccines Germany 2008
Hoffman LaRoche $   460,000,000 355,209 $ 1,295.01 biologics api Germany 2008
Cook $     70,000,000 124,000 $ 564.52 biologics api USA 2007
Genentech $   375,000,000 500,000 $ 750.00 biologics api USA 2007
Roche $     16,640,000 22,604 $ 736.15 small molecules China 2007
Taiyo $   38,580,000 126,411 $ 305.19 fill/finish Japan 2007
Vetter $     134,000,000 172,223 $ 778.06 fill/finish Germany 2007

What can we make of this data? The statistics aren’t incredibly helpful for total cost. The range of costs are approximately $5MM to $500MM, the median is just under $91MM. The distribution of data is heavily skewed to the lower budget, as shown below:

histogram-with-cost

The cost per square foot is a little more normally distributed, with a few outliers above $3000/s.f., but most around the mean of $1111/s.f., as shown below:

histogram-with-cost-per-sf

Is there inflation in the data, represented by an increasing cost per square foot year over year? The statistics show an average increase of just over $100/s.f., which would be an inflation rate of 9% against the mean cost. However, the statistical evidence is very weak and heavily influenced by the two facilities that cost more than $3000/s.f. The regression is shown below:
inflation-regression

Finally, although the country data are interesting, there does not appear to be a great correlation between these data and the location of the facility. While India does have the absolutely cheapest cost/s.f. for a facility, the next three cheapest are Germany, Italy and Japan. The only country that sticks out is Switzerland, for its extremely high cost.
The data don’t give a lot of hope for predicting the cost of your facility, they are heavily project dependent. However, they do suggest a range of costs and budgets that might influence your thinking and cost of goods calculations, at least as a first estimate.

Posted by Scott Rudge

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