EXECUTIVE SUMMARY This assessment was completed to analyze the application of flexibility in the design of biotech manufacturing facilities. For the purposes of the analysis, the therapeutic for NPV analysis was based on available data for Avastin, the blockbuster oncology therapy manufactured and marketed by Genentech (now owned by Roche AG). A Monte Carlo simulation was completed based on estimated market demand growth rates over the year horizon for three distinct designs as follows: Fixed Design: A traditional biotech facility setup where capacity was maximized initially with no additional need for modifications Standard Flexible Design: A facility that was initially built with less capacity, but the capital investment was lower. However, it could support additional bioreactor trains as market demand increased. Future Flexible Design: A facility utilizing single-use disposable bioreactor technology in lieu of traditional stainless steel construction and having the lowest capital investment of all options. On the other hand, raw material costs were higher due to the need for new bioreactors for each production run. The design lever for the flexible designs was the addition of bioreactor trains to increase production capacity. Additional bioreactor trains were added in the following when market demand was greater than 80% of total plant capacity (i.e. decision factor = 80%) in the previous year. The analysis clearly showed that the Fixed Design had a lower mean ENPV compared to the flexible designs. For the flexible designs analyzed, the Future Flexible Design had a higher ENPV in 99.91% of all simulation trials. The sensitivity analysis also showed that the Future Flexible Design was favored in a majority of the situations as the decision factor varied from 50% to 150%. The optimal decision factor (i.e. the factor leading to the highest ENPV) was 80% for the Future Flexible Design and 90% for the Standard Flexible Design. The analysis proves that single-use disposable technology is not cost efficient when product demand is extremely high, since using a large number of disposable bioreactors has a significant impact on operating costs. OF CONTENTS
EXECUTIVE SUMMARY This assessment was completed to analyze the application of flexibility in the design of biotech manufacturing facilities. For the purposes of the analysis, the therapeutic for NPV analysis was based on available data for Avastin, the blockbuster oncology therapy manufactured and marketed by Genentech (now owned by Roche AG). A Monte Carlo simulation was completed based on estimated market demand growth rates over the horizon for three distinct designs as follows: Fixed Design: A traditional biotech facility setup where capacity was maximized initially with no additional need for modifications Standard Flexible Design: A facility that was initially built with less capacity, but the capital investment was lower. However, it could support additional bioreactor trains as market demand increased. Future Flexible Design: A facility utilizing single-use disposable bioreactor technology in lieu of traditional stainless steel construction and having the lowest capital investment of all options. On the other hand, raw material costs were higher due to the need for new bioreactors for each production run. The design lever for the flexible designs was the addition of bioreactor trains to increase production capacity. Additional bioreactor trains were added in the following year when market demand was greater than 80% of total plant capacity (i.e. decision factor = 80%) in the previous year. The analysis clearly showed that the Fixed Design had a lower mean ENPV compared to the flexible designs. For the flexible designs analyzed, the Future Flexible Design had a higher ENPV in 99.91% of all simulation trials. The sensitivity analysis also showed that the Future Flexible Design was favored in a majority of the situations as the decision factor varied from 50% to 150%. The optimal decision factor (i.e. the factor leading to the highest ENPV) was 80% for the Future Flexible Design and 90% for the Standard Flexible Design. The analysis proves that single-use disposable technology is not cost efficient when product demand is extremely high, since using a large number of disposable bioreactors has a significant impact on operating costs. OF CONTENTS
dev_nishanth_esd71_ap_final.docx