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  1. 1. Slide
  2. 2. <ul><li>About Company </li></ul><ul><ul><li>Background </li></ul></ul><ul><ul><li>Overview </li></ul></ul><ul><ul><li>Organization </li></ul></ul><ul><ul><li>Process </li></ul></ul>Introduction to case Outline
  3. 3. <ul><li>About Capacity Planning </li></ul><ul><ul><li>Capacity overview </li></ul></ul><ul><ul><li>Potential demand for AVASTIN </li></ul></ul><ul><ul><li>Potential Market Size </li></ul></ul><ul><ul><li>Capacity Planning </li></ul></ul><ul><ul><li>Capacity Expansion Options </li></ul></ul><ul><ul><li>Location </li></ul></ul><ul><ul><li>Plant Size and Design </li></ul></ul>Slide Conclusion
  4. 4. Introduction to Case <ul><li>In Nov 2004 </li></ul><ul><li>>>Plant in Porri ño Spain was successfully producing Avastin. </li></ul><ul><li>>>Ebersman think other cancer patients might benefit from Avastin. </li></ul><ul><li>>>Genentech tested Avastin on other forms of cancer. </li></ul><ul><li>If Avastin can approved by FDA </li></ul><ul><li>>>Genentech may need to expand its capacity to meet demand. </li></ul><ul><li>At least we need 5 years for completed the Genentech’s clinical trials. </li></ul><ul><li>But don’t know >> how many cancer patients could benefit. </li></ul><ul><li> >> how alternative cancer drugs from other companies will get this clinical trials. </li></ul>Slide
  5. 5. Slide
  6. 6. Slide 2005 Most Admired Biotech Company
  7. 7. Background Slide <ul><li>In 1976 , Genentech was founded by Venture Capitalist (Robert A. Swanson & Dr. Herbert W. Boyer) </li></ul><ul><li>In 1977, Licensed first recombinant DNA drug to Eli Lilly </li></ul><ul><li>In 1980 , Product Public in USA. </li></ul><ul><li>In 1990 , Roche Holding Ltd. Invested $2.1billon </li></ul><ul><li>in Nov.2004 , Value of firm $52 billion (Roche held 60 % of common stock) </li></ul><ul><li>Oncology Product / Pipeline focus </li></ul><ul><li>Products </li></ul><ul><ul><li>RITUXAN </li></ul></ul><ul><ul><li>HERCEPTIN </li></ul></ul><ul><ul><li>GROWTH HORMONE </li></ul></ul><ul><ul><li>AVASTIN </li></ul></ul><ul><ul><li>Etc. </li></ul></ul>
  8. 8. 1AVASTIN : drug for patients with previously untreated metastatic cancer of the colon or rectum Slide Overview Mission To be the leading biotechnology company, using human genetic information to discover, develop, manufacture and commercialize biotherapeutics that address significant unmet medical needs. In 2003 Revenues : $3,300 million 79 % from product sales Net Income: $563 million In 2004 AVASTIN 1 was approved by FDA First nine months of 2004 sales of AVASTIN 15 % or $2,684,000 million TARCEVA & OMNITARG both drugs that Genentech promise to launch in the next year
  9. 9. Genentech Product Information (2001-2003) Slide ($ in millions)
  10. 10. Organization <ul><li>Six primary groups: </li></ul><ul><li>Product operations </li></ul><ul><li>Legal and human resources </li></ul><ul><li>Finance </li></ul><ul><li>Commercial operations </li></ul><ul><li>Product development </li></ul><ul><li>Research </li></ul>Slide In 2004 Product Operation Product development Part in
  11. 11. Ebersman <ul><li>Senior Vice President Product Operation </li></ul><ul><li>Experienced for 10 years </li></ul><ul><li>Responsible for manufacturing , process development , supply chain management , engineering and operational (these staff 2,500 people) </li></ul>Slide
  12. 12. Manufacturing Process <ul><li>South San Francisco (SSF) </li></ul>Slide To created drugs based on recombinant DNA (inserting DNA into cells to produce protein) Operation Locations Vacaville (CA ) Porri ño Spain
  13. 13. Production Process Slide
  14. 14. Manufacturing Process Flow Chart (per Batch) Slide 2,000L 12,000L ( 0.75gm/L )
  15. 15. Slide Ultra Filtration Frozen Bulk Packaged Products
  16. 16. Opportunities & Challenges <ul><li>By finding the way to improve process of revalidation with FDA </li></ul>Slide <ul><li>Look the way to increase yields </li></ul><ul><li>Genentech have to revalidate </li></ul><ul><li>If the company have to reengineering (new process) </li></ul>
  17. 17. Slide
  18. 18. <ul><li>In 1994 Started planning CCP1 in Vacaville , California </li></ul><ul><li>minimum >> 5 years to build a biotech plant </li></ul><ul><li> >> 4 phases involved in each project </li></ul><ul><li>- Design (1 year) </li></ul><ul><li>- Engineering / Construction (2 years) </li></ul><ul><li>- Testing / Debugging / Validation (1years) </li></ul><ul><li>- FDA filing / licensing (1years) </li></ul><ul><li> >> Every process 100 % control and sterility are required </li></ul>Capacity Overview Slide In 2000 FDA approved for CCP1 In 2004 CCP1 became a Genentech’s high volume drugs (Rituxan , Herceptin , Xolair and Avastin Capacity : 12 12,000liter production vessels
  19. 19. Vacaville Expansion <ul><li>>>After FDA approved AVASTIN , Genentech decided to expand Operation in Vacaville by Starting “CCP2” and hope to complete in 2009 </li></ul>Slide >>In developing CCP2 , - double capacity in each line (build eight 25,000 liter production vessels) - without higher expenditure Capacity : 8 25,000liter production vessels
  20. 20. Contract Manufacturing Relationships <ul><li>>>In 2003 – 2004 Genentech entered to 2 contract manufacturing relationships </li></ul>Slide
  21. 21. <ul><li>Potential Demand for AVASTIN </li></ul>Slide <ul><li>Limited time to add capacity </li></ul><ul><li>Need to forecast product demand to decision about expansion </li></ul><ul><li>Some industry analysts estimated that Avastin could be $2-$4 billion drug annually for the company & It will double the company’s revenues in 5 years. </li></ul>
  22. 22. <ul><li>Total number of patient with each type of cancer </li></ul><ul><li>The duration of treatment for each patient </li></ul><ul><ul><ul><li>The number of dosages </li></ul></ul></ul><ul><ul><ul><li>The number of weeks </li></ul></ul></ul>Potential Market Size Slide
  23. 23. A model for all cancer indication Slide
  24. 24. Slide Capacity Planning Demand-upside Demand-Basecase Demand- Downside Sample Capacity Requirements Chart
  25. 25. Slide Plan Economic optimum a Total Product Demand (kilograms) Distribution of Possible Demand Scenerios
  26. 26. Capacity Expansion Options <ul><li>>>In Nov 2004, Usage of Rituxan/Herceptin and Genentech’s other recombinant DNA continued to grow </li></ul><ul><li>So Genentech need to produce at least 1,000kg </li></ul><ul><li>to meet demand in 2005 </li></ul><ul><li>Demand will growth </li></ul><ul><li>- In 2010 (25 % ) </li></ul><ul><li>- In 2015 (25 % ) </li></ul><ul><li>>> Ebersman need to determine about “CCP3” </li></ul>Slide
  27. 27. <ul><li>>> CCP1 & CCP2  success in Vacaville </li></ul><ul><li>Vacaville has location advantage But </li></ul><ul><li>It has - risk (“putting all their eggs in one basket”) - inefficiency management ( “big to manage”) </li></ul><ul><li> </li></ul>Location Slide
  28. 28. Plant Size and Design Slide
  29. 29. Conclusion Slide
  30. 30. Slide
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