Printer Friendly

Economics of in-house buffer preparation: evaluating the cost effectiveness of keeping basic ops in-house.

Buffer preparation, like culture media preparation, is a task classically performed in-house by bioprocessing facilities. Until recently, preparation of these working fluids has generally been viewed as a "core" operation to be kept in-house and not outsourced. However, some biomanufacturers have been questioning and evaluating the cost effectiveness of keeping relatively basic operations like buffer prep in-house, when suppliers are beginning to offer these as outsourced materials. BioPlan Associates conducted a follow-on study to our analysis in 2014 to assess the cost-effectiveness of buffer preparation done in-house. These data can be used to evaluate outsourcing options.

Increasingly, these classically core powder hydration/prep operations are candidates for outsourcing as biomanufacturers seek to do more with fewer staff at lower costs. Bioprocessing facilities have generally taken an in-house platform approach to buffer--and media--preparation, using common equipment.

But there are total facility costs associated with buffer preparation that differ between facility types. We wanted to assess how these costs vary based on facility size and bioprocessing scales. And how costs of buffer prep using stainless steel compare to use of single-use equipment or hybrid.

In our earlier study of bioprocessing fluids outsourcing we found that nearly half of the respondents (47%), indicated that large-scale media and buffer prep outsourcing was an option they would actively consider. Thus, even core bioprocessing tasks, such as buffer prep, are becoming candidates for outsourcing. In some cases, purchase and delivery of buffer--and culture media--fluid prepared remotely by buffer fluid vendors or hired CMOs may be preferred and potentially more cost-effective than in-house preparation. Not unexpectedly, this tends to more be the case for smaller facilities, facilities doing intermittent bioprocessing. While in-house prep generally remains the pattern at larger commercial scales. Shipping of fluids can very often be the main cost in purchase of pre-prepared bioprocessing fluids.

But with buffer prep as with other operations, there are other factors involved beside materials and other direct/ variable costs. These are captured in the model, such as overhead; allocated facility support services like administrative, and validation; costs of depreciation, etc. In addition, other intangible factors can make outsourcing more attractive. These include aspects like:

* Potentially higher quality materials delivered from suppliers;

* Ability to re-allocate production space from buffer prep to bioreactor capacity (utilization of classified space);

* Speed of development (often more important than costs);

* Regulatory compliance and documentation (absolute requirements);

* Rapid process turnover;

* Efficient use of staff;

* Demands for flexible and lean operations;

* Inventory management and warehousing;

* Space availability;

* Need for training; and

* Demands for bioprocessing sterility.

The recent study did not include consideration of these aspects, rather solely concerned itself with total in-house buffer prep costs.

Study methodology

To answer these questions, we developed a buffer costs preparation model based on prior research and on financial and cost inputs from industry segment experts. From this we developed a comparative buffer prep costs model (spreadsheet). We then performed a series of in-depth interviews collecting information from bioprocessing professionals that had calculated their in-house costs for buffer preparation. From this we developed a buffer prep costs model. We interviewed 10 industry staff for this project, to update cost data from 32 relevant industry end-users performed in 2014. (1)

For this recent buffer costs modeling effort, expert bioprocessing professionals having calculated their in-house costs for buffer preparation, were interviewed to collect their costs estimation data. Rather than collecting only bottom line cost conclusions, interviews concentrated on trying to understand and consistently record individual cost component. Although few interviewees used the same methodologies for their internal cost accounting, we were able to estimate cost-per-liter data to help with consistency.

Table 1 presents the types of buffer-related cost categories discussed in interviews. These headings may be useful as a checklist to develop buffers-related cost estimate data. As noted, a potential weakness with interviewee-collected cost estimate data is that there are no industry-accepted methods for determining and allocating bioprocessing task-related cost parameter. In many cases, obtaining cost data involved estimating each cost item jointly with interviewees. For each component cost (Table 1), its current average per year cost was requested or developed. For example, "Capital Facility Expenses (Buffer Prep Building, excluding Equip/HVAC)," involved total building construction cost and determining ongoing annual financial burden, e.g., by amortizing total building costs over time at 4%, and then prorating this by the estimated percentage of facility space allotted to buffers. Buffer prep-related construction costs also vary greatly, depending on the facility size and bioprocessing scale.

Study results

Figure 1 shows results of averaging estimated total in-house buffer-prep costs for different size facilities. The overall average cost for in-house buffer preparation was $19.72. Note, the costs for buffer prep do not include costs related to buffer R&D, process design/development, etc.; and only buffer prep from source powders, not from fluid concentrates, was considered. The costs of in-house automated buffer prep dilution from outsourced purchased concentrates, a growing trend but still mostly used only at commercial manufacturing scales, were not considered in this study.

As expected and shown in Figure 1, costs/L of buffers tend to decrease as facility size and bioprocessing scales increase. Estimated average costs ranged from nearly $30/L for smaller facilities, those producing <100,000 L of buffers/year, to about $11 at largest scales, >1,000,000 L/year. Figure 1 also shows, as fully expected, the total facility costs generally increasing as facility size and bioprocessing scale go up, with facilities at <100,000 L/year having annual average buffer prep costs of $2.6 million, while those at largest scales, >1,000,000 L/year, have costs averaging in multiple $10s of millions. Note, some excess buffer manufacturing capacity is generally prudent, if not critical, for bioprocessing facilities to have, but with any such unused capacity adds to operational costs. Some excess capacity is needed, because the opportunity, loss of speed, and other costs of not having some flexible excess capacity when needed, such as need to supply product launches, deal with any buffer-related bottlenecks, avoid shortages, etc. can be devastating to a product and company.

Facility type findings

Average annual total buffer prep costs by type of facility, whether stainless steel, single-use or hybrid systems--used for buffer prep--also varied in the study. Operating at very large scales using stainless steel systems generally provide the lowest in-house buffer prep per liter costs, with average cost for stainless steel facilities at $11.92/L, while single-use facilities average $21.80. Note that the sample size for these facilities is insufficient to address issues of scale. However, because single-use scales are typically significantly smaller, these data suggest scaling factors should also be considered. The overall average annual average total costs for buffer prep for all facilities surveyed was $8.5 million. Overall, total average costs for in-house buffer prep were higher for stainless steel facilities, $13.2 million/year, but with these facilities tending to include larger commercial manufacturing regulatory compliance and documentation, operating at much larger scale than the others. The overall average cost for single-use facilities was $5.5 million.

The average facility fixed costs by facility size were also evaluated. Average for all facilities' fixed costs were $4.47/L or about 22.6% of the average total cost. There is a general trend for lower fixed costs/L at larger scales, as expected. Average per liter costs are $6.77 at small scales (<100,000 L/year); but $3.08 at largest, >1,000,000 L/year scale.

Average annual in-house buffer prep fixed costs by facility type included fixed cost/liter for stainless steel facilities at $3.55/L; and $3.87 for single-use.

Average annual total variable costs by facility size generally trended lower as facility size and bioprocessing scales increase. The overall average annual variable costs were $10.67/L. Small facilities (<100,000 L/year) had average costs of $14.86/L; those at the largest facilities, >1,000,000 L/year had average costs of $4.88.

Variable costs by facility type, not unexpectedly, showed single-use facilities as having higher costs. Overall average annual variable buffer prep costs was $10.67/L, with single-use at $12.37/L and stainless steel at $6.92/L. Stainless steel costs are expected to be lowest, with single-use system equipment needing to be purchased new for each bioprocessing run or campaign.

There is a general trend for lower labor costs/L, i.e., higher staff productivity, as facility size and (bioprocessing scales increase. Average cost/L vary over a range about 100%, from the lowest $3.17/L at largest scales (>1,000,000 LI year) to highest at $7.54/L at small scale (<100,000 L/year).

[FIGURE 1 OMITTED]

Conclusions

The difference and trends with total in-house average annual buffer prep from powder costs were generally as expected. Costs per liter were lower and productivity was higher for larger and stainless steel facilities, with being larger facilities generally stainless steel--and vice versa.

Although the costs for outsourcing of buffer fluids preparation are generally significantly higher than for in-house preparation as expected, the intangible value of outsourced buffers may outweigh a simple cost calculation. Further, though outsourced fluids may reduce some costs, certain costs remain, including storage, staff time, regulatory filings, on-site filtration, management overhead, QA/QC lab, and other costs included in the in-house total cost calculations may also apply to externally purchased buffers.

References

(1.) Langer, E.S., "Outsourcing Media and Buffer Prep," Contract Pharma, Sept. 8, 2014.

Eric S. Langer

BioPlan Associates

Eric S. Langer is president and managing partner at BioPlan Associates, Inc., a biotechnology and life sciences marketing research and publishing firm established In Rockville, MD in 1989. He Is editor of numerous studies, including "Biopharmaceutical Technology In China," "Advances In Large-scale Biopharmaceutical Manufacturing", and many other Industry reports. elanger@bioplanassociates.com 301-921-5979. www.bloplanassoclates.com
TABLE 1: Annual In-House Buffer Prep-Related Costs Data Collected
In Interviews

Fixed Expenses, Buffer Prep Equipment

Capital Facility Expenses, (Buffer Prep Building-excl. Equip/HVAC)
WFI (or RO) skid, tanks/piping (cost allocated to buffer prep-hardware)
Mixed buffer-only storage/holding tanks
Classified HVAC systems (allocated to buffers)
Refrigerated storage unit (allocated to buffers)
Warehousing, facility operations, annual
Utilities, electric, gas, used in buffer prep areas
Other buffer prep equipment
Other facilities construction
Automation of equipment for mixing
Filtration (equip, only, excl filter cost)
Other equipment

Variable/Staffing Expenses, Buffer Prep

Validation/documentation, for buffers
Logistics, in-house
Quality control lab costs for buffers
IT system setup and GMP, related to buffers
Labor, Annual, operations for buffer prep only
Regulatory, QA/documentation, related to buffer prep
Repairs, Labor buffer prep
Other G&A Labor

Consumable Expenses, Buffer Preparation

Buffer ingredients costs
Other ingredients/powders
Filters and related consumables
Single-use Devices (bags, tubing, connectors, manifolds)
WFI costs, consumables, not elsewhere noted
Disposal expenses
Other consumables, expenses

FIGURE 2

TOTAL BUFFER IN-HOUSE PRODUCTION
COSTS, BY FACILITY TYPE

              Total Costs   Total Costs/Liter

STAINLESS     $13,200,000        $11.92
SINGLE USE    $5,500,000         $21.80
ALL SYSTEMS   $8,500,000         $19.72

Trend: Total Cost/L

Note: Table made from bar graph.
COPYRIGHT 2016 Rodman Publishing
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2016 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Title Annotation:THE BIOPHARM INSIDER
Author:Langer, Eric S.
Publication:Contract Pharma
Date:Sep 1, 2016
Words:1848
Previous Article:Time to be specific: using near-infrared spectroscopy as a tool.
Next Article:FDI green light sets the stage: M&A activity and outsourcing to gather pace.
Topics:

Terms of use | Privacy policy | Copyright © 2019 Farlex, Inc. | Feedback | For webmasters