PYRAMID TEAM

EM 636

Bioprocessing Manufacturing Facility

CER Proposal

By:

Omar Aloitabi

Anthony DiSanti

Syed Khaja Hussain

Hao Ji

Justyna Maslach

Luz Katerine Palacios

Maitray Patel

To: Thomas Brodowiski

Friday, April 27, 2012

1.) Routing Sheet:

Your signature on this document indicates that you have received and read the Capital Expenditure Request Proposal attached.

Compliance Date
Health and Safety Date
Operations Date
General manager Date
Facility Engineer Date
Project Manager Date

2.) Approval of Capital Expenditure Request:

Your signature on this document indicates that you have read and approve the Capital Expenditure Request Proposal attached.

Head of Manufacturing Date
Chief Financial Officer Date
Chief Executive Officer Date
Executive Committee Date
Board Member Date

3. Purpose Statement

The Capital Expenditure Request is for $21m for the construction of a 30,000 sqft bioprocessing facility to be built in Lansdale, PA adjacent to the current bioprocessing research and development center.

4. Project Description

4.1. Opening Statement

To construct a new 30,000 sqft bioprocessing facility that utilizes single-use equipment and isolator technology to allow for flexibility in processing multiple biopharmaceutical products.

4.2. Introduction

Biopharmaceuticals are the next big wave in pharmaceutical products.

Pharmaceutical companies are investing more and more into the development of biologic products.

Research and development has increased $4.2 billion from 2007 to 2010 for US based pharmaceutical companies, an increase of 6.6%.

During this time the FDA approved an average of 13.75 biopharmaceutical products that were new chemical entities with 2009 having the most approvals with 18.

Even with the economic slowdown the biopharmaceutical market continues to grow. With the increase in R&D spending by pharmaceutical companies the opportunity for contract manufactures is always present.

4.3. Existing Conditions

Currently the site in Lansdale is home to the bioprocessing research and development center. The campus has an office area (5,000 sqft) and a fully functioning R&D laboratory (10,000 sqft). The campus has already been approved by the local municipality to be able to expand to a size of 100,000 sqft. The campus is located just outside of Philadelphia, PA and is close to many of the major pharmaceutical companies as well as many research hospitals and biotech companies.

4.4. Project Discussion

The team proposes a flexible approach taking advantage of single use and isolator technologies. Utilizing this approach will allow us to design a highly adaptable bioprocessing area that will allow for a faster start-up time than traditional facility design. Shortening the validation time needed leading to a faster path to starting up time.

Single-Use Disposable Bioprocessing products have gained rapid acceptance by biopharmaceutical manufacturer worldwide.

Advantages of Single-Use Technology:

Reduced contamination rates

Eliminates SIP, CIP and cleaning validation – faster turnaround time

Plug and play set-up – flexibility

Integrated process analytical technology allows for faster and more accurate scale-up

Scale-able

Advantages of Isolator Technology:

Eliminates the need for expensive highly controlled clean rooms

Less gowning requirements therefore more comfortable for operators to work

Reduce the amount of space needed for production

Reduction in water and waste

Allow for multiple simultaneous product production

Minimal utilities needed

Lowers energy costs

To achieve this goal the team has recommended that a significant amount of time and money be spent in designing the facility. The project can be broken down into the following phases:

Planning / Design Phase: Start May 2012, last 5 months

Construction Phase: Start October 2012, last 16 months

Validation Phase: Start March 2014, last 14.5 months

4.5. Alternatives considered

The team considered the following alternatives.

Traditional Stainless Steel Fermenters – Are expensive to operate and to clean. Need to have CIP and SIP utilities in place increasing the cost to build. Cleaning verification increases the amount of water usage.

Conventional Cleanrooms – Are energy inefficient, cumbersome to work in due to the level of gowning needed to operate in. Increase the construction cost due to complexity of the concentric layout.

Traditional Bioprocessing facilities – Larger and less flexible due to fixed equipment and highly controlled environment.

5. Funding Requirement

5.1 Capital

The funding for the project comes from a combination of company investment and client contribution. A great client and partner over the years has committed to providing $5.5m toward the project. The facility would be financed out of the capital expenditure budget over the next 4 years. The capital funding needed for the project would be $6.2m (2012), $4.0m (2013), $6.7m (2014) and $0.6m (2015). A detailed budget is given in Section 9 which gives a detailed breakdown of the project cost.

5.2 Operational

The facility is projected to be running starting in second quarter of 2014. The operational costs are projected to be about $3.0m (2014), $4.6m (2015), $4.7m (2016) and $4.9m (2017). The first 3 years then grow to $5.2m and then adjust to increase with inflation. The operational cost will cover the utilities, salaries, raw materials and processing media. The increase in operational costs is based on a 3% cost of living increase over the projected time.

5.3 Revenue

Currently there is a 4 year contract in the works to produce a vaccine for Merck. The project will start once the facility is operational. The projected revenue from this project is as follows:

2014: $4.5m

2015: $12.9m

2016: $15.7m

2017: $19.1m

This opportunity gives will bring in good revenue for the initial first three years. This will allow for the company to slowly work on bringing in new projects to keep the facility fully operating for years to come.

The graph below shows the output of cash per quarter for the duration of the project. The graph also summarizes the cumulative cash flow. The money spent in the first two quarters is primarily for the design phase with the construction starting in the middle of the fourth quarter of 2012.

 

6. Schedule

6.1 Milestones

Project Phases

Start Date

Finish Date

Duration (days)

Engineering/Design

5/14/12

10/19/12

90

Equipment procurement

9/30/13

2/14/14

100

Construction

10/22/12

2/28/14

470

Close out Construction

2/28/14

2/28/14

1

Validation

3/3/14

5/8/15

310

Close out Validation

5/8/15

5/8/15

1

Total

786

7. Project Resources

PROJECT MANAGER

PROJECT ENGINEER

 

PROCUREMENT MANAGER

 

SAFETY ENGINEER

DOCUMENT MANAGER

 

CONSTRUCTION MANAGER

-DESIGN ENG

-CIVIL ENG

-ARCHITECT

-STRUCTURAL ENG

-QUALITY ENG

-TOTAL QUALITY MANAGER

-PROCESS INSPECTOR

-THIRD PARTY INSPECTOR

-ELECTRICAL SUPERVISOR

-INSTRUMENT SUPERVISOR

-PLC SUPERVISOR

-SUB-CONTRACTS ADMINISTRATOR

-MATERIAL CONTROLLER

-MECHANICAL SUPERINTENDENT

-HVAC SUPERVISOR

-PROCESS AND UTILITIES SUPERVISOR

-TURNOVER MANAGER

-DOCUMENT CONTROL LEAD

-DOCUMENT CONTROLLER

SUB CONTRACTORS

WORKERS

Project Sponsor

8. Payback Analysis

8.1 Payback Period

Product will be shipped to multiple Merck locations in North and South America, where it will be further distributed to clinics and university hospitals. Cost of dose will be $40 and it will remain constant for years 2014-2017.

When plant is fully operational in 2nd quarter of 2014 it is predicted that initial investment will be recouped in eight months just at the beginning of 2015. The graph below illustrates the payback period:

 

8.2 Return of Investment

ROI is a performance measure that can be used to evaluate efficiency of an investment. In order to calculate ROI, the return of an investment is divided by the cost of the investment. Results are expressed as percentage.

In our scenario we incorporated interest into capital investment decision of the plant. The ROI was calculated by dividing net income by total cost. The ROI for 2015 was calculated at 56% and by 2017 it will grow to 166%. It proves that our investment is efficient to generate considerable revenues form an asset. The table below lists the ROI values and other value associated with their calculations in dollars:

Year

Capital Cost

Operational Cost

Total Cost

Revenues

Interest

Net Income

ROI

2012

6,206,334

0

6,206,334

0

2,467,662

-8,673,996

-140

2013

9,493,748

0

9,493,748

0

3,681,029

-13,174,777

-139

2014

6,780,927

3,014,157

9,795,084

4,500,000

4,183,401

-9,478,485

-97

2015

645,439

4,601,250

5,246,689

12,930,375

4,754,334

2,929,352

56

2016

0

4,739,288

4,739,288

15,716,952

5,403,186

5,574,478

118

2017

0

4,881,466

4,881,466

19,104,053

6,140,591

8,081,996

166

9. Budget Estimate

COST CODE

DESCRIPTION

MATERIAL

LABOR COST

TOTAL

DIVISION 1 -GENERAL CONDITIONS

01001

PROCESS/MECHNICAL ENGINEERING

$2,040,000

01010

ARCHITECTURAL

$900,000

01020

DESIGN

$1,500,000

01030

PROJECT MAQNAGER

$400,000

01040

PROJECT TEAM

$1,500,000

01050

DRAWING

$1,500

01060

PERMITS

$2,500

GENERAL CONDITIONS SUBTOTAL

$4,000

$6,340,000

$6,344,000

DIVISION 2 – SITE WORK

02002

DUMPSTERS

$20,000

02003

GENERAL DAILY CLEAN-UP LABOR, ALL AFFECTED AREAS INCL MEZZ

$18,000.00

02004

TEMPORARY PROTECTION

$75,000

02004

EXCAVATION

$50,000

02003

SITE CLEARANCE

$5,000

$2,000.00

02820

FENCING

$2,000

02900

DEMO

$20,000.00

SITE WORK SUBTOTAL

$152,000

$40,000.00

$192,000

DIVISION 3 – CONCRETE

03100

Excavate area

$2,500

$7,500.00

03200

Prepare Footing

$1,000

$6,900.00

03300

Pour Footing

$18,000

$1,920.00

03400

Pour Floor

$180,000

$1,920.00

CONCRETE SUBTOTAL

$201,500

$18,240.00

$219,740

DIVISION 5 – METALS

05100

Primary Framing

$800,000

$12,000.00

05200

Secondary Framing

$535,000

$12,000.00

05300

Frame Roof

$535,000

$8,000.00

05400

Wall sheeting

$40,000

$8,000.00

05500

Trim

$20,000

$8,000.00

METALS SUBTOTAL

$1,930,000

$48,000.00

$1,978,000

DIVISION 6 – CARPENTRY

06101

Framing of Bioprocessing area

$90,000

$6,400.00

06101

Framing of Locker room

$26,250

$3,200.00

06101

Framing of Bioprocessing warehouse

$22,500

$3,200.00

06101

Framing of final product warehouse

$22,500

$3,200.00

06101

Misc Carpentry

$18,750.00

CARPENTRY SUBTOTAL

$161,250

$34,750.00

$196,000

DIVISION 7 – INSULATION & ENVIRONMENTAL PROTECTION

07500

ROOF CUT, CURB & PATCH @ EXHAUST FANS

$8,500

$4,533.33

07501

EPDM ROOFING

$45,000

$8,000.00

07850

PREFABRICATED ROOF CURBS, FURNISH AND INSTALL

$1,500

$3,600.00

07600

FLASHING AND SHEETMETAL INCL AT ROOF CURBS

$3,000

$8,000.00

07850

PATCHING AT ROOF AND OTHER PENETRATIONS

$2,000

$1,600.00

07900

INSULATION

$20,000

$8,000.00

07900

JOINT SEALANTS AND CAULKING

$1,840

$3,200.00

INSULATION & ENVIRONMENTAL PROTECTION SUBTOTAL

$81,840

$36,933.33

$118,774

DIVISION 8 – DOORS AND WINDOWS

08100

HM FRAMES AND DOORS (INTERIOR, SINGLE, MANUAL )

$20,000

$8,000.00

8200

PASS THROUGH SAMPLE CHAMBERS

$2,000

$1,600.00

08100

OVERHEAD DOORS

$20,000

$2,400.00

08800

DOOR LITE GLAZING

$480

$2,400.00

08710

HARDWARE

$1,650

$0.00

8300

WINDOWS B/W LAB AND PROCESSING AREA

$8,000

$4,800.00

DOORS AND WINDOWS SUBTOTAL

$52,130

$19,200.00

$71,330

DIVISION 9 – FINISHES

09260

GWB WALLBOARD SYSTEMS

$600,000

$14,400.00

09510

STANDARD ACT CEILINGS

$31,500

$9,600.00

09659

EPOXY FLOORING

$210,000

$7,200.00

09661

VINYL BASE

$120

$4,800.00

09765

CONCRETE SEALER

$60,000

$2,400.00

09900

PAINTING WALLS

$36,000

$6,400.00

09900

PAINT DOORS AND FRAMES

$2,000

$3,200.00

FINISHES SUBTOTAL

$939,620

$48,000.00

$987,620

DIVISION 10 – SPECIALTIES

10520

FIRE EXTINGUISHER CABINETS

$600

$320.00

10200

METAL WALL LOUVERS

$3,750

$1,600.00

10105

ROOM SIGNAGE

$1,000

$3,200.00

SPECIALTIES SUBTOTAL

$5,350

$5,120.00

$10,470

DIVISION 11 – BIOPROCESSING EQUIPMENT

11010

50L SINGLE USE BIOREACTOR

$60,000

11011

100L SINGLE USE BIOREACTOR

$90,000

11012

200L SINGLE USE BIOREACTOR

$90,000

11013

500L SINGLE USE BIOREACTOR

$75,000

11014

1000L SINGLE USE BIOREACTOR

$150,000

11015

2000L SINGLE USE BIOREACTOR

$250,000

11020

DEPTH FILTERS

$600,000

11021

DEPTH FILTERS CARTRIDGES

$5,000

11030

CHROMATOGRAPHY UNIT

$300,000

11040

CENTRIFUDGE

$126,000

11050

LYOPHILIZER

$300,000

11060

ASEPTIC FILL MACHINE

$200,000

11061

ASEPTIC FILL VIAL WASH

$300,000

11062

ASEPTIC FILL STERILIZER

$400,000

11063

ASEPTIC FILL CAP MACHINE

$100,000

11064

LABEL MACHINE FOR ASEPTIC VIALS

$7,000

11070

MIXING TANKS

$270,000

11071

MIXINGTANK BAGS

$3,750

11101

ISOLATORS

$700,000

11102

MODIFICATIONS TO ISOLATORS TO INCLUDE ASEPTIC FILL LINE EQUIPMENT

$100,000

EQUIPMENT SUBTOTAL

$4,126,750

$4,126,750

DIVISION 12 – FURNISHINGS

12010

CLEANROOM TABLES

$800

12011

CLEANROOM BENCHES

$800

FURNISHINGS SUBTOTAL

$1,600

$1,600

DIVISION 13 – SPECIAL CONSTRUCTION

13002

RIGGING OF HVAC EQUIPMENT (WFI)

$10,000

13002

RIGGING OF HVAC EQUIPMENT (FINISHED PRODUCT WAREHOUSE)

$15,000

13002

RIGGING OF HVAC EQUIPMENT (BIOPROCESSING AREA)

$15,000

13002

RIGGING OF HVAC EQUIPMENT (BIOPROCESSING WAREHOUSE)

$7,500

SPECIAL CONSTRUCTION SUBTOTAL

$47,500

$47,500

DIVISION 14 – VALIDATION

14001

IQ, OQ, PQ BIOREACTORS

$30,000

$16,200.00

14001

IQ,OQ, PQ AHU FOR BIOPROCESS AREA

$5,000

$2,700.00

14001

IQ, OQ, PQ AHU WAREHOUSE FILL PRODUCT

$5,000

$2,700.00

14001

IQ, OQ, PQ FILL LINE

$5,000

$7,200.00

14001

IQ, OQ, PQ LYOPHILIZER

$5,000

$2,700.00

14001

IQ, OQ, PQ CENTRIFUDGE

$10,000

$5,400.00

14001

IQ, OQ, PQ DEPTH FILTER

$10,000

$5,400.00

14001

IQ, OQ, PQ CHROMATOGRAPHY UNIT

$5,000

$2,700.00

14001

IQ, OQ, PQ WFI UNIT

$5,001

$2,700.00

VALIDATION SUBTOTAL

$80,001

$47,700.00

$127,701

DIVISION 15 – MECHANICAL

PROCESSING AREA

15010

DUCTWORK (GALVANIZED)

$52,000

$3,000.00

15011

DUCT INSULATION, WRAP

$32,500

$3,000.00

15012

VOLUME DAMPERS

$2,200

15013

GRILLES, REGISTER AND DIFFUSERS

$3,000

15014

FLEX DUCTS

$10,000

15015

REHEAT COILS

$6,000

15016

DOWNSTREAM HEPA

$500,000

15017

EXHAUST FANS AHU-1

$125,000

$900.00

15018

INSTALL AND TRIM OUT AIR HANDLER

$3,500

15019

AHU-1

$480,000

$480.00

15020

TESTING, ADJ. AND BALANCING

$25,000

15021

HUMIDIFIER

$2,500

15030

WFI PIPING 1″SS316 TC

$420,000

$4,500.00

15031

WATER FOR INJECTION UNIT (3000L/HR) PSG3000

$500

$480.00

15032

STORAGE TANK 10000 L WFI

$500,000

15033

WFI PUMPS

$40,000

15040

ETHYLENE OXIDE TREATMENT_ASEPTIC ISOLATORS

$165,000

$3,000.00

15050

SAFETY SHOWER COMBO INCL ROUGH-IN

$1,650

15060

COMPRESSED AIR PIPING MAIN, 1 1/2″

$8,000

$6,000.00

15061

COMPRESSED AIR PIPING BRANCHES, 3/4″ AND 1/2″

$3,000

$6,000.00

15062

COMPRESSED AIR VALVES AND FITTINGS

$3,340

$6,000.00

15070

FIRE PROTECTION

$14,000

$6,000.00

15080

BAS / CONTROL SYSTEM

$440,000

$24,000.00

LOCKER ROOMS

15101

DOMESTIC WATER MAIN HW AND CW, 2-1/2″ TO 1-1/2″

$12,000

$4,500.00

15102

DOMESTIC WATER BRANCH PIPING

$7,500

$4,500.00

15103

DOMESTIC WATER VALVES AND FITTINGS

$1,500

$4,500.00

15104

DOMESTIC WATER PIPE INSULATION

$1,800

$4,500.00

15105

PLUMBING FIXTURES INCL ROUGH-INS FOR SHOWERS, SINKS, LAVS, WC’S, URINALS, SERVICE SINK

$2,500

$2,700.00

ASEPTIC WAREHOUSE

15019

AHU-2

$480,000

$480.00

15017

EXHAUST FANS

$125,000

$900.00

15012

VOLUME DAMPERS

$11,000

15020

TESTING, ADJ. AND BALANCING

$20,000

15080

BAS / CONTROL SYSTEM

$220,000

15010

DUCTWORK (GALVANIZED)

$195,000

$3,000.00

15011

DUCT INSULATION, WRAP

$130,000

$3,000.00

BIPOPROCESSING WAREHOUSE

15019

AHU-3

$320,000

$480.00

15017

EXHAUST FANS

$125,000

$900.00

15012

VOLUME DAMPERS

$4,400

15020

TESTING, ADJ. AND BALANCING

$7,500

15080

BAS / CONTROL SYSTEM

$176,000

15010

DUCTWORK (GALVANIZED)

$162,500

$3,000.00

15011

DUCT INSULATION, WRAP

$113,750

$3,000.00

MECHANICAL SUBTOTAL

$4,952,640

$98,820.00

$5,051,460

DIVISION 16 – ELECTRICAL

BIOPROCESSING AREA

16100

CONDUITS

$30,000

$7,000.00

16120

WIRE AND CABLE

$50,000

$14,000.00

16141

SWITCHES – 277VOLT SINGLE POLE OR 3-WAY

$856

16142

RECEPTACLES – 125VOLT DUPLEX

$3,195

16170

WFI HOOKUP

$60,000

$3,500.00

16170

PUMP HOOKUPS

$45,000

$3,500.00

16170

ACEPTIC FILL LINE HOOKUPS

$30,000

$3,500.00

16170

ETHYLENE OXIDE TREATMENT HOOKUP

$5,000

$3,500.00

16195

ELECT IDENTIFICATIONS

$1,500

16452

GROUNDING

$3,000

16470

2500 AMP MCC

$50,000

16470

MCC STARTERS/BREAKERS

$16,800

16470

PANELBOARD – 208/120V, 100A w/ MAIN CB

$2,100

16470

PANELBOARD – 277V, 100A w/ MAIN CB

$2,100

16481

MOTOR HOOKUP

$5,550

$3,500.00

16483

VARIABLE FREQUENCY DRIVES AND MOTOR STARTERS (using VIV’s)

$22,500

$3,500.00

16476

DISCONNECT SWITCHES

$9,000

16515

LIGHT FIXTURES

$8,750

$3,150.00

16535

EXIT SIGN

$1,800

$3,150.00

16535

EMERGENCY BALLAST

$1,000

$2,800.00

16721

FIRE ALARM

$10,000

$3,500.00

16724

SECURITY SYSTEM

$128,247

$3,500.00

16740

TELE/DATA (ROUGH-IN ONLY)

$500

$3,500.00

ASEPTIC WAREHOUSE

16100

CONDUITS

$15,000

$3,500.00

16120

WIRE AND CABLE

$30,000

$7,000.00

16142

RECEPTACLES – 125VOLT DUPLEX

$2,130

16481

MOTOR HOOKUP

$14,800

16470

MCC STARTERS/BREAKERS

$19,200

16195

ELECT IDENTIFICATIONS

$1,500

16470

1000 AMP MCC

$50,000

16800

Generator (Caterpillar, XQ2000)2000 kW, 60 Hz, 1800 RPM

$710,790

$7,000.00

BIOPROCESS WAREHOUSE

16100

CONDUITS

$7,500

$3,500.00

16120

WIRE AND CABLE

$20,000

$7,000.00

16142

RECEPTACLES – 125VOLT DUPLEX

$426

16481

MOTOR HOOKUP

$3,700

16470

MCC STARTERS/BREAKERS

$4,800

16195

ELECT IDENTIFICATIONS

$1,500

16470

200 AMP MCC

$20,000

LOCKER ROOMS

16100

CONDUITS

$10,000

$3,500.00

16120

WIRE AND CABLE

$25,000

$7,000.00

16142

RECEPTACLES – 125VOLT DUPLEX

$852

16481

MOTOR HOOKUP

$14,800

16470

MCC STARTERS/BREAKERS

$19,200

16195

ELECT IDENTIFICATIONS

$1,500

16470

500 AMP MCC

$35,000

ELECTRICAL SUBTOTAL

$1,494,596

$100,100.00

$1,594,696

Total

$14,230,777

$6,836,863.33

$21,067,640

10. Cost Allocation