Economic and Uncertainty Analysis of Manufacturing Operations

Economic modeling tool to help biopharma manufacturers assess facility investment risks, simulate demand uncertainty, and compare costs across technologies, supporting flexible, scalable designs that reduce long-term costs and lost-sales risk.

Industry Need

Biopharmaceutical manufacturers face significant economic challenges when planning new facilities, including high capital investment, long depreciation periods, and the risk of inaccurate demand forecasts that can lead to costly underutilization and overbuilding. These uncertainties make it difficult to align capacity with market needs, underscoring the need for robust economic models and risk-based planning tools that optimize capital allocation, reduce lost sales, and support flexible, scalable facility strategies.

Approach

The project team aims to generate an a robust economic and uncertainty modeling tool to guide investment decisions for facility construction under variable market conditions. The approach includes developing a decision-support application for industry use, enabling companies to simulate scenarios and optimize strategies for capacity planning and ROI.

Impacts

Companies can avoid overbuilding and underutilization by aligning facility investments with realistic demand forecasts.

Use of the facility economic and uncertainty modeling tool can improve ROI and financial resilience by knowing when to defer capital spend until needed, improving cash flow and reducing exposure to forecast errors.

Industry-wide adoption of economic and uncertainty modeling could enable common benchmarks for economically optimized facilities leading to lower cost of medicines and improving patient access.

By enabling data-driven decisions, the modeling tool can accelerate the shift to flexible, continuous technologies thereby advancing industry-wide transformation.

Value Statement/Outcomes

The economic and uncertainty modeling tool developed in this project will help users quantify the financial impact of forecasting errors and compare long-term net present costs across facility types (traditional stainless steel, single-use fed batch, and single-use continuous). In a related NIIMBL project (Next Gen High Level Facility Design), the model demonstrated how flexible, modular designs reduce 20-year net present costs by $500 million compared to traditional stainless steel facilities and cut lost sales risk from $150 million to less than half through accelerated build timelines and incremental expansion strategies.