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.