Monday, December 10, 2012

The Cost of Pharmaceutical Facilities



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:

 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.