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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:
|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:
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:
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:
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