Lowering mAb Cost per Gram: The Economics of a mAb Facility with 4x Higher Output

Key takeaways

• Using product intensification technologies, such as PAK systems, you can produce four times more product in your current facilities. 
• If you can quadruple your output, you can divide your fixed costs by four, dramatically reducing the final cost of goods sold (COGS). A 6x2000L facility can reduce costs by $22.55/g, providing an annual economic impact of $130M.
• Some costs remain fixed as output increases. Others, such as raw material costs, will increase in proportion to your new capacity.
• Product intensification lets you avoid unnecessary capital investments.
• It can also be used as part of a strategic plan to respond to demand for a successful biologic later, taking on less risk in initial investments.

Increase manufacturing productivity. Reduce your cost per gram.

For decades, improvements in monoclonal antibody (mAb) manufacturing economics have been driven by higher upstream titers, improved chromatography resins, and larger equipment.

But there is another powerful lever for reducing manufacturing cost that receives less attention.  What if you could produce more drug substance from the manufacturing facility you already have rather than building a new one?

Producing More with Your Existing Facilities

If a commercial mAb facility can produce four times more product without a proportional increase in facility footprint, equipment, labor, or supporting infrastructure, the economics of manufacturing change dramatically.

The reason is straightforward. You distribute your fixed or semi-fixed costs across substantially more grams of product. The cost of your buildings, cleanrooms, utilities, quality organization, engineering support, maintenance programs, and automation infrastructure remain the same, while increased efficiency delivers up to four times more product out the door.

For high-volume commercial biologics, the result can be hundreds of millions of dollars in annual cost savings.

Why Cost per Gram Matters

A useful way to evaluate biologics manufacturing efficiency is manufacturing cost per gram of drug substance.

At its simplest:

Annual Manufacturing Cost ÷ Annual Grams Produced = Manufacturing Cost ($/g)

The equation highlights an important point. Reducing the numerator, annual manufacturing expense, is one way to lower cost per gram.  But increasing the denominator—annual production—is potentially just as powerful.

PAK BioSolutions continuous manufacturing units let you produce four times more product within your existing manufacturing facilities by allowing you to run four processes simultaneously. 

But does this mean your costs will be cut in four? Let’s dive into the economics.

Three Types of Costs

Commercial biologics manufacturing facilities represent enormous capital investments. Underutilizing this infrastructure means your cost per gram is higher than it needs to be. Advances in manufacturing technology can help improve efficiency, but the distinction between fixed, semi-variable and variable costs is critical when evaluating the true value of these technologies.

A simplified commercial cost of goods sold (COGS) model might divide costs into three categories.

	Behavior	Examples
Fixed costs	Change relatively little with manufacturing volume.	Depreciation, portions of facility maintenance, infrastructure, automation systems and certain salaried personnel
Semi-fixed costs	Increase as manufacturing activity increases, but not necessarily in direct proportion to production.	Manufacturing labor, engineering support, quality operations, maintenance and environmental monitoring
Variable costs	Closely tied to manufacturing volume	Raw materials, consumables, filters and certain process chemicals

A fourfold increase in output can reduce the $/g contribution of fixed costs dramatically, as these costs won’t change very much as your manufacturing volume increases. On the other hand, increasing facility output does not eliminate your variable costs.

For example, producing four times more product will likely require four times more raw materials. Your semi-fixed expenses are more nuanced. For example, producing four times as much product won’t necessarily require four times as many engineers, operators or QA personnel. Staffing, and other semi-fixed expenses, will cost less per gram. But, it’s probably not as simple as dividing by four.

The greatest economic benefit comes from manufacturing technologies, such as PAK systems, that simultaneously increase facility productivity and improve utilization of expensive variable inputs.

A Simplified Commercial Facility Example

Consider a commercial mAb manufacturing facility with six 2,000 liter bioreactors and a capital cost of approximately $150 million.  Let’s see what happens if the facility is able to produce four times more product using the same infrastructure. 

If the capital investment is depreciated over approximately 15 years, annual depreciation would be roughly $10M per year. Let’s also assume that semi-fixed costs, such as operations, engineering, maintenance, quality and infrastructure costs are $35M per year. 

	Traditional process	Intensified process
Manufacturing Capacity	6 x 2,000 L bioreactor capacity (low titer)	6 x 2,000 L bioreactor capacity (high titer or perfusion)
Annual Production	1,440 kg mAb per year	5,760 kg mAb per year
Fixed costs: Facility depreciation over 15 years	$10M / year($150M facility)	$11M / year($150M facility and upgrades)
Semi-fixed costs: Operations, engineering, maintenance, quality and infrastructure costs	$35M / year(200 employees)	$39M / year(220 employees)
Total fixed and semi-fixed costs	$45M / year	$50M / year
Fixed and semi-fixed cost contribution (costs / production)	$31.25 per gram	$8.70 per gram

Savings per Gram	$31.25 – $8.70 = $22.55 (~75%)
Annual Economic Impact (savings per gram x annual production)	$130M

If we assume the same $150 million infrastructure can support this fourfold increase in production, the fixed and semi-fixed cost contribution is reduced by $22.55/g from facility and infrastructure costs alone.

A Larger Commercial Facility Example

A larger commercial mAb manufacturing facility, with six 15,000 liter bioreactors and a capital cost of approximately $400 million, can realize a savings per gram of $9.25 (~75%).  

	Traditional process	Intensified process
Manufacturing Capacity	6 x 15,000 L bioreactor capacity (low titer)	6 x 15,000 L bioreactor capacity (high titer or perfusion)
Annual Production	10,000 kg mAb per year	40,000 kg mAb per year
Fixed costs: Facility depreciation over 15 years	$27M / year($400M facility)	$28M / year($400M facility and upgrades)
Semi-fixed costs: Operations, engineering, maintenance, quality and infrastructure costs	$100M / year(600 employees)	$110M / year(660 employees)
Total fixed and semi-fixed costs	$127M / year	$138M / year
Fixed and semi-fixed cost contribution (costs / production)	$12.70 per gram	$3.45 per gram

Savings per Gram	$12.70 – $3.45 = $9.25 per gram (~75%)
Annual Economic Impact (savings per gram x annual production)	$370M

Note that a fourfold increase in facility output does not mean total manufacturing cost per gram automatically falls by 75%.  This is because some costs, such as raw materials, scale almost directly with production.

What Do These Savings Mean at a Commercial Scale?

At commercial scale, seemingly modest $/g savings become very large numbers.  For a product requiring 1,000 kg per year, saving $22.55 per gram can result in $22.55 million in annual savings.

For a facility producing 40,000 kg per year, the $9.25 savings per gram would result in $370 million in annual economic benefit. As manufacturing volumes increase, these seemingly modest savings per gram only continue to multiply.

Over a ten-year commercial life, the cumulative manufacturing value can potentially reach hundreds of millions or even billions of dollars. This is why seemingly incremental improvements in manufacturing productivity can have enormous financial implications once a biologic reaches commercial scale.

Avoided Capital May Be Even More Valuable

There is another economic benefit that is not fully reflected in $/g manufacturing calculations.  Suppose demand for a successful biologic increases.  Under a traditional manufacturing model, that increase might require additional downstream suites, major equipment installations or an entirely new manufacturing facility.  A new commercial biologics facility could require hundreds of millions of dollars of capital and several years to design, construct, qualify and validate.

But, if you can run multiple processes simultaneously, using technology like a PAK system, then your existing infrastructure absorbs that additional demand. This approach is called process intensification.

Unlike a traditional manufacturing model, process intensification may let you avoid:

• Hundreds of millions of dollars in capital expenditure
• Years of facility construction and qualification
• Additional depreciation
• Additional facility maintenance
• Additional cleanroom infrastructure
• Significant hiring requirements
• Technology transfer into another manufacturing site

This creates an economic benefit well beyond the simple cost of goods sold (COGS) equation we saw above.

Capacity Has Strategic Value

Manufacturing capacity is also valuable because demand forecasts are imperfect.  Biologics manufacturers must make capacity decisions years before actual commercial demand is known. Build too little capacity, and the company risks product shortages. Build too much, and hundreds of millions of dollars of capital can sit underutilized. 

A more productive manufacturing platform creates another option:  Install less capacity to start and extract more output from it when demand increases. When considered in this context, manufacturing productivity has value not only as a cost-reduction tool but also as a form of capacity insurance.

Investing in a new purification system may cost a manufacturing facility several million dollars. But, the equipment investment becomes small relative to the manufacturing value it unlocks. If the additional capacity allows you the flexibility to respond to commercial demand, and eliminates or delays construction of another manufacturing suite, the return becomes substantially larger.

The Bottom Line

A fourfold increase in commercial mAb facility output does not automatically reduce every manufacturing expense by fourfold. Raw materials still need to be purchased. Consumables still need to be used. Product still needs to be tested and released.

But, many of the industry’s largest manufacturing expenses are fixed or semi-fixed. The more product that moves through those assets, the lower their contribution becomes on a per-gram basis.

For a commercial mAb facility, moving from conventional manufacturing to a highly intensified process could potentially reduce manufacturing costs by tens of dollars per gram. At commercial volumes, that can translate into tens or hundreds of millions of dollars in annual savings. And if higher productivity eliminates the need for another manufacturing facility, the capital savings can be even greater.

More grams. More capacity. Smaller facilities. Lower cost per gram.

For the next generation of commercial biologics manufacturing, increasing output from existing infrastructure may prove to be one of the most powerful cost-reduction strategies available.