Plant Costing

1
Plant Costing

• Mark Kastantin
• Production Group
• April 29, 2003

2
Objective

• Estimate the cost of building and operating a
  stent production plant.
• Will show that the plant cost is small in
  comparison to the possible revenue.

3
Approach

• Photolithography production process
• Factors that make up the cost
• Capital Cost
• Equipment
• Other
• Annual Cost
• Raw Materials
• Other
• Comparison of bare metal and drug-eluting stents
• Predicted Profit

4
How to Make Stents

• Lots of places make stents using laser cutting.
• This is boring and would make the project too
  easy.
• Use photolithography.
• Better feature resolution for small stents.
• Cost is still not prohibitively expensive.

Micro-abrasive blasting solutions for medical
device manufacturing problems. Comco, Inc.
2002. Kovacs et. al.
5
Photolithography is

• the process of transferring geometric shapes from
  a mask to the surface of a substrate

Photolithography. http//www.ece.gatech.edu/resear
ch/labs/vc/theory/photolith.html. March 10, 2003.
6
Photolithography
UV
etchant
substrate
photoresist
mask
Spin coating
Mask and expose
Develop
Etching
Final Product
Can make complex 3-D shapes using gray-scale
techniques
Resist removal
7
Detailed Process Description
Bare Metal
Solvent Clean
Dehydration Bake
Photoresist Coating
Time 10 min Acetone, methanol, isopropanol, H2O
Time 10 min Spin-coat primer and photoresist
Time 120 min 200C to remove solvent residues
Resist Bake
UV Exposure
Develop
Post-Exp. Bake
Time 30 min 100C to remove solvent residues
Time 5 min Selectively degrades photoresist
Time 30 min 100C to solidify resist before
etching
Time 10 min Remove degraded photoresist
Metal Etching
Solvent Rinse
Polymer Coating
Bake/Sterilize
Time 30 min Type of etch depends on type of
metal
Time 30 min 100C to dry polymer and sterilize
prior to packaging
Time 15 min Piranha, H2O
Time 20 min Spray-coat polymer with embedded drug
Packaging
Final Product
Time 20 min
8
Each Process Uses
Raw Materials
Process Equipment
9
Raw Materials

• Titanium used as an estimate
• Etchant depends on type of metal used
• Polymer is (poly)lactic acid

-Disputes involving Paclitaxel, a cancer drug
sold under different brand names, including
Taxol. -VWR International Catalog.
http//www.vwr.com. March 10, 2003. - Shipley.
http//www.shipley.com/. March 10, 2003.
10
Equipment
Karl Suss. http//www.suss.com/. Electronic
Visions. http//www.ev-global.com. Medisonic.
http//www.sono-tek.com/biomedical/medisonic.html.

11
How Many Stents to Make?

• Demand
• 3.1 million bare metal (sell for 3000)
• 700,000 drug-eluting (sell for 1000)
• Market Share 20
• We want to make
• 620,000 bare metal
• 140,000 drug-eluting

12
How Many Processes?

• Estimate 30 stents from each process
• Can vary depending on stent size
• To meet demand
• 20,667 processes /yr for bare metal
• 4,667 processes /yr for drug-eluting

13
How Many Processes?

• Run plant 24 hr/day for 340 days/yr
• Other days used for maintenance
• Total process time
• 5 h 10 min for bare metal
• 5 h 30 min for drug-eluting
• To meet demand
• 13 parallel processes for bare metal
• 3 parallel processes for drug-eluting

14
Polymers vs. Bare Metal

• Process Equipment
• Spray-coater required for polymer process
• Advantage bare metal
• Overall Capital Cost
• More equipment more expensive
• Advantage drug-eluting

• Raw Materials
• Drug/polymer is expensive
• Advantage bare metal
• Overall Annual Cost
• More equipment more maintenance
• Advantage drug-eluting

15
Process Equipment Costs (per process)
Bare Metal 195,000
Drug-eluting 295,000
16
Other Capital Costs

• Land Purchase
• Construction
• Control and Automation Systems

• 5 million
• 20 million
• 2.5 x (process equipment cost)

17
Summary Capital Costs
Bare Metal 33,872,500
Drug-eluting 28,097,500
18
Raw Material Costs (per process)
Bare Metal 3,212,055 /yr
Drug-eluting 1,699,749 /yr
19
Other Annual Costs

• Equipment Maintenance
• Worker Salary
• Land Tax
• Utilities

• 25 of equipment price annually
• 620,000 / yr
• 10 of purchase price
• 50,000 / yr

Worcster Muncipal Research Bureau. August 13,
1999.
20
Summary Annual Costs
Bare Metal 5,015,805 /yr
Drug-eluting 3,090,999 /yr
21
Breaking Even

• Both break even almost immediately
• Bare metal stents are more profitable
• Greater capital investment is overwhelmed by
  higher revenue

22
The Search for Equality

• Increase demand by 57
• Polymer plant is cheaper
• Makes money faster due to 3000 price tag

23
How the Model Can Change

• Land purchase and construction costs
• Number of stents/process
• Cost of drug/polymer
• Generic Taxol can cost 1/100 of Bos.Sci. claims
• Optimized Processes
• Reduce process equipment needed

• Less profit to the company
• Others take cut of sale price
• Doctors
• Hospitals
• Distributors

24
Summar of Key Figures
25
Conclusions

• Both annual and capital costs are small in
  comparison to the projected revenue (for both
  plants).
• With current market conditions, it is more
  profitable to produce bare-metal stents.
• Drug-eluting stents become more profitable as
  demand increases.
• Plant should produce both, and change to meet
  market needs.

26
References

• Gregory Kovacs, Nadim Maluf, and Kurt Petersen.
  Bulk Micromachining of Silicon. Proceedings of
  the IEEE 1998 86(8), 1536-1551.
• Worcesters Commercial/Industrial Property Tax
  Rates Top Comparable Cities and Surrounding
  Towns. Worcster Muncipal Research Bureau.
  August 13, 1999.
• Disputes involving Paclitaxel, a cancer drug sold
  under different brand names, including
  
  Taxol. http//www.cptech.org/ip/health/taxol/ .
  December 8, 1998.
• VWR International Catalog. http//www.vwr.com.
  March 10, 2003.
• Mikrostrukturierung. http//www.ist.fraunhofer.de/
  english/products/gf2/micro/microstru/frames.html.
  Fraunhofer-Gesellschaft 2001.
• Timothy Chuter. Stent-graft design the good, the
  bad and the ugly. Cardiovascular Surgery. 2002
  10(1), 7-13.
• Metals. http//www.mcmaster.com. March 10, 2003.
• Photolithography. http//www.ece.gatech.edu/resear
  ch/labs/vc/theory/photolith.html. March 10, 2003.
• Micro-abrasive blasting solutions for medical
  device manufacturing problems. Comco, Inc. 2002.
• Shipley. http//www.shipley.com/. March 10, 2003.

27
Extra Slide w/ original figure
Time 30 min 100C to remove solvent residues