COMPANY REPORT
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very business leader or salesperson has been faced with this unbelievable customer decision regarding industrial investment: Take the cheapest offer despite evident differences in technology and its operational costs.
What is behind the decision, what are the consequences of such a decision? What should we change? Why is it a real concern in the health industry, and especially in the biopharma industry? The total cost of ownership (TCO) is used to calculate the total cost of purchasing and operating a technology product or service over its useful life. These three underlined phrases are the basis of the analysis necessary to support the right decision. When an industrial company decides to invest, there are
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normally three basic possible reasons for it:
Total Cost of Ownership: Cost Versus Value
+ grow the business + answer customer concerns + regulation compliance Despite the motivation, the pharmaceutical industry acts as a long-term investor. Any industrial project is based on 20-plus years of operating the facility. As a result, it makes a great
Philippe Fournet-Fayard
deal of sense to take special care regarding the costs linked to
CEO | Eolis
a three- to five-year lifetime, providing a different perspective
these 20-plus years of operation. This is unlike the case of the micro-electronics industry, for example, where investment has on the subject. We are all used to handling operating costs. Most are identified and direct; some are not always considered. For example, in our health industry, to intervene in a critical system requires requalifying and validating the system, to the extent required by the facility documents. Any additional intervention for maintenance on the systems would cost time and effort to revalidate it, on top of costs related to the lack of production and spare parts. Let me use a typical situation we face in the pharmaceutical industry: the definition of air filters for an HVAC system. The table below compares two filters. The have the same nominal airflow and same efficiency but different sizes and different costs of acquisition. Looking deeper into the specifications of each filter, we can see a different initial pressure drop but the same final max recommended pressure drop. This means that from the very first day, the cheapest filter will consume 40 percent more energy and will incur a 20 percent reduction in life time. The life-time reduction will oblige the maintenance team to change the filters five times instead of four times for the other filter. The collateral cost of an additional shutdown of a critical system is much higher by itself than the cost of the filters we will change. Typically, the price difference between these two filters is around 15 percent. Do the math! The right calculation is the Annual Total Filtration Cost, including the Complete Shutdown Cost, not the cost of the filters.
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Another aspect of the dilemma related to Investment cost/ Operating cost is the accounting treatment of both cases. The investment cost in the biopharma industry is treated as a fixed asset and typically depreciates over a long period of time (several decades). As a result, the impact of a 10 percent higher price on a purchasing decision has very little impact on the cost of the product itself. On the contrary, the operational expenses have a direct and immediate impact on the production costs, and consequently on the cost of the product and its sales price on the market, or the margin the market will allow you to get. This is key to understanding where to put extra money.
Filter A
Filter B
m3/h
3,000
3,000
mmxmm
610 x 610
610 x 610
Initial PD
Pa
80
115
Face velocity
m/s
2.2
2.7
Final PD
Pa
450
450
Airflow Size
The TCO is important for evaluating technology costs that are not always reflected in upfront pricing. Industries that invest for a long period of time in operations (like biopharma) gain a huge benefit by focusing on total cost, including purchasing and operation. Yes, this is more complicated to calculate than just the acquisition price, but it may make the difference on the indirect part of the product manufacturing cost.
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Motivating the organization to adapt the TCO analysis before deciding is the key. And it may begin with changing the bonus calculation of the purchasing department: no more reward only for the savings on the acquisition price. This approach is still a cultural challenge in many companies.
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from the
Q: How did Eolis’ specialized services and expertise support the pharmaceutical industry during COVID-19? PF: As a business, Eolis has not been negatively impacted by the COVID-19 pandemic. However, the company had to take on some costs to ensure the safety of our collaborators as the government did not take action. For instance, we had to multiply our transport fleet to bring people to the plants and send them back home due to their vulnerability to COVID-19. In this sense, Eolis imposed strict safety measures that went even beyond those recommended by the government. Internally, Eolis created guidelines for our visitors and clients
Philippe Fournet-Fayard
regarding the correct use of our infrastructure. From about 40 active projects, just two have been paused because of COVID-19 limitations. Inside the company, we had a very low percentage of contagion during the pandemic. One of our
CEO | Eolis América Latina
priorities continues to be to protect our collaborators and continue avoiding contagion. Q: Biosecurity came under the spotlight with the pandemic. What is the role of biosecurity for controlled environments such as pharma? PF: Biosecurity plays a fundamental role in the production of medicine and this is why HVAC are considered critical services. Air is in direct contact with the drugs, so air systems are fundamental for safe drug manufacturing. Biosecurity rules have always been essential for the industry but after the COVID-19 crisis, the concept became a of general interest. The COVID-19 crisis created opportunities for the pharmaceutical industry. Therefore, we have been involved in
Topiltzin Diaz Manager Industrial Division | Eolis América Latina
many projects, especially those regarding COVID-19 vaccine production in Mexico. For our company, this created an opportunity to innovate and implement new ways of working. Overall, we have successfully implemented safer work options by complying with the different requirements of the federal and state governments from Mexico City and Puebla. In 2020, the industry also experienced changes regarding
HVAC Systems Critical for Industrial Manufacturing
public medicine supply. As leaders in HVAC, we have worked side by side with pharmaceutical companies on their plant expansions or renovations and always delivering regulation compliance. Moreover, COFEPRIS guidelines regarding medicine production evolved, inspections became more rigorous, which also caused disruptions and we are supporting our clients as they adapt. Q: How does Eolis expect to grow during 2021? TD: For the industrial division, we want to support our clients in other manufacturing industries besides pharmaceuticals. Biosecurity is a concern for many manufacturing processes so we are ready to be a strategic partner for more industries. As a result of the COVID-19 pandemic, many of our clients are
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evolving their businesses. For instance, textile manufacturers have found an opportunity to produce face masks and, depending on their focus, others are producing sanitizing gel or personal protection equipment, which all need controlled environments to guarantee production excellence.
T
he National Metrology Center (CENAM) is the national reference laboratory for measurements, which promotes uniformity of measurements in Mexico by way of comparison with traceability to a common reference. CENAM has a close relationship
with national laboratories and international organizations related to metrology. This ensures the international recognition of national standards, as well as promoting the acceptance of the products and services of Mexico. CENAM was created to support the national metrological system (SMN) as a decentralized body. CENAM’s research and development activities are aimed at responding effectively to the growing measurement needs in all sectors. These include the advances in the traceability of temperature measurements for industrial and healthcare applications, the construction of one of the most accurate frequency standards in the world to support
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telecommunications and computing, as well as the development
Lab Project Propels CENAM Into Exclusive Club Philippe Fournet-Fayard CEO | Eolis
of a variety of certified reference materials to provide certainty to chemical measurements in the health, environmental and industrial processes sectors. To enter the very select club of worldwide reference labs, the ambient conditions of the measurements become critical as their precision and stability are part of the global accuracy formula. The participation of Eolis America Latina in the project was to provide an integral solution for metrology laboratories, including high quality and accurate air conditioning systems in modules A, B and C of the Special Laboratories building, as well as the Acoustics Laboratories and the Laboratories of 3D reference machines. Eolis engineers worked closely with the users of these labs to create a custom design of each area. The scope of work was extremely wide, from design to commissioning, and included a cleanroom partitioning system, HVAC, energies, controls and BMS. Eolis´ objective was the construction of 23 special laboratories for mechanical and electrical physics, including the national mass standard, density laboratory, gravimetry laboratory, nanometrology laboratory, Volt and Ohm laboratories, laboratory cryogenic, dimensional laboratory, national acoustic pressure standard, laboratory of tissue and cells, and DNA technology laboratory. In addition, several of these laboratories had ISO 5, ISO 7 and ISO 8 cleanroom classifications. The biggest challenge of the project was the integration of thermal inertia strategies in the HVAC systems to achieve a stability in the temperature and humidity of +/0.1 °C and +/- 5 %HR maximum in the national mass standard, density laboratory, dimensional laboratory and laboratories of the volt and ohm. Special strategies were implemented to cancel the noise
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and vibrations transmission from the MEP equipment to the laboratories and special air distribution elements designed with limited residual velocities of 0. 2 m/s to improve the homogeneity of the temperature and avoid disturbances in the development of the experiments.