Bioprocess Design

MARKET ANALYSIS
 Learning goals

 Cost analysis

 Market analysis : which price? which production rate?

 Profitability analysis

 Business phases
 1010
EPO
Biotech Market
109 ‐interferon

108
Vinblastine
107 DHA
106 Beta carotene
105 Taxol Insulin
€ 𝑘𝑔

104 Digitalis
Pectinase
103
Cephalosporin
102 Tetracyclines Penicillin
101 ‐lactoglobulin Protease
Aspartame Adipic acid
Succinic acid Lysine
100 Butanol Soy protein
1,3PDO Glutamic Citric 
acid
10‐1 acid Ethanol
8
10‐4 10‐3 10‐2 10‐1 10‐0 10 10 10 10 10 10 10 10
1 2 3 4 5 6 7

𝑀𝑇 𝑦
 1010

109

108

107

106

105
€ 𝑘𝑔

104

103

102

101

100 Egg proteins

10‐1
10‐4 10‐3 10‐2 10‐1 10‐0 101 102 103 104 105 106 107 108
𝑀𝑇 𝑦
 Customers behaviour

10
Demand law
€ 𝑘𝑔

Egg protein
𝑃

Revenue

104 2∙104
𝐹 𝑀𝑇 𝑦
 Customers behavior

Demand law
€ 𝑘𝑔

Egg protein
+1%
𝑃

Δ𝐹 %
𝑒
Δ𝑃%

%
elasticity
Elasticity= ‐3%
%

𝐹 𝑀𝑇 𝑦
 𝑃 𝑃 Customers behavior
𝑀𝑃
𝑒~1 𝑀𝑃 𝑒≫1

𝐹 𝐹
𝑀𝐷
𝑃 𝑃 Δ𝐹 %
𝑒
𝑒≫1 Δ𝑃%
𝑒≪1 𝑀𝑃
elasticity
𝑒≪1

𝑀𝐷 𝑀𝐷
𝐹 𝐹
 Customers behavior

%
Elasticity=
%
Δ𝐹 %
𝑒
Δ𝑃%
 1010
EPO
Biotech Market
109 ‐interferon

108 𝑒≪1
Vinblastine
107 DHA
106 Beta carotene
105 Taxol Insulin
𝑒≶1
€ 𝑘𝑔

104 Digitalis
Pectinase
103
Cephalosporin
102 Tetracyclines
𝑒≫1
Penicillin
101 ‐lactoglobulin Protease
Aspartame Adipic acid
Succinic acid Lysine
100 Butanol Soy protein
1,3PDO Glutamic Citric 
acid
10‐1 acid Ethanol
8
10‐4 10‐3 10‐2 10‐1 10‐0 10 10 10 10 10 10 10 10
1 2 3 4 5 6 7

𝑀𝑇 𝑦
𝑃 𝑃 Customers behavior
INCOME

𝐹 𝐹
𝑃
Other effects
𝑃
𝑃 𝑃

𝐹 𝐹
 Supplier behavior
𝑃€

𝐹 𝑀𝑇 𝑦
𝐹

𝐺𝑅𝑂𝑆𝑆 𝑃𝑅𝑂𝐹𝐼𝑇 𝑃⋅𝐹 𝐶𝑂𝑆𝑇

 Market analysis: 
𝑃€ customers vs suppliers

𝐹 𝑀𝑇 𝑦
𝐹

Suppliers maximize their profit Customers maximize their “utility”

𝐺𝑅𝑂𝑆𝑆 𝑃𝑅𝑂𝐹𝐼𝑇 𝑃⋅𝐹 , 𝐶𝑂𝑆𝑇 𝐹 , 𝑈𝑡𝑖𝑙𝑖𝑡𝑦 𝑓 𝐹 ,𝐹 ,𝐹 ,….

 Demand function
𝑃 € 𝑘𝑔

Company

𝐹 𝐹 𝑃

𝐹 𝐹 𝐹
𝐹 𝐹

𝑃 € ⋅ 𝑘𝑔
𝐹 𝑀𝑇 𝑦
𝐹 𝑀𝑇 ⋅ 𝑦
 Learning goals

 Cost analysis

 Market analysis : which price? which production rate?

 Profitability analysis

 Business phases
 Profitability

𝑅€ 𝑃€ ⋅𝐹 Revenue = Price x Production rate
𝐶𝑂𝑆𝑇€ 𝐶𝐴𝑃𝐸𝑋 𝑂𝑃𝐸𝑋 Cost
𝐺𝑃€ 𝑅€ 𝐶𝑂𝑆𝑇€
Gross Profit
𝑃€ 𝐶𝑂𝑆𝑇€
⋅𝐹
𝑁𝑃€ 𝐺𝑃€ ⋅ 1 𝑇 Net Profit
𝑇 – tax rate %
𝑁𝑃€⁄
𝑅𝑂𝐼 ⋅ 100 Return Of Investment
𝑇𝐶𝐼€
𝑇𝐶𝐼€ Payback time
𝑃𝑎𝑦𝑏𝑎𝑐𝑘 𝑡𝑖𝑚𝑒
𝑁𝑃€⁄
 Building Net Cash Flow
𝑁𝐶𝐹€
Start‐up

Full‐scale Production

𝑡 𝑡 𝑡
Δ𝑇𝐶𝐼€
𝑁𝐶𝐹€ 𝑁𝐶𝐹€ 𝑁𝑃€ 𝐷€
Δ𝑡

𝑁𝑃€ 𝐺𝑃€ ⋅ 1 𝑇
 Building Net Cash Flow
𝑁𝐶𝐹€
Start‐up

Full‐scale Production

𝑡 𝑡 𝑡
Δ𝑇𝐶𝐼€
𝑁𝐶𝐹€ 𝑁𝐶𝐹€ 𝑁𝑃€ 𝐷€
Δ𝑡

𝑁𝐶𝐹 𝑃⋅𝐹 𝑂𝑃𝐸𝑋 𝑀 𝑂𝑉 𝐺𝐸 𝑇𝐴𝑋𝐸𝑆

𝑇𝐴𝑋𝐸𝑆 𝑇⋅ 𝑃⋅𝐹 𝑂𝑃𝐸𝑋 𝑀 𝑂𝑉 𝐺𝐸 𝐷€
𝑁𝐶𝐹 𝑃⋅𝐹 𝑂𝑃𝐸𝑋 𝑀 𝑂𝑉 𝐺𝐸 𝐷 1 𝑇 𝐷

𝑁𝑃€
 Time‐value for money

Future value for money vs present value
𝐹𝑉
𝑃𝑉
𝐹𝑉 𝑃𝑉 ⋅ 1 𝑖 1 𝑖

𝑖 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑟𝑎𝑡𝑒
 Building Net Cash Flow
𝑁𝐶𝐹€
Start‐up

Full‐scale Production

𝑁
𝑡 𝑡 𝑡
Δ𝑇𝐶𝐼€
𝑁𝐶𝐹€

𝑁𝑃€ 𝐷€ 𝑁𝑃€
Δ𝑡

𝑁𝐶𝐹€⁄ 𝑡
𝑁𝑃𝑉€ ⋅ Δ𝑡 Net Present Value
1 𝑖

𝑁𝐶𝐹€⁄ 𝑡 Internal Rate Return
0€ ⋅ Δ𝑡
1 𝐼𝑅𝑅
 Learning goals

 Cost analysis

 Market analysis : which price? which production rate?

 Profitability analysis

 Business phases
 Design phase
R&D

Prototyping

Pre‐pilot &
Pilot tests

Building

Start‐up

Full‐scale 
Production
 Design phase
R&D

Prototyping

Pre‐pilot &
Pilot tests

Building

Start‐up

Full‐scale 
Production
 Production phase
𝐶𝑂𝑆𝑇€ 𝐶𝑂𝑆𝑇
€
𝑓 𝐹
Redesign the process = 

Building
Start‐up
New investment 
Production

Building
Start‐up
Production

Production Redesign the process = 
New investment 
𝑘𝑔 𝑦

LONG PERIOD
𝐹
Business phase
 Bioprocess Design

MARKET ANALYSIS