In the Facility Design Zone

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As companies grow and expand their product offerings, it becomes necessary to consider manufacturing space. The decision to build is not made lightly, because CGMP manufacturing space comes at a steep price. Estimates range from $500 to $1,400 per ft2 to build new biopharmaceutical manufacturing space (1,2,3). As Jean-Francois Denault, Agnes Coquet, and Vincent Dodelet point out in their article in the February issue of BioProcess International, non-GMP biomanufacturing space comes at a much lower cost due to the lack of strict regulatory compliance required (3). A “virtual biotech” company uses this fact to its advantage, contracting out the manufacturing and housing only scientists in an office environment with the leanest approach to this theme. That business model certainly has its advantages in the uncertain world of biopharmaceuticals, where everything rests on costly and lengthy clinical trials.

However, companies from small to large with successful products are facing the choice of whether to contract out their manufacturing once they have a product approved or build their own facility to ensure that they can provide the quantity of the product that the market demands. It is worth noting that even successful companies like Genentech have chosen to use contract manufacturers to help meet the demand for their products. In 2006, Lonza and Genentech signed a complex business agreement centered around facilities and capacity issues (4). In the first part of the agreement, Genentech sold its Avastin manufacturing facility in Perriño, Spain, where Lonza would continue to manufacture the drug for Genentech over a period of time. Lonza also would progress with the building of a multipurpose shell and the reactivation and expansion of a previously mothballed reactor in Portsmouth, NH. Finally, Lonza will build in Singapore an 80,000-L large-scale mammalian biopharmaceutical production facility, which is expected to be licensed by the FDA in 2010. Genentech has an exclusive option to acquire that facility from Lonza between 2007 and 2012 for a purchase price of $290 million plus an additional $70 million on the achievement of certain performance milestones. The facility will be built in parallel with Lonza’s own planned 80,000-L plant in Singapore, expected to come on-line in 2011.

In fact, it is generally accepted that unless a company has one (preferably two) approved product(s) and a strong clinical pipeline, outsourcing is a more economical way for it to manufacture than in-house production (5). Even with the CMO markup, outsourced manufacturing spreads out fixed costs across a number of clients, lowering the cost of goods for each product sponsor as compared with construction and fixed-cost maintenance of a biopharmaceutical manufacturing facility operating beneath its break-even capacity use (5).

Clearly, the decision to build needs to be made strategically, then be carefully planned and executed. To complicate matters, in contrast with conventional construction, engineering design activities for biopharmacuetical projects usually begin while product and process development are still being defined and optimized (6). You can’t begin to plan a facility for manufacture of a product when that product is needed by the market. Stick-built facilities take about four years to build and receive regulatory approval; modular facilities take about half that time (7). Indeed, all of the factors to be considered can make the prospect overwhelming.

Companies need to design facilities that meet their many needs of differences in scale, product development, phase of clinical development, and corporate growth. Yet they’re often limited by budget realities and the need to design for today’s certainties and tomorrow’s uncertainties. It’s hard to predict the direction of world economies and the regulatory and political changes that will transpire. (8)



The team that works on capital project planning is key to its success. Each member will bring various skills and values to the endeavor. Architecture and engineering firms bring process and critical utilities know-how, linking specialty processing systems and GMP operation requirements. Final delivery requires effective collaboration between all members that make up the design and execution team (9).

Site Selection: Blindfolded Pointing on a Map?

Simply choosing a location at random on a map may be an initially attractive idea — especially if you’ve always wanted to relocate to Bermuda. But careful site selection is the first step in new facility planning. Conventional wisdom is to build a new facility near where you are already located. So small biotechs build facilities near the research park that incubated their company, usually with close proximity to the university they came from. Therefore, it’s no surprise that biopharmaceutical hubs in the United States are centered on San Francisco, CA, Boston, MA, and San Diego, CA. If you are at the biotech start-up stage, helpful information about site selection for your facility can be found in the “Site Selection: Best Practices” box.

If you’re contemplating a major facility, important considerations include labor cost and resources, logistics, materials and construction cost, and technology transfer. Economic development councils from Ireland and Puerto Rico (10), Arizona (11) and New York (12), Toronto (13), Singapore, Australia (14), France, and every place in between are actively recruiting companies to site new facilities in their locales. Such groups often tout academic resources, tax incentives, and favorable local regulations as reasons to consider them. Facilities offshore may be attractive for labor, materials, and tax incentives, but the challenges can include regulatory understanding of local contractors; local authorities and their operating time-frames, procedures, policies, and language differences; logistical considerations for the planning and construction phases; and myriad other unknowns that may only become known too late.

Significant cost savings can also be achieved through buying an existing building and retrofitting it for GMP manufacturing. KBI BioPharma, a division of Atlanta-based Kinetic Biosystems Inc, did just that in 2003. The company purchased a 341,298ft2 building on the 75-acre former Mitsubishi Semiconductor America campus in Durham, NC (1). A lot of infrastructure required for biopharmaceutical manufacturing such as cleanroom facilities, purifie
d water, air-filtering systems, high tech HVAC (heating, ventilating, and air conditioning) systems, gas lines, and waste-handling facilities were already in place. The company estimates that renovating the facility cost about $600 to $700 per square foot.

Materials and Methods of Construction

After you’ve decided where to build, you need to decide how you’re going to do it. The project execution strategy affects cost, schedule, and quality of the immediate project as well as further operations throughout the facility life-cycle (2). Many biopharmaceutical facility projects are integrating some form of modularization to maximize predictable costs, schedules, and quality benefits. Modular can mean prefabricated buildings, or process skid systems and HVAC systems, or preengineered modular construction techniques.

Focus on the Regulations: Whether you decide to take a modular approach or a stick-built (or some combination, which is most common), you will need to work with regulatory authorities to ensure that your design is compliant. This becomes more complex if you want your facility to supply products to multiple countries, in which case you have to work with multiple regulatory agencies on the front end to make sure there are no surprises in the validation phase.

SITE SELECTION: BEST PRACTICES by Bill Neil



Site selection is not for the faint of heart, as any life sciences professional who has been through the process will attest. Finding the right location can be an arduous task with significant short-and long-term financial implications. Fortunately, steps can be taken to make the process easier.



Choose Your Team: The most effective way to avoid errors, missteps, and delays is to choose the most experienced site-selection team possible. The basic team consists of a real estate broker, an architect, and a contractor. Depth of experience in life sciences is critical. Conduct thorough interviews, get detailed case studies, learn about their work for past clients, and check references. Make sure each team member understands your company’s specific requirements and goals, and can both articulate and deliver the services you need.



Understand Your Options: Once the team is together, it is time to consider space options. Properties suitable for life-sciences tenants are more complex in infrastructure than traditional office or industrial facilities. Base buildings require high floor loads, upgraded plumbing, back-up power, and higher ceiling heights. The difference in price between traditional and life sciences space is equally dramatic. In Seattle, WA, for example, a typical build-out for 15,000 ft2 of office space is about $70/ft2, whereas build-out for R&D space of the same size can easily reach $200-$250/ft2.



Although a few lucky businesses may find suitable space that can be renovated to meet their needs, most will find a build-to-suit facility to be the best and most cost-effective option. In this case, life science companies are well advised to focus their efforts on the three or four real-estate investment trusts (REITS) that specialize in developing life-sciences properties. They have the financing, experience, and fortitude to quickly turn plans into reality.



Have an Exit Strategy: Because of the highly specialized nature of life sciences space, landlords typically push for lease terms of 10 years or more. Because of the somewhat volatile business of life sciences, tenants generally want terms closer to five years. In addition to straight negotiation over the length of a lease, tenants should work with their brokers to build lease termination provisions into their agreements. For example, a tenant can negotiate the option to terminate after three years if a landlord can’t offer additional space to accommodate growth.



Also, it is best to locate a life-sciences business in close proximity to similar businesses. In case of either catastrophic business failure or enormous success, efforts to sublease excess space or expand into new space will be infinitely easier when a facility is surrounded by similar businesses with like requirements.



Bill Neil is senior vice president of GVA Kidder Mathews, and past chair of the life sciences practice group, GVA Worldwide, 500 108th Avenue NE, Suite 2400, Bellevue, WA 98004; 1-425-454-7040; .

In 2007, Althea Technologies (San Diego, CA, www.altheatech.com) expanded its facility with a 30,000-ft2 CGMP manufacturing facility. This is the third Althea facility located on the company’s San Diego, CA, campus (15). Althea’s facilities must comply with US Food and Drug Administration (FDA) and Europeans Medicines Agency (EMEA) requirements, adding to the complexity of the regulatory compliance.

“We made sure that we’re very aware of US and especially European requirements,” explained Rick Hancock, executive vice president for Europe at Althea. “Planning for regulatory compliance starts extremely early.”

Raw Materials Planning: Beyond the “how” and the regulatory planning, is materials planning. Modular construction offers an advantage in that its material procurement process is more set than in stick-built construction. It becomes more complex with the uncertainty of pricing for construction materials, which can fluctuate wildly, even from week to week. “Some architects are designing building structures in two versions — one steel and the other concrete — and letting market forces dictate which version to buy and build,” (8). Equipment vendors are working to control the costs of stainless steel through lot purchases of raw materials under favorable market conditions — stockpiling it, which of course, is a market force that sends the price up.

Another method steel fabricators are using is to apply a surcharge to bids that helps compensate steelmakers and-users for the fluctuating prices of alloy elements (especially nickel).

“The surcharges on six-inch tubing are greater than the cost per foot of the tubing,” shared Randy Cotter, Sr., of Cotter Brothers Corporation (www.cotterbrothers.com). “Because of the growth in China and the rest of the world starting to use this material, we are seeing shortages in some of the material that makes up the stainless steel that we use in this industry. We have seen the price of stainless go up 35% in six months on two occasions recently.” Knowing this, companies may find the concept of single-use products and their advantages in cleaning and validation to be more attractive to implement. Scale is the biggest limiting factor with single-use systems, and large-scale manufacturers still have questions about the feasibility of using a disposables for their processes. Companies such as Althea commonly use a mixture of both stainless equipment and disposables in their new facility designs.

FACILITY DESIGN ZONE EXHIBITORS



CRB Engineers & Builders Booth #5109 www.crbusa.com



Turner Construction CompanyTurner Pharmaceutical Group Booth #5208 www.turnerconstruction.com



BIOTECHNOLOGY INDUSTRY ORGANIZATION (WWW.BIO.ORG)

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;Wherever possible, we do use disposables, especially in buffer preparation,” said Hancock. “In process storage, we tend to rely pretty heavily on Stedim. On the filling side, we’re going to do as much possible with product-dedicated disposable equipment, but we’re going up to a 1,000-L scale, so there we will have some tanks.”

Cotter shared that he hasn’t seen a slow-down in demand for his company’s fabrication services. “I don’t see the niche (single-use systems) taking over the business,” he said. “I see it being very specialized. Some companies are using it.” But he hasn’t seen it yet impact his company.

“The industry is as busy now as it ever has been, and some of us are even having trouble with predictions of what we see on the horizon,” said Cotter. “We thought all the big monster jobs were behind us, and they’re not.”

He explained that with all this business, there is a big demand for fabricators who understand the standards and requirements of GMP manufacturing facilities. As new entrants come into the business, companies doing the hiring are doing less to ensure that the contractors are really ready for the job.

“In the old days, they used to do a lot more due diligence and surveys of people before they would allow them to go on a bidder’s list,” explained Cotter. “We don’t see that anymore. There are so many new companies out there now showing up on the bidder’s list, and some of them really don’t know what’s involved in the requirements of some of these jobs. We’re seeing pricing gaps of greater than 20%.”

Adding to the pressure is that the boom in bioindustrial plants is creating more demand for fabrication. These facilities use the same essential equipment, but without the GMP requirements. Cotter has decided to stay out of that segment of the market because he has invested time and energy in gaining the expertise and skills necessary to do highly regulated biopharmaceutical jobs. He was recently approached by a former biopharmaceutical facility manager who had moved into the bioindustrial sector and who wanted him to fabricate a fermentor, but he turned down the job.

“When she asked me why, I said, ‘Because we’ve worked so long and so hard to get where we’re at and understanding the specs and having the people trained that we couldn’t build a system without incorporating that level of quality in it and we’re not going to be competitive,’” said Cotter. “The margins aren’t there for people like us. It’s an industry with no rules yet. There’s no set of standards that you can say are validatable to meet a requirement.” And therein lies the truth of the difference between biopharmaceutical and industrial biotech facilities. It’s not quite apples and oranges, but it’s definitely closer to clementines and grapefruits. As Denault, Coquet, and Dodelet discuss in their recent article (3), GMP compliance is a big factor in facility design.

Cost Savings and Efficiency

Beyond integration of single-use processing systems, there are other new trends in facility design. One is the program of the US Green Building Council (USGBC) and their Leadership in Energy and Environmental Design (LEED) green building rating system. The nonprofit group “encourages and accelerates global adoption of sustainable green building and development practices through the creation and implementation of universally understood and accepted tools and performance criteria” (16).

“The reason an owner goes after a green building project has a number of different components,” said Brad Pease, senior green building consultant at Paladino and Company (Seattle, WA, www.paladinoandco.com). “These three items cover what we call the triple bottom-line of people, planet, and prosperity. Usually an owner comes at a green building project because of concerns about one or all three of those areas. When designed properly, green buildings can address all three areas in a way that is economically feasible.”

Despite the mentioned feasibility, many in the biopharmaceutical industry may be thinking that their regulatory requirements are already too much, and the last thing they want to add is one more piece of planning to their process. For companies interested in going green, Pease has this advice: “If you integrate the green concepts early in your design process, LEED certification costs can be minimal compared to the benefit it brings. You have to be smart about where you allocate your money, keeping in mind the reasons you’re going after a green building to begin with.”

An example of how green buildings can help a facility become more energy efficient and cost a company less money in the long run is the implementation of air systems with a green component.

“A number of strategies can help you reduce the amount of energy spent on HVAC,” explained Pease. When air systems bring in fresh air from outside, that air needs to be heated, meanwhile, the exhaust air is exhausting heat outside of the building. He shared that there are new technologies in ventilation systems that recover heat from the air without cross-contamination. This is a good example of where some additional equipment on the front-end can provide some very quick turnarounds and real savings on energy cost.

On 5 March 2008, Novo Nordisk announced plans to expand their Princeton, NJ, facility. This $20-million facility is expected to LEED certification through a unique, sustainable design. Its interior will encourage use of the exterior daylight and feature “smart lighting” that will automatically dims and adjusts to promote a whole-building approach to sustainability (17).

FACILITY DESIGN SESSIONS



The 2008 BIO International Convention offers some sessions to tell you more about facility planning considerations, including outsourcing options. Please watch for updates and scheduling details at www.bio.org!



Outsource It or Do It Yourself—Making the Manufacturing Decision for Phase 3 and Beyond



Outsourcing Biologics Manufacturing: The CMO Advantage in Asia From Europe and Japan to the US: Build or Buy?



Is Biomanufacturing the Next Product-Enabling Technology? Foreign Health Authority Inspections of U.S. and European Manufacturing Sites The Early Bird Gets the Worm: Extracting Value Out of Your Early-Stage Pipeline

No matter what type of facility, where, and when, the decision to build is an exciting first step in a long process. There are many options to consider, and costs and benefits to weigh, and there are many resources and businesses ready to help you on your way.

REFERENCES

1.) Teer Associates KBI Biopharma, North Carolina Center For Biomanufacturing, Durham, North Carolina KBI Biopharma, USA. Pharm. Tech. (accessed 5 March 2008); www.pharmaceutical-technology.com/projects/kbi-biopharma.

2.) Koffke, K, and RG. Merrill. 2008. Integrating Modular Design-Build Execution Strategies into Biotech Projects: Meeting Schedule, Cost, and Compliance Goals. BioProcess Intl. 6:24-32.

3.) Denault, JF, A Coquet, and V. Dodelet. 2008. Construction and Start-Up Costs for Biomanufacturing Plants: Canadian Case Studies in the Cost of Regulatory Compliance. BioProcess Intl. 6:14-23.

4.) Lonza Group Ltd. 2006.News Release: Lonza Enters into Biopharmaceutical Manufacturing Agreement with Genentech.

5.) Finnegan, S, and K. Pinto. 2006. Offshoring: The Globalization of Outsourced Bioprocessing. BioProcess Intl. 4:56-62.

6.) Reifferscheid, M
, and K. Bronnenmeier. 2005. Front-End Engineering: A New Design Approach for Biotechnology Projects. BioProcess Intl. 3:24-28.

7.) Arthur, J. 2005. A Case Study in Parenteral Filling: Modular Construction Meets the Need for Speed. BioProcess Intl. 3:48-51.

8.) Levin, J. 2005. Facility Design for Biotechnology Projects in the New Millennium. BioProcess Intl. 3:18-23.

9.) Signore, AA. Signore, AA and T 2005.Pharmaceutical Industry ProfileGood Design Practices for GMP Pharmaceutical Facilities, Taylor & Francis, New York:1-22.

10.) Scott, CA. 2004. Biotech in Puerto Rico: Ready to Look Toward the Island?. BioProcess Intl. 2:7880.

11.) Scott, CA. 2005. Phoenix Rising. BioProcess Intl. 3:36-40.

12.) Rosin, LJ. 2004. New York’s Hudson Valley. BioProcess Intl. 2:78-80.

13.) Blocher, P. 2008. Accelerating Commercialization: MaRS Helps Companies Shift into the Fast Lane. BioProcess Intl. 6:24-27.

14.) Sims, K. 2008. The Biotech Boom Down Under. BioProcess Intl. 6:18-22.

15.) Althea Technologies, Inc. 2007.Press Release: Althea Technologies’ Manufacturing Capacity Grows Through New Facility Construction.

16.) US Green Building CouncilLEED Rating Systems.

17.) Novo Nordisk 2008.Novo Nordisk Expands US Headquarters in New Jersey.

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