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Development and Application of a Business Case Model for a Stream Sampler in the Pharmaceutical Industry

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Abstract

Purpose

A template to prepare a business case for Process Analytical Technology (PAT) and Continuous Manufacturing (CM) projects is presented in this study. Business cases are necessary tools used in different organizations to present new projects for management evaluation. As new ways of working under PAT and CM constitute a significant investment of capital, time, personnel, and other resources, a solid business case will facilitate the organization, presentation, and justification of these innovative strategies to management for their evaluation. The authors understand that this is the first study that considers the implementation of PAT in a specific manufacturing facility, including potential tax benefits associated with the manufacturing location.

Methods

A financial analysis template was used to develop a business case for an innovative stream sampler for pharmaceutical powder blends. The business case financial model included the capital investment and associated costs for implementing this powder sampler. The case study modeled three different potential tax benefits modalities. The definition of the financial model parameters, assumptions, and constraints are followed by the recommendations of pharmaceutical industry leaders and tax advisors.

Results

The financial model provided the evaluation of the listed relevant costs and benefits. The analysis evidenced a significant influence of tax incentives on the economic evaluation. As a result, the financial model estimated a net present value (NPV) range of $420,957 to $578,896, an internal rate of return (IRR) with a minimal of 65% and a maximum of 89%, and a return of investment (ROI) of 82 to 133% for the proposed PAT investment. The most significant benefits representing additional savings between $14,157 and $234,157 per year were presented applying the tax incentives.

Conclusion

The PAT Business Case template facilitates evaluating different scenarios, costs, and benefits for a proposed project. Each company may adopt the business case model according to its cost structure and manufacturing processes. The tax benefits contribute further to this case study, especially the super deduction, followed by the R&D tax credit. Furthermore, the tax incentives effects can be evaluated by entering the input data without an additional step in the business case template.

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Data availability

All data is available as supplementary material of this article.

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Acknowledgements

This study was financially supported by the U.S. Economic Development Administration (EDA) (Investment No.: 01-79-14889). The authors would like to thank several pharmaceutical industry leaders, CPA María de los Ángeles Rivera, tax advisor at Kevane Grant Thornton company, and Víctor Merced Amalbert, chief business development of the Department of Economic Development and Commerce (DEDC) of Puerto Rico, who provided valuable insights for the development of the business case.

Funding

This research is funded by Economic Development Administration, Award Number: (01–70-14889).

Author information

Authors and Affiliations

  1. Department of Industrial Engineering, University of Puerto Rico at Mayagüez, Call Box 9000, Mayagüez, 00680, Puerto Rico

    María A. Fontalvo-Lascano & Mayra I. Méndez-Piñero

  2. Department of Chemistry, University of Puerto Rico at Mayagüez, Call Box 9000, Mayagüez, 00680, Puerto Rico

    Bárbara B. Alvarado-Hernández & Rodolfo J. Romañach

  3. CIS International LLC, Del Valle Industrial Park Building #5 Road 183 km 7.2, San Lorenzo, 00754, Puerto Rico

    Carlos Conde

  4. Scientia Naturam, PO Box 1639, Juncos, 00777, Puerto Rico

    Eric J. Sánchez

Authors
  1. María A. Fontalvo-Lascano
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  2. Bárbara B. Alvarado-Hernández
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  3. Carlos Conde
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  4. Eric J. Sánchez
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  5. Mayra I. Méndez-Piñero
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  6. Rodolfo J. Romañach
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Contributions

MAF-L: Coordinated this research and carried out all experiments, data analysis, and drafted the manuscript. BBA-H: Drafted the manuscript, prepared figures, and data analysis. CC: Aided in manuscript revisions and establishing theoretical data needed. EJS: Aided in manuscript revisions and establishing theoretical data needed. MIMP: Coordination of the research, helped establish methods for data analysis, and aided in the conception of the study. RJR: Conceived this study and participated in coordinating the research.

Corresponding author

Correspondence to Rodolfo J. Romañach.

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The authors declare no competing interests.

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Fontalvo-Lascano, M.A., Alvarado-Hernández, B.B., Conde, C. et al. Development and Application of a Business Case Model for a Stream Sampler in the Pharmaceutical Industry. J Pharm Innov 18, 182–194 (2023). https://doi.org/10.1007/s12247-022-09634-0

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