October 2007

Slide 1

© 2007, Genentech
 October 2007

Outline
Introduction to case
About Company
 Background
 Overview
 Organization
 Process

© 2007, Genentech
 October 2007
Slide 3

About Capacity Planning

Capacity overview
Potential demand for AVASTIN
Potential Market Size
Capacity Planning
Capacity Expansion Options
Location
Plant Size and Design

Conclusion

© 2007, Genentech
 October 2007
Slide 4

Introduction to Case
In Nov 2004
>>Plant in Porriño Spain was successfully producing Avastin.
>>Ebersman think other cancer patients might benefit from Avastin.
>>Genentech tested Avastin on other forms of cancer.

If Avastin can approved by FDA

>>Genentech may need to expand its capacity to meet demand.

At least we need 5 years for completed the Genentech’s clinical trials.

But don’t know >> how many cancer patients could benefit.
>> how alternative cancer drugs from other
companies will get this clinical trials.

© 2007, Genentech
October 2007
Slide 5

© 2007, Genentech
October 2007
Slide 6

2005 Most Admired

Biotech Company

© 2007, Genentech
 October 2007
Slide 7

Background
• In 1976 , Genentech was founded by • Oncology Product / Pipeline
Venture Capitalist (Robert A. focus
Swanson & Dr. Herbert W. Boyer) • Products
• In 1977, Licensed first recombinant
• RITUXAN
DNA drug to Eli Lilly
• HERCEPTIN
• In 1980 , Product Public in USA. • GROWTH HORMONE
• In 1990 , Roche Holding Ltd. Invested • AVASTIN
$2.1billon • Etc.
• in Nov.2004 , Value of firm $52 billion
(Roche held 60% of common stock)

© 2007, Genentech
 October 2007
Slide 8

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
AVASTIN1 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
1AVASTIN : drug for patients with previously
untreated metastatic cancer of the colon or
rectum
© 2007, Genentech
 October 2007
Slide 9

Genentech Product Information (2001-2003)

$7.00, 0%
Rituxan
$25.00, 1%
Herceptin
$167.00, 6% Growth Hormone
$1.00, 0%
$185.00, 7% Thrombolytic
Pulmozyme
$322.00, 12%
Xolair
$1,489.00, RAPTIVA
58%
Other
$425.00, 16%

($ in millions)

© 2007, Genentech
 October 2007
Slide 10

Organization
Six primary groups:
• Product operations
• Legal and human resources
• Finance
• Commercial operations
• Product development
• Research

In 2004
Product Operation Part in Product development

© 2007, Genentech
 October 2007
Slide 11

Ebersman

• Senior Vice President Product Operation

• Experienced for 10 years
• Responsible for manufacturing , process development ,
supply chain management , engineering and
operational (these staff 2,500 people)

© 2007, Genentech
 October 2007
Slide 12

Manufacturing Process
Operation Locations
South San Francisco
(SSF)

Vacaville (CA)

Porriño Spain

To created drugs based on recombinant DNA

(inserting DNA into cells to produce protein)

© 2007, Genentech
 October 2007
Slide 13

Production Process

© 2007, Genentech
 October 2007
Slide 14

Manufacturing Process Flow Chart (per Batch)

12,000L
2,000L
(0.75gm/L)

© 2007, Genentech
October 2007
Slide 15

Frozen Packaged
Ultra Bulk Products
Filtration

© 2007, Genentech
 October 2007
Slide 16

Opportunities & Challenges

 Look the way to increase yields

 By finding the way to improve process of

revalidation with FDA

 Genentech have to revalidate

If the company have to reengineering (new process)

© 2007, Genentech
October 2007
Slide 17

© 2007, Genentech
 October 2007
Slide 18

Capacity Overview
In 1994 Started planning CCP1 in Vacaville , California
minimum >> 5 years to build a biotech plant
>> 4 phases involved in each project
- Design (1 year)
- Engineering / Construction (2 years)
- Testing / Debugging / Validation (1years)
- FDA filing / licensing (1years)
>> Every process 100% control and sterility are required

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

© 2007, Genentech
 October 2007
Slide 19

Vacaville Expansion
>>After FDA approved AVASTIN , Genentech
decided to expand Operation in Vacaville by Starting
“CCP2” and hope to complete in 2009

>>In developing CCP2 ,

- double capacity in each line
(build eight 25,000 liter production vessels)
- without higher expenditure

Capacity : 8 25,000liter production vessels

© 2007, Genentech
 October 2007
Slide 20

Contract Manufacturing Relationships

>>In 2003 – 2004 Genentech entered to 2 contract
manufacturing relationships

© 2007, Genentech
 October 2007
Slide 21

Potential Demand for AVASTIN

o Limited time to add capacity

o Need to forecast product demand to decision about

expansion

o 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.

© 2007, Genentech
 October 2007
Slide 22

Potential Market Size

• Total number of patient with each type of cancer

• The duration of treatment for each patient
– The number of dosages
– The number of weeks

© 2007, Genentech
October 2007
Slide 23

A model for all cancer indication

© 2007, Genentech
 October 2007
Slide 24

Capacity Planning

Demand-
upside

Demand-
Basecase

Demand-
Downside

Sample Capacity Requirements Chart

© 2007, Genentech
October 2007
Slide 25

Economic
Plan optimum a

Total Product Demand (kilograms)

Distribution of Possible Demand Scenerios

© 2007, Genentech
 October 2007
Slide 26

Capacity Expansion Options

>>In Nov 2004, Usage of Rituxan/Herceptin and Genentech’s
other recombinant DNA continued to grow
So Genentech need to produce at least 1,000kg
to meet demand in 2005
Demand will growth
- In 2010 (25%)
- In 2015 (25%)

>> Ebersman need to determine about “CCP3”

© 2007, Genentech
 October 2007
Slide 27

Location
>> CCP1 & CCP2  success in Vacaville
Vacaville has location advantage But
It has - risk (“putting all their eggs in one basket”)
- inefficiency management ( “big to manage”)

© 2007, Genentech
 October 2007
Slide 28

Plant Size and Design

© 2007, Genentech
 October 2007
Slide 29

Conclusion

© 2007, Genentech
October 2007
Slide 30

© 2007, Genentech