These are tough times for the introduction of new technologies. When proposing a change in the manufacturing environment, today’s economic climate forces us to debate between scientific opportunity and validation costs, improving product quality versus return on investment (ROI), and moving toward a model of continuous improvement without impacting the bottom line. When it comes to the implementation of rapid microbiological methods (RMMs), pharmaceutical microbiologists and QC managers have literally run into a wall with financial planners and manufacturing site heads over the potential costs associated with the evaluation, qualification and installation of these novel technology platforms. If the industry is going to move into the 21st Century with respect to the implementation of RMMs in Process Analytical Technology (PAT) and Quality by Design (QbD)-driven surroundings, then we must be prepared to use appropriate financial models to economically justify the time and expense in qualifying and utilizing these new approaches.
There is no denying that the initial costs associated with performing proof-of-concept or feasibility studies, formal validation testing and installation activities can be significant. However, it is unfair to only examine the up-front costs when evaluating a new RMM project, as there can be substantial long-term cost savings and cost avoidances that may be realized once the RMM is put into service, and this could tip the ROI scale in favor of moving the project forward. Therefore, it is important to fully understand all of the financial components that should go into an economic analysis before a decision is made on whether to proceed with a formal qualification program. These can include the costs associated with the existing method, the costs associated with the initial capital investment and the long-term financial benefits (cost savings and avoidances) that the RMM may provide. Dollar amounts for each of these components can then be used to develop a comprehensive economic analysis and business case for introducing the new method.
Where can we realize the greatest savings when implementing a RMM? One obvious expense is personnel, which can account for the majority of the costs associated with manual sampling and testing in the traditional microbiology laboratory. Next, the overhead associated with maintaining the laboratory and testing equipment, in addition to the consumables and media required to conduct the assays, contribute additional monies that need to be considered. Therefore, a RMM that reduces headcount, eliminates the need for consumables and minimizes overhead may be a good candidate for additional consideration from a financial point of view. Additional business benefits when implementing a RMM may include reduced testing time and testing costs for product release, a reduction or elimination of off-line assays, lower cost of product sold, decreased re-sampling, retests and deviations, reduction in rework, reprocessing and lot rejections, and a reduction in plant downtime. The technical benefits of a RMM may include a significantly faster time to result or results in real-time, greater accuracy, precision, sensitivity and reproducibility, single cell detection, enhanced detection of stressed and viable but non-culturable (VBNC) organisms, increased sample throughput and automation, continuous sampling, and enhanced data handling and trend analysis [1, 2]. For those RMMs that can provide results in real-time, the response time to an adverse trend or excursion can be immediate, which is not possible for today’s growth-based procedures. Therefore, if the resulting ROI review is favorable, and the technology attributes offer superior testing capabilities as compared with the existing conventional microbiology method, then the decision to qualify and implement the RMM should proceed.
Using Return on Investment (ROI) and Payback Period (PP) Models
ROI is the ratio of money gained or lost on an investment relative to the amount of money invested. For RMMs, the cost of performing the conventional method (CM) with the cost (and savings) of using the new method can be compared. The resulting data is reported as a percentage (%) and usually represents an annual or annualized rate of return. The ROI is calculated using the following formula:
The PP is the time required for the return on an investment to “repay” the sum of the original investment. In the context of RMMs, this equals the time (usually in years) required to realize sufficient cost savings to pay for the initial investment of the RMM capital equipment, qualification and implementation activities. The formula used to calculate the PP is the inverse of the ROI formula:
Monetary values for each financial component need to be understood in order to calculate the ROI and PP. The first component is the operating costs for the conventional method and the RMM. These may include the cost of consumables, regents and supplies; total sampling, preparation, testing, data handling and documentation resource time; cost of labor [salary and benefits]; media, reagents and consumables disposal costs; laboratory equipment depreciation, calibration and qualification; overhead for laboratory and storage space; data management and record retention; and preventive maintenance and service contracts. The second component is the RMM investment, which can include the initial capital expense; technology and software training; system qualification and method validation costs; and regulatory filing expenses, if required. The latter may not be required, especially for changes to in-process microbiological methods or methods that are not specified in an NDA or marketing authorization. The last component to be used in these models is the RMM cost savings. Examples include reduced testing and finished product release cycle times; a reduction or elimination of laboratory equipment and overhead; lower headcount; reduced repeat testing and investigations, lot rejection, reprocessing and rework; a reduction in plant downtime; increased yields and lower cost of product sold; and reduced raw material, in-process and finished goods inventory holdings.
After entering all of these components into the models, the ROI and PP can be determined. The ROI can be calculated for the first year (when the initial capital investment will be made) and then every year thereafter. The rate of return can take on any value greater than or equal to -100%; a positive value represents an investment gain, a negative value represents a loss, and a value of 0% corresponds to no change. The higher the ROI value is, the greater the return will be on the initial investment. When the information entered for the PP is based on annual values, the PP result will be reported in years.
Putting the Models Into Practice
I have assisted a number of companies in developing a business case for implementing RMMs. One company explored the use of new environmental monitoring technologies to eliminate some of the costs associated with active air monitoring and reduce the time to result. They identified an optical spectroscopic RMM as a potential replacement for its existing agar-based aerosol sampling procedure. The technology is based on Miescattering, in which scattered light is concentrated in a forward direction, and the scattered portion of the light is proportional to the particle size. When airborne particles are processed through the instrument, the system detects, sizes and quantifies both viable and nonviable particles [3, 4]. Because this RMM continuously monitors airborne particles in real-time, eliminates manual sampling and laboratory testing, and does not use consumables or media, the potential for significant cost savings was obvious. The company conducted a financial analysis of using the system in three separate manufacturing facilities, and for the purpose of illustrating the use of the ROI and PP models, I have chosen one of these analyses to be presented here.
Briefly, the manufacturing site represents a fill-finish facility that processes 70,000 active air samples per year. Filling is performed in a number of isolators, and the site rejects one $1M product lot per year due to an EM excursion on conventional media and shuts down the affected line to conduct an EM investigation. As a result of the investigation, one additional lot of product is not filled. An overview of the individual financial components that were used to develop the ROI and PP calculations is presented below.
Operating costs for the conventional method (CM) and the RMM:
1. Because the RMM operates continuously, in this example we will assume that the actual number of tests performed can be reduced by a factor of 5 as compared with the CM.
2. Depreciation for RMM equals 10% of capital cost (assumes 20 units at $90,000 each; pricing used is representative and is for calculation purposes only, as the supplier may vary the price based on configuration and quantities purchased).
3. Annual maintenance and service contracts start in year 2 and are based on geographic region and services contracted. Pricing assumed equals 12% of capital cost (20 units at $90,000 each).
Cost savings for the RMM:
RMM investment costs:
1. Assumes 20 units at $90,000 each.
ROI and PP Analysis Results
The resulting ROI and PP calculations are provided below.
It is apparent from the calculations that implementation of the selected RMM for active air monitoring represents ample economic justification for initiating a qualification and implementation plan. Furthermore, the company will realize a reduced PP due to the cost savings realized during the first year of implementation. Therefore, the company can support the start of this RMM project from not only a technical perspective, but from a business perspective as well.
Summary
Although the case study presented herein represents the use of a particular RMM in a specific manufacturing scenario, the ROI and PP models can be utilized to develop an economic assessment for virtually any type of RMM. It is important to remember that for each RMM and application there can be different line items and dollar amounts for the ROI and PP financial components, and that the final ROI and PP values can vary accordingly.
The use of financial models can play an important role in justifying a RMM validation and implementation program. Providing this type of information should satisfy the business needs of the individuals and functions that will ultimately approve the capital spending and financial support that can move the project forward. Even for microbiologists, the use of these models really does make
it easier to demonstrate a ROI for your RMMs!
References
1. Miller, M.J. Rapid microbiological methods in support of aseptic processing. In Practical Aseptic Processing: Fill and Finish Volume 2. Lysfjord, J., Ed.; DHI Publishing, River Grove, Illinois and PDA, Bethesda, Maryland: 2009, 169-219.
2. Encyclopedia of Rapid Microbiological Methods Volumes 1-3; Miller, M. J., Ed.; DHI Publishing, River Grove, Illinois and PDA, Bethesda, Maryland: 2005.
3. Miller, M. J.; Lindsay, H.; Valverde-Ventura, R.; O’Conner, M. J. Evaluation of the BioVigilant IMD-A, a novel optical spectroscopy technology for the continuous and real-time environmental monitoring of viable and nonviable particles. Part I. Review of the technology and comparative studies with conventional methods. PDA J. Pharm. Sci. Technol. 63 (3), 244 –257. 2009.
4. Miller, M.J.; Walsh, M.R.; Shrake, J.L.; Dukes, R.E.; Hill, D.B. Evaluation of the BioVigilant IMD-A, a novel optical spectroscopy technology for the continuous and real-time environmental monitoring of viable and nonviable particles. Part II: Case studies in environmental monitoring during aseptic filling, intervention assessments and glove integrity testing in manufacturing isolators. PDA J. Pharm. Sci. Technol. 63 (3), 258 –282. 2009.
Dr. Michael J. Miller is an internationally recognized microbiologist and subject matter expert in pharmaceutical microbiology, Process Analytical Technology (PAT), isolator design and qualification, and the due diligence, validation, registration and implementation of rapid microbiological methods. Currently, Dr. Miller is the President of Microbiology Consultants, LLC (http://microbiologyconsultants.com). In this position, he is responsible for providing microbiology, regulatory and quality solutions for the pharmaceutical and biopharmaceutical industries. Over the past 20 years, Dr. Miller has held numerous R&D, manufacturing, quality, consulting and business development leadership roles at Johnson & Johnson, Eli Lilly and Company, Bausch & Lomb, and Pharmaceutical Systems, Inc.
Dr. Miller has authored over 90 technical publications and presentations in the areas of rapid microbiological methods, PAT, ophthalmics, disinfection and sterilization, and is the editor of PDA’s Encyclopedia of Rapid Microbiological Methods. He currently serves on a number of PDA’s program and publication committees and advisory boards, and is co-chairing the revision of PDA Technical Report #33: Evaluation, Validation and Implementation of New Microbiological Testing Methods.
Dr. Miller holds a Ph.D. in Microbiology and Biochemistry from Georgia State University (GSU), a B.A. in Anthropology and Sociology from Hobart College, and has served as an adjunct professor at GSU and the University of Waterloo, School of Optometry. Recently, he was appointed the John Henry Hobart Fellow in Residence for Ethics and Social Justice, awarded PDA’s Distinguished Service Award and was named Microbiologist of the Year by the Institute of Validation Technology (IVT).
Author correspondence should be addressed to: [email protected]