UNIVERSITAS INDONESIA

PRELIMINARY DESIGN OF LARGE PRODUCTION OF

HEPATITIS B VACCINE

Report Assignment 5

GROUP 8
GROUP PERSONNEL:
Andrey Sapati Wirya (1306412161)
Clara Novia (1306370985)
Getta Austin (1306405364)
Luthfiyah Ainny (1306370852)
Ulina Ayu Pangesti (1306447726)

CHEMICAL ENGINEERING DEPARTMENT

ENGINEERING FACULTY
UNIVERSITAS INDONESIA
DECEMBER, 2016
 1 EXECUTIVE SUMMARY

Hepatitis is one of the most prevalent disease in the world. Indonesia is

one of the countries with the highest hepatitis patients, among 11 countries in
Southeast Asia. Everyone has the risk of continue dracting hepatitis B. To prevent
the spread of hepatitis B virus in Indonesia, then immunization or vaccination
hepatitis in infants.
A vaccine is a biological preparation that improves immunity to a
particular disease, widely used to improve social health by using weakened
bacteria and use its antigen so specific virus or bacteria cannot infect and grow in
human body. There are hundreds vaccine manufacturers in the world, but only 23
of them are certified by World Health Organization (WHO) and eligible to
produce vaccine that could be used globally. In Indonesia, only PT. Bio Farma
(Persero) that certified by WHO and produced vaccines for Indonesia vaccination
needs. One of the vaccine that is important to provide but still imported is
Hepatitis B vaccine from other countries. Concerned with these conditions, we
would like to propose a way to production large scale of hepatitis vaccine.
We will design a hepatitis B vaccine production plant with production
capacity of 1% to cover the Indonesian needs of importing vaccine. Our
production capacity will be 10 million of dosages per year. The raw material
required in our plant will be HBsAg or hepatitis B surface antigen, purified from
the plasma of chronically infected individuals, produced by recombinant DNA
techniques in Saccharomyces cerevisiae, strain 2150-2-3 (pHBS56-GAP347/33),
which is utilized for the production of HBsAg, then cultured in Yeast Extract/Soy
Peptone/Dextrose (YPD) medium. The isolated and purified antigen is adsorbed
onto aluminum hydroxide as an adjuvant, and thimerosal is added as a
preservative, and then the vaccine is packed and labeled in a latex rubber vial.
The production process is start from inoculation, seed fermentation, media
blending, sterilization, large fermentation, precipitation, immunoaffinity
chromatography, size exclusion chromatography, preservatives addition, adjuvant
addition, homogenization, storage, and filling. Hepatitis B vaccine production
process is supported by a utility system consist of water utility, steam utility,
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electricity utility, and pressurized air. Water utility includes the water required for
process, cooling, and water needed for steam boiler. This vaccine production must
be done as effectively and efficiently as possible, so we also calculate the
recovery of water and the makeup required. Our plant will be built in Cilegon City,
Banten. In our plant consisting several different area, namely:
manufacturing/production area, office area, utility area include water treatment area,
waste water treatment area, and supporting area include parking area, mosque,
canteen, and security post.
To determine whether or not our plant is profitable, we calculate the
profitability analysis. We begin to calculate the capital investment (CAPEX). The
Total CAPEX for our plant is $ 49,797,914.73. After we calculate the CAPEX, we
have to calculate the OPEX (Operational Cost). Operational Cost is including the
raw material, direct labours, indirect employee, utilities, assurance, maintenance,
and other cost we spent for operating the plant. From the operational cost
breakdown, the biggest cost for operational is raw material. The total operating
cost is $ 94,338,834.44.
To run our plant we loan the money form investor about 40% and bank
about 60%. This loan have some interest. The WACC that we get from calculation
is 8.622% and we assume as MARR. This MARR will be used for calculating the
NPV. We also calculate the depreciation from each asset (equipment, supporting
equipment, and building). Meanwhile, our revenue calculation begin with
determine the price of our product. The price per package is $ 18.00 per vial,
which can only be use for one time injection.
Then, we make the Before Tax Cash Flow and After Tax Cash Flow, and
calculate the profitability analysis. The ROI is 183.10%, Payback Period is 2.85
years, IRR is 55.79%, BEP is 5,040,240.61 unit sale or 80% production sale, and
NPV is $ 547,794,059.22. All of profitability component that we get is meaning
that our plant is very profitable and can be implemented. We also done the
sensitivity analysis, which resulting with the most sensitive component is selling
price.

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 1 TABLE OF CONTENT

EXECUTIVE SUMMARY ................................................................................... ii

TABLE OF CONTENT ....................................................................................... iv
LIST OF FIGURES ............................................................................................. vi
LIST OF TABLES .............................................................................................. vii
LIST OF ASSUMPTION .................................................................................. viii
CHAPTER 1 CAPITAL ESTIMATE ................................................................. 1
1.1 Cost Index ..................................................................................................... 1
1.2 Capital Expenditure....................................................................................... 1
1.2.1 Equipment Cost ...................................................................................... 2
1.2.2 Utility Cost and Waste Water Treatment Cost (Office Facilities) ......... 6
1.2.3 Supporting Equipment Cost ................................................................... 9
1.2.4 Piping, Insulation, and Controller Cost .................................................. 9
1.2.5 Civil Work Cost ................................................................................... 11
1.2.6 Land Cost ............................................................................................. 12
1.2.7 Electricity Cost ..................................................................................... 13
1.2.8 Market Research and Additional Cost ................................................. 13
1.2.9 Total Capital Expenditure .................................................................... 14
1.3 Benchmarking ............................................................................................. 16
CHAPTER 2 OPERATING COST ................................................................... 18
2.1 Direct Production Cost ................................................................................ 18
2.1.1 Raw Material Cost ............................................................................... 18
2.1.2 Direct and Indirect Labors Salary ........................................................ 21
2.1.3 Utility ................................................................................................... 24
2.2 Maintenance ................................................................................................ 28
2.3 Fixed Cost ................................................................................................... 29
2.4 Insurance ..................................................................................................... 29
2.5 Plant Overhead Cost .................................................................................... 29
2.6 Other Cost ................................................................................................... 30
2.7 Operating Cost (OPEX) Breakdown ........................................................... 30
CHAPTER 3 ECONOMIC EVALUATION .................................................... 32
3.1 Hepatitis B Vaccine Price Prediction (Sales) .............................................. 32
3.2 Cash Flow.................................................................................................... 32
3.2.1 Equity ................................................................................................... 35
3.2.2 Depreciation ......................................................................................... 36
3.2.3 Before and After Tax Cash Flow ......................................................... 38
3.3 Profitability Analysis .................................................................................. 39
3.3.1 Payback Period ..................................................................................... 39
3.3.2 Break Even Point ................................................................................. 40
3.3.3 Internal Rate of Return (IRR) .............................................................. 40
3.3.4 Net Present Value (NPV) ..................................................................... 41
3.4 Sensitivity Analysis ..................................................................................... 42
3.4.1 Selling Price Fluctuation ...................................................................... 42
3.4.2 Operational Cost Changes (Raw Material) .......................................... 43
3.4.3 Civil Work Fluctuation ........................................................................ 43

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 3.4.4 Sensitivity Graph.................................................................................. 44
3.4.5 Strategy ................................................................................................ 46
CHAPTER 4 CONCLUSION ............................................................................ 47
REFERENCES .................................................................................................... 48

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 1 LIST OF FIGURES

Figure 1.1 CAPEX cost breakdown ...................................................................... 16

Figure 2.1 OPEX Breakdown ............................................................................... 31
Figure 3.1 Net Profit Before Tax (NPBT) and Net Profit After Tax (NPAT) cash
flow ....................................................................................................................... 38
Figure 3.2 Payback Period Curve.......................................................................... 39
Figure 3.3 Sensitivity chart for IRR ...................................................................... 44
Figure 3.4 Sensitivity chart for payback period ................................................... 45
Figure 3.5 Sensitivity chart for NPV..................................................................... 45

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 1 LIST OF TABLES

Table 1.1 Marshall and Swift Chemical Equipment Cost Index (CEPCI) .............. 1
Table 1.2 List of equipment cost ............................................................................. 3
Table 1.3 Utility cost and waste water treatment Cost............................................ 7
Table 1.4 Supporting equipment cost ..................................................................... 9
Table 1.5 Piping and insulation cost ..................................................................... 10
Table 1.6 Elbow and junction cost ........................................................................ 10
Table 1.7 Fitting cost ............................................................................................ 10
Table 1.8 Controller cost ....................................................................................... 11
Table 1.9 Building volume area ............................................................................ 11
Table 1.10 Open area ............................................................................................ 12
Table 1.11 Civil work cost .................................................................................... 12
Table 1.12 Land cost ............................................................................................. 12
Table 1.13 Electricity installment cost .................................................................. 13
Table 1.14 Additional cost .................................................................................... 13
Table 1.15 CAPEX ............................................................................................... 15
Table 1.16 Benchmarking ..................................................................................... 17
Table 2.1 Raw material cost .................................................................................. 19
Table 2.2. Shipping cost ........................................................................................ 20
Table 2.3 Fixed direct labors salary ...................................................................... 22
Table 2.4 Total of direct worker costs .................................................................. 22
Table 2.5 Fixed indirect labor salary..................................................................... 22
Table 2.6 Total of indirect worker costs ............................................................... 24
Table 2.7 Main equipment electricity ................................................................... 24
Table 2.8 Supporting equipment electricity .......................................................... 26
Table 2.9 Water utility cost ................................................................................... 27
Table 2.10 Total fuel cost ..................................................................................... 27
Table 2.11 Total utility cost .................................................................................. 28
Table 2.12 Insurance Cost ..................................................................................... 29
Table 2.13 Other Cost ........................................................................................... 30
Table 2.14 Total OPEX ......................................................................................... 30
Table 3.1 Cumulative cash flow............................................................................ 33
Table 3.2 Weighted Average Cost of Capital (WACC) ........................................ 34
Table 3.3 Percentage of equity source .................................................................. 35
Table 3.4 BRI equity ............................................................................................. 35
Table 3.5 Investor equity....................................................................................... 36
Table 3.6 Total financial interest .......................................................................... 36
Table 3.7 Depreciation .......................................................................................... 37
Table 3.8 Break even point ................................................................................... 40
Table 3.9 Selling price fluctuations ...................................................................... 42
Table 3.10 Raw material cost fluctuations ............................................................ 43
Table 3.11 Distribution cost fluctuations .............................................................. 43

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 1 LIST OF ASSUMPTION
Here the list that assumption that we used for this economic analysis:
 1 USD = Rp 13,776.00
 Life time Plant : 20 Years
 Start Construction Plant : 2018
 Finish Construction Plant : Late 2018
 Start Production Plant : Early 2019
 Location Plant : Cilegon
 Cost Index : Marshall and Swift
Chemical Equipment
 Cost Index for 2016 : 1,830.9
 Cost Index for 2018 : 1,937.4
 Equipment and Building will have salvage value
 Depreciation Method : Single Declining Balance
with Interest 10%
 Depreciation Factor for Process Equipment : 10%
 Depreciation Factor for Supporting Equipment: 3%
 Depreciation Factor for Building : 3%
 Labour Cost in Cilegon : Rp 3.078.900
 Labour Shift per Day :3
 Working Hour : 8 Hour per Day
 Industrial Index WACC : Drugs (Pharmateucitical)
 Equity : 60% Bank (Bank BRI) with
interest rate 12%, 40%
Investor with interest rate
20%
 Green Area is assumed with grown tree planting, with the amount of 44
trees and price $ 6.00 each
 Non-Asphalt Open Area is concrete paved, $26.00/m2
 The Price of second floor building is assumed to be 67.5% of it's first floor

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 1 CHAPTER 1
1 CAPITAL ESTIMATE

1.1 Cost Index

The index used is Marshall and Swift Chemical Equipment cost index that
is available on internet from 2003-2010, so we made extrapolation to get index for
2016 and 2018. Table 1.1 below show data for cost index from 2003-2018.
Table 1.1 Marshall and Swift Chemical Equipment Cost Index (CEPCI)

Year Cost Index

2003 1,123.6
2004 1,178.5
2005 1,244.5
2006 1,302.3
2007 1,373.3
2008 1,449.3
2009 1,468.6
2010 1,457.4
2011 1,564.7
2012 1,617.9
2013 1,671.2
2014 1,724.4
2015 1,777.7
2016 1,830.9
2017 1,884.1
2018 1,937.392

In estimating equipment cost, we use index value to estimating price at

present time (in 2018), the equation is:
𝑖𝑛𝑑𝑒𝑥 𝑣𝑎𝑙𝑢𝑒 𝑜𝑓 𝑝𝑟𝑒𝑠𝑒𝑛𝑡 𝑡𝑖𝑚𝑒
𝑃𝑟𝑒𝑠𝑒𝑛𝑡 𝐶𝑜𝑠𝑡 = 𝑜𝑟𝑖𝑔𝑖𝑛𝑎𝑙 𝑐𝑜𝑠𝑡 × (𝑖𝑛𝑑𝑒𝑥 𝑣𝑎𝑙𝑢𝑒 𝑎𝑡 𝑡𝑖𝑚𝑒 𝑜𝑟𝑖𝑔𝑖𝑛𝑎𝑙 𝑐𝑜𝑠𝑡) (1)

1.2 Capital Expenditure

Total capital investment is the cost needed to design, build and start a plant
production. In our production of hepatitis B vaccine, we need this cost, and
usually obtained by requesting loan to banks, or find inventors who want too
invest their money in our company. There are some assumptions we needed:

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 Manufacturing of Hepatitis B Vaccine will began at early 2018

 Plant will be built by the early of 2018 for one year and start to operate in
the beginning of 2019
 Some equipment will have salvage value in the end of its life time value
 Plant built in empty land located in Cilegon
Capital investment consist of fixed capital investment and working capital
investment. The formula to calculate TCI is:
𝑇𝐶𝐼 = 𝑇𝐹𝐶 + 𝑇𝑊𝐶 (2)
Where:
TCI : Total Capital Investment
FC : Fixed Capital
WC : Working Capital
Fixed Capital (FC) are included all process equipment with the installation
and also all auxiliaries that needed for complete process operation. Fixed capital
consist of direct and indirect cost. Direct cost is that directly involved in the
production process of the product, examples are materials, parts and all cost that
related to equipment, utility and waste water treatment that include in direct cost.
Indirect cost are those that cannot easily to assigned to a certain product activity.
The component of direct and indirect cost can be seen in sub chapter below.

1.2.1 Equipment Cost

The calculation of equipment of total bare module cost is calculate price of
equipment based on their capacity and price at present and then using formula to
correction the calculation for purchase price in 2018. List of purchased cost of
equipment using bare module cost can be seen in table 1.2.

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Table 1.2 List of equipment cost

Correction
Price Based Seller FOB FOB Price (2018)
Cost BM Cost
Type of Capacity Price with Update
No Equipment Based Qty 2018
Equipment (USD)=FOB Price (2018) Material Corection
Cappacity (USD)
(2016)(USD) (USD) (USD)
(USD)
1 Agitator Media Blending Tank 5,000.00 4,464.93 4,724.61 6,047.51 1 12,095.01
2 Salting in 100.00 44.14 46.70 59.78 1 119.56
3 Salting Out 100.00 61.22 64.78 82.92 1 165.84
4 Preservative and Adjuvant Addition 1,500.00 1,312.17 1,388.49 1,777.27 1 3,554.54
5 Reactor Seed Fermentor 100.00 102.99 108.98 108.98 1 217.96
6 Fermentor 100.00 373.92 395.66 395.66 1 791.33

7 Heater and
Heat for Sterilization 500.00 392.42 415.24 531.51 1 577.22
Cooler

8 Cooling for Sterilization 1,200.00 1,175.44 1,243.80 1,592.07 1 1,728.98

9 Cooling 300.00 99.84 105.64 135.22 1 146.85

10 Vessel Tank Vaccine Liquid Storage 900.00 887.37 938.99 1,201.90 1 2,139.38
11 Storage YPD 200.00 57.71 61.07 78.17 1 156.34
12 Storage PBS 1,500.00 2,203.78 2,331.96 2,984.90 1 5,969.81
13 Storage Ammunium Sulfate 25% 50.00 50.00 52.91 67.72 1 135.44

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Table 1.2 List of equipment cost (Continued – 1)

Correction
Price Based Seller FOB FOB Price (2018)
Cost BM Cost
Type of Capacity Price with Update
No Equipment Based Qty 2018
Equipment (USD)=FOB Price (2018) Material Corection
Cappacity (USD)
(2016)(USD) (USD) (USD)
(USD)
14 Storage Ammunium Sulfate 60% 50.00 50.00 52.91 67.72 1 135.44
15 Storage Aluminium Hydroxide 50.00 46.53 49.23 63.02 1 126.03
16 Storage TrisCl-NaCl 50.00 36.65 38.78 49.64 1 99.27
17 Storage Na3(PO4)2 50.00 62.45 66.08 84.58 1 169.16
18 Chromatography Immunoaffinity Chromatography 85,000.00 85,000.00 368,770.87 368,770.87 1 368,770.87
19 Size Exclusion Chromatography 48,000.00 48,000.00 208,247.08 208,247.08 1 208,247.08
Filter Press
20 (Plate and Dialysis 1 300.00 240.97 254.98 254.98 1 344.23
Frame)
21 Dialysis 2 7,000.00 3,218.55 3,405.75 3,405.75 1 4,597.76
22 Ultrafiltration 300.00 74.33 78.66 78.66 1 106.19
23 Milling Homogenizer 2,000.00 589.41 623.69 623.69 1 835.74
24 Centrifuge Centrifuge 5,000.00 4,113.39 4,352.63 5,571.36 1 6,602.06
25 Filling Machine Vials Filling Machine 10,000.00 10,000.00 10,581.61 10,581.61 1 12,666.19
26 Beaker Glass Inoculation 2.47 1.85 1.96 1.96 1 3.92
27 Freezer Storage Product Vials 6,399.00 3,583.10 3,791.50 3,791.50 1 5,421.85

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Table 1.2 List of equipment cost (Continued – 2)

Correction
Price Based Seller FOB FOB Price (2018)
Cost BM Cost
Type of Capacity Price with Update
No Equipment Based Qty 2018
Equipment (USD)=FOB Price (2018) Material Corection
Cappacity (USD)
(2016)(USD) (USD) (USD)
(USD)
28 Freezer box for vaccine vials holder 483.94 9,692.10 10,255.81 10,255.81 1 14,665.80
29 Pump Dosing Pump 7,500.00 7,500.00 53,329.42 53,329.42 2 205,851.58
30 Pump PBS-SEC 2,000.00 2,000.00 2,116.32 2,116.32 1 4,084.50
TOTAL COST (USD) 860,600.75

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1.2.2 Utility Cost and Waste Water Treatment Cost (Office Facilities)
Calculation for utility and WWT equipment, we used bare module cost
because capacity of our equipment is small. If using hystorical data, our
equipment cost cannot be calculated because our equipment capacity not in range.
The calculation is summarized in table 1.3.

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Table 1.3 Utility cost and waste water treatment Cost

Correction FOB Price (2018)

Price Based Seller
Type of Cost Based FOB Price with Update
No Equipment Capacity (USD)=FOB Qty BM Cost (USD)
Equipment Cappacity (2018) (USD) Material Corection
Price (2016)(USD)
(USD) (USD)

Utility Equipment
1 Vessel Tank Potable Water Storage 5,000.00 4,983.86 5,273.73 6,750.37 1 12,015.66
2 Purified Water Tank 1 1,000.00 428.55 453.48 580.45 1 1,033.20
3 Purified Water Tank 2 1,000.00 404.63 428.16 548.04 1 975.52
4 PDAM Water Storage 5,000.00 4,984.12 5,274.00 6,750.72 1 12,016.29
5 Lamp Ultraviolet Lamp 750.00 678.44 717.90 717.90 1 725.08
6 Membrane Reverse Osmosis 800,000.00 681,419.26 721,051.58 721,051.58 1 728,262.10
7 Ion Exchanger Ion Exchanger 30,000.00 29,751.66 31,482.06 31,482.06 1 31,796.88
8 Boiler Boiler for heat Sterilization 830.00 745.35 788.70 1,009.54 1 1,096.36
9 Boiler for Water Treatment 6,000.00 5,901.14 6,244.36 7,992.78 1 8,680.16
10 HE HE for Water Treatment 1 880.00 818.46 866.06 1,108.56 1 1,203.90
11 HE for Water Treatment 2 770.00 704.79 745.78 954.60 1 1,036.69
Heater for water bath seed
12 500.00 334.13 353.56 452.56 1 491.48
fermentor
Heater for water bath
13 700.00 685.69 725.57 928.73 1 1,008.60
fermentor
14 Cooling Tower Cooling Tower 12,200.00 12,200.00 12,909.57 12,909.57 1 14,019.79
15 Pump Centrifugal Pump 15.00 15.00 15.87 15.87 9 275.70
16 Compressor Compressor 1,000.00 1,000.00 1,058.16 1,058.16 1 1,327.99

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Table 1.3 Utility cost and waste water treatment cost (Continued)
Correction FOB Price (2018)
Price Based Seller
Type of Cost Based FOB Price with Update
No Equipment Capacity (USD)=FOB Qty BM Cost (USD)
Equipment Cappacity (2018) (USD) Material Corection
Price (2016)(USD)
(USD) (USD)
WWT
1 Vessel Tank Collected Tank 200.00 116.33 123.10 123.10 1 246.20
2 Neutralization tank 200.00 116.33 123.10 123.10 1 246.20
3 Aeration tank 1 200.00 47.24 49.98 49.98 1 99.97
4 Aeration tank 2 200.00 47.24 49.98 49.98 1 99.97
5 Sedimentation tank 1,000.00 279.57 295.83 295.83 1 591.65
6 Chloration tank 1,600.00 840.84 889.74 889.74 1 1,779.49
7 Incinerator 10,000.00 9,309.16 9,850.59 9,850.59 1 19,701.18
TOTAL COST (USD) 838,730.07

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1.2.3 Supporting Equipment Cost

Supporting equipment is equipment needed to accelerate production
process which is including in the entire area of plant building. This plant area
building consists of production room, laboratory, office, toilet, etc. The amount of
these supporting equipment is determined from the number of employees and also
their needs. So, this is the table about the detail of supporting equipmen or offsite
facilities.
Table 1.4 Supporting equipment cost
Price per Unit
No Supporting Equipment Quantity Price (USD)
(USD)
1 Computer 46 362.95 16,695.70
2 Sofa 8 217.77 1,742.16

3 Office Chair 73 95.09 6,941.78

4 Dining Chair and Table 1 154.84 154.84

5 Air Conditioner 2PK 4 402.51 1,610.05

6 Air Conditioner 1PK 24 195.92 4,702.09

7 Printer 18 79.85 1,437.28

8 Telephone 12 13.94 167.25

9 Fax Machine 12 98.00 1,175.96

10 Recycle Bin 61 7.50 457.41

11 Clock 11 3.63 39.92

12 Stationary 1 290.36 290.36

13 Projector Sets 2 508.13 1,016.26

14 CCTV 21 32.67 685.98

15 TV 2 1,959.93 3,919.86

16 Neon Lamp 191 2.69 512.99

17 Laboratory Set 4 435.54 1,742.16

18 Laboratory Coat 20 362.95 145.18

Total 43,437.23

1.2.4 Piping, Insulation, and Controller Cost

a. Piping and Insulation Cost

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To determine the cost of piping we have to determine the type of the pipe
first. It’s determined by the P&ID. Determining the cost of pipe is based on its
length and the insulation based on the pipe outer surface area. The price for pipe
per ft is $ 1.05 and for insulation is $ 0.57 per m2. The piping and insulation cost
are listed in the following table.
Table 1.5 Piping and insulation cost

Requirement Outer
Length Total Price Insulation
Nominal ID Area
Material Schedule (ft) (USD) (USD)
Pipe (in) (m2)
0.5 40 0.52 55.71 0.06 58.66 0.03
Carbon
1.25 40 1.38 8,075.62 20.47 8,503.63 11.67
Steel
2.5 40 2.47 6,605.74 33.49 6,955.85 19.09
Total 15,518.14 30.79

The elbow and junction cost are calculated in pieces. The price varies with
its diameter. The elbow and junction cost are listed in the following table
Table 1.6 Elbow and junction cost

Requirement
Quantity Price (USD)
Material Nominal Pipe Schedule ID (in)
1.25 40 1.38 10 1,356.64
Elbow 90
2.5 40 2.47 17 3,316.768
1.25 40 1.38 4 890.928
T Junction
2.5 40 2.47 5 2,136.41
Total 7,700.746

The valve used within the piping system are comprised with only one type,
that is diaphragm globe valve with pneumatic actuator. The air to open (AO) and
air to close (AC) type are of the same price. The valve cost are listed in the
following table
Table 1.7 Fitting cost

Type Quantity Price (USD) Total Price (USD)

Globe Valve 35.00 100.00 3,500.00

b. Controller Cost
Another component form this sub chapter is controller. Controller is very
important for the process so we need the spare in case of emergency. Our

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controller is based on the uses in P&ID.The controller cost are listed in the
following table
Table 1.8 Controller cost
Price Total Price
Type Quantity Spare
(USD) (USD)
Level Controller 3 1 985.07 3,832.75
Flow Controller 8 4 895.52 10,452.96
Pressure Controller 1 1 2,238.81 4,355.40
Temperature
6 3 1,343.28 11,759.58
Controller
Timer Controller 3 1 895.52 3,484.33
Analysis Controller 6 3 895.52 7,839.72
Total 41,724.74

1.2.5 Civil Work Cost

Civil work cost is the cost to build the plant included the steel and concrete
that we use. This cost is also including the asphalt for the road and parking area.
The cost is determined by volume of building and open area. It depends on the
assumption and plant layout design that we make. Below are the calculation of the
volume and area that this cost will cover:
Table 1.9 Building volume area
Size (m) Volume Area
No Area Area (m2)
Length Width Height (m3)
Process Production
1 26.628 38.85 5 1,034.50 197,053.01
Building
2 SEC Room 3.6 11.63 8 41.88 3,898.19
3 Office Building 33.4 15.16 4 506.24 30,692.55
Office Building 2nd
4 33.4 15.16 4 506.24 30,692.55
Floor
5 Utility Building 24.304 28.50 5 692.74 98,725.40
Waste Treatment
6 3.4 3.00 5.11 10.20 156.37
Incineration Building
7 Mosque 28.03 20.10 5.585 563.40 63,246.78
Wudhu and Toilet
8 8.25012 3.24 2.5 26.70 216.05
Building
9 Cafetaria 20.1 20.10 3 404.01 24,361.80
10 Security pos 2 2.00 2.5 4.00 20.00
11 Security pos 2 2 2.00 2.5 4.00 20.00
TOTAL 3,793.92 449,082.70

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Table 1.10 Open area

Size (m)
No Area Area (m2)
Length Wide
1 Building - - 3793.92
2 Open Area (road) 115 78.23 4,626.205
3 Green Area (44 Trees) 1.447266 1.45 92.16147
4 Waste Treatment Pond 3 3.09 9.27
5 Waste Treatment Open Area 13.5 8.59 115.965
6 Parking Area 1 1 30.11 30.113
7 Parking Area 2 4 28.03 112.12
8 Parking Area 3 6 20.10 120.6
9 Parking Area 4 4 24.00 96
TOTAL 8,996.355

Based on Table 1.9 and 1.10 we can determine the cost of civil work by
based on the basic cost or assumption from the contractor we hired, which shown
below:
Table 1.11 Civil work cost
Price/Unit Total Price
No. Type Area Total Price (IDR)
(USD/m2) (USD)
1 Site (m2) 125.235 25.96 3,251.65 44,794,738.58
Green Area
2 92.161 5.56 512.77 7,063,889.56
(m2)
1st Floor 418390.
3 74.18 31,037,844.69 427,577,348,433.96
Building (m3) 146
2nd Floor 30692.5
4 50.07 1,536,904.35 21,172,394,334.61
Building (m3) 49
4985.03
5 Asphalt (m2) 9.27 46,226.24 636,812,711.18
8
TOTAL 32,624,739.70 449,438,414,107.89

1.2.6 Land Cost

The cost for the land that we build our plant upon is based on the
prediction of the average land price around Cilegon area. The land cost is actually
increasing every year. We are predicting that the price is Rp2,000,000/m2. So the
totalcost for land is:
Table 1.12 Land cost

Component Area (m²) Price Total Price (USD)

Land area (m²) 8996.35455 2,000,000.00 1,306,090.96

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1.2.7 Electricity Cost

Electricity installment is one of the most important utility installments.
The electricity installment is calculated by determining the total installment cost
from PLN that covers all the component we need for the plant. Table 1.13 below
show the cost for the installment done for our plant:
Table 1.13 Electricity installment cost

Installation Total (Rp) Total (USD)

Electricity Installation (82500 VA) 82,500,000 5,988.68

1.2.8 Market Research and Additional Cost

The market research cost is the cost required to conduct a research in an
activity that directly connected us with the demand and expectationinformation of
our product’s consumer in Indonesia.The method to do the market research cost is
consulting with some consultant company. This method will be used to determine
the production capacity. Market research analysis is will be doing once before we
begin the production and after some years of production.The consultant that we
will hire is a reputablelocal consultant company, that will use their data to
determine the production capacity. Therefore, for market research analysis we use
around Rp50,000,000.
Beside the market research cost, there are some additional cost that will be
included in CAPEX. The cost is based on the Indonesia Law of Industry No 14.
2001, with the additional of local services company such as Telkom for telephone
wire installments and internet, and also PDAM, shown in the table below:
Table 1.14 Additional cost

NO Activity Total Cost (IDR) Total Cost (USD)

1 Market Research by Consultant 50,000,000.00 3,629.50
2 Industry Design Permission 7,500,000.00 544.43
3 Brand 7,050,000.00 511.76
4 Water Installation 19,117,000.00 1,387.70
5 Hydrants Installation 13,100,000.00 950.93
6 Internet Network Installation 1,300,000.00 94.37
7 Telephone Installation 1,500,000.00 108.89
Total 57,500,000.00 4,173.93

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1.2.9 Total Capital Expenditure

Capital expenditure is the capital investment on the plant. To analyze the
capital investment, the total capital investment should be calculated first. The total
capital investment of a vaccine plant is stated as a one-time expense for the
design, construction, and start-up of a new plant. The Total Capital Investment,
CTCI, or CAPEX, consists of equipment group, mass material group, indirect cost,
and other cost. Below is the table that shows the component of CAPEX:

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Table 1.15 CAPEX

Total Cost
Investment Group Description Elaboration Parameter Cost (USD) Total Cost (IDR)
(USD)
Main Equipment Production Process Equipment Calculated 860,525.95
Equipments for Utility and Waste
Equipment Offsite Calculated 838,730.07
Treatment
Supporting Office Facilities and Additional
Calculated 31,878.91
Equipment Hardwares
Piping and Valve Piping, pipe fittings, and valves Calculated 26,718.89
Direct Cost Control Process Controller and Indicators Calculated 41,724.74 35,748,061 492,465,295,091.28
Mass Insulation Pipe insulations Calculated 30.79
Materials Site development, Concrete, Steel
Civil Work Calculated 32,624,739.70
Foundation
Electricity Electricity Installment Calculated 5,988.68
Other Cost Land Land Cost for Plant development Calculated 5,224,363.85
Contractor Fee - 3% TBM 50,979.92
Contingency - 15% TBM 254,899.58
Market Research Market Research and Installments
Calculated 4,173.93
Indirect Cost & Additional Cost of Supporting Facilities 949,002 13,073,447,237.65
Freight, Insurance,
- 8% TBM 135,946.44
Taxes
Engineering
EPC Fee 29.6% TBM 503,001.83
Expense
TOTAL PERMANENT INVESTMENT COST 36,697,063 505,538,742,328.93
FIXED CAPITAL COST 43,302,535 596,535,715,948.14
WORKING CAPITAL COST 6,495,380 89,480,357,392.22
TOTAL CAPITAL INVESTMENT 49,797,915 686,016,073,340.36

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3.55912% 0.69460% 0.37046%

1.37069% 0.00008%
0.11837%
0.13892% 5% 0.07281%
0.01632%
0.01137% 0.11370%

Main Equipment

Offsite

Supporting Equipment

Piping and Valve

Control

Insulation

Civil Work 88.90286%

Figure 1.1 CAPEX cost breakdown

Figure 1.1 explain about cot breakdown in CAPEX cost. The main cost is
for Civil Work 88% and than main equipment cost is 5%.

1.3 Benchmarking
The purpose of doing a benchmarking is to ensure the validity of cost &
investment of this plant, and to provide further visualization of the economic
capability of the plant. In Indonesia, Hepatitis B vaccine is produced by Biofarma,
and thus we compare some data with Biofarma. Below is the result of our
benchmarking:

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Table 1.16 Benchmarking

Benchmarking
Benchmark Production Capacity
CAPEX OPEX ROI ROA
Plants (vial/year)
Biofarma 8,935,905,480,000,000.00 22,018,932,960,000,000.00 439,448,000,000.00 11,775,000 254,502,400,000.00

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 2 CHAPTER 2
2 OPERATING COST

2.1 Direct Production Cost

Operational Cost is the cost that we spent to process our product. Operating
costs consist of the expense of manufacturing a product as well as the packaging
and shipping, selling and distribution, and general overhead expenses. The
manufacturing expense will be interpreted to mean those expenses required to
make a product and to ready it for shipment. Unit cost is the cost of an item based
upon either a mass or volume unit. Raw materials, by-products and utility costs
are quoted on these bases. Operational is categorized into fixed operation cost and
variable cost. Fixed operation cost is all the costs that we spent other than
manufacturing cost, such as administrative cost, distribution cost, marketing cost,
etc. Variable expenses vary approximately in direct proportion to the production
rate.

2.1.1 Raw Material Cost

This cost is very important, because this production is really depend on the
material supplier. Hepatitis vaccine manufacture with a capacity production
10,000,000 vial/year not require a large amount of raw material, because each
dose vial, has small volume that is 5 ml. So the material needed just a little. Here
is a list of raw materials and prices as well as the suppliers required in the
manufacture of vaccines for hepatitis B summarized in the table below:

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Table 2.1 Raw material cost

Order per Price per Kg
Raw Distance Total Order Total Order Cost/Year
No Supplier Year (Kg or Vial
Material (Km) Cost/Year (USD) (IDR)
or Vial) (USD)
Semaran
1 AlOH Asia Bahan Farmasi 351 22.26 8,572 118,081,097.20
g
2 AlSO4 GM Kimia Jakarta 2,588 18.55 52,121 718,013,819.78
Karawan
3 Dextrose Toko Alat Kimia 27,359 69.73 1,951,514 26,884,057,605.96
g
Mangadu Sri Chakra Nagar,
4 Nitrogen India 821 0.89 9,665 133,143,276.95
Chennai, Tamil Nadu
Mangadu Sri Chakra Nagar,
5 Oksigen India 249 0.11 2,739 37,728,657.63
Chennai, Tamil Nadu
Dalian Baotai Chemical Co.,
6 PBS China 731,462 3.80 8,114,667 111,787,648,537.74
Ltd.
Suzhou Greenway Biotech Co.,
7 Pepton China 27,402 30.00 1,021,931 14,078,120,976.92
Ltd
Sodium Jerry Shen Kunshan Yalong
8 China 28,250 0.60 223,005 3,072,117,872.86
Acetate Trading Co., Ltd.
Sodium shiyu tan Zigong Dacheng
9 China 25,112 58.00 1,639,645 22,587,746,919.42
Chloride Material Co., Ltd.
Sodium Jl. Raya Menganti Kedurus No.
10 Surabaya 181 0.80 567 7,807,797.48
Fosfat 26 Kedurus Karang Pilang

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Table 2.1 Raw material cost (Continued)

Order per Price per Total Order
Raw Distance Total Order Cost/Year
No Supplier Year (Kg or Kg or Vial Cost/Year
Material (Km) (IDR)
Vial) (USD) (USD)
Janet Luo Guangzhou Haishi
11 Thimerosal China 8 0.30 37 513,149.83
Biological Technology Co., Ltd.
Tris-Cl- Lina Gao Richin International
12 China 626 0.16 2,462 33,919,857.01
NaCl Trade (Dalian) Co., Ltd.
Fogson Wang Hangzhou New
13 Yeast China 14,153 20.00 386,289 5,321,510,524.04
Asia International Co., Ltd.
Hebei wellbottle perdagangan
14 PP Vial China 10,000,000 0.05 73,437,501 1,011,675,013,776.00
internasional co, LTD.
Total Raw Material Cost per Day 289,502 3,988,184,746.23
Total Raw material Cost Anually 86,850,713 1,196,455,423,868.84

Table 2.2. Shipping cost

Route Shipping (USD)

Semarang-Cilegon 763.98
Jakarta-Cilegon 4,132.24
Karawang-Cilegon 43,691.76
Surabaya-Cilegon 421.58
China-Cilegon 78,967,331.07
India-Cilegon 11,645.02

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From the tables above, the total cost for the raw material to production of
vaccine hepatitis B is $ 86,850,713 per year. This cost is already including the
shipping the materials to the our plant. The shipping is done by the supplier, so we
ony need to facilitate a warehouse and storage tank

2.1.2 Direct and Indirect Labors Salary

The number of workers is determined based on production capacity and
the structure of worker. Wages paid to labors must be over the limit the regional
minimum wage (UMR) in the area Cilegon, West Java province. Value of the
minimum wage in 2016 amounted to Rp3.078.900 based on surat keputusan
nomor 560/66/2016.
Direct worker costs consist of fixed costs and variable costs. Fixed costs
are fixed-cost throughout the year. Variable costs are amount of bonus that earned
by workers. Some reasons for this bonus as there are allowance for labor costs,
such as religious holidays, special allowances each year, and the cost of overtime.
The amount is 10% of the wages of workers for a year.
We have to understand that there are three components of remuneration
should we give to employees:
1. Basic wages (basic income), is the base remuneration (base salary).
2. Fixed allowance, ie payments to workers who carried out regularly and
is not associated with the presence of workers or certain of achievement.
Allowances are not fixed, is a payment that is directly or indirectly
associated with the workers be given on an intermittent basis and are paid
according to the time unit that is not the same as the time of payment of basic
wages, such as transport.
The estimate number of operators is for per shift and to account for three
shift daily. For this plant, since the batch operation covered the longest time of 67
hour/batch, the operators should cover the full 24 hour, 7 week, 12 month a year.
For the basis, we decide to 3 shift operation in direct labor. The cost of indirect
works can be seen in the table below:

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Table 2.3 Fixed direct labors salary

Total
Salary/Month/Person Amount/shift Total
Position Salary/month
(USD) (person) Labors
(USD)
Operator 229.97 8 24 83,623.69
Foreman 259.64 4 12 47,038.33
Total 36 130,662

Table 2.4 Total of direct worker costs

Direct Workers Cost/year Cost (USD)

Fixed cost 130,662.20
Variable cost 13,066.20

Total 143,728.40

For the direct labors annually the salary will be $143,728.40 for 48 labors.
As well as direct labor costs, indirect labor costs consist of fixed and variable
costs. Indirect workers consists of corporate leadership, production department,
professional engineer, and research and development. The cost of indirect workes
can be seen in the table below:
Table 2.5 Fixed indirect labor salary

Salary/month/ Amount
Department Position Total (USD)
person (USD) (person)
President
2,540.65 1 30,487.80
Director
Secretary of
President 508.13 1 6,097.56
Stakeholder
Director
Vice
President 1,814.75 1 21,777.00
Director
Finance
Accounting 907.38 1 10,888.50
Finance Manager
Department Assistant
Finance 617.02 1 7,404.18
Manager
General
Support and SCM 907.38 10,888.50
1
Service Manager
Department

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Table 2.5 Fixed indirect labor salary (Continued)

Department Position Salary/month/ Amount Total (USD)
(person)
person (USD)
General Support Security 290.36 6 20,905.92
and Service
Receptionist 290.36 2 6,968.64
Department
Cleaning 290.36 9 31,358.89
Service
Procurement 362.95 1 4,355.40
& Contract
Supervisor
HRD HR Manager 907.38 1 10,888.50
Department
HRD HR Planning 362.95 1 4,355.40
Department &
Recruitment
HES HES 907.38 1 10,888.50
Department Manager
Safety 435.54 5 26,132.40
Engineer
Production and Production 907.38 1 10,888.50
Maintenance and
Department Maintenance
Manager
Process 617.02 2 14,808.36
Engineer
Staff 362.95 5 21,777.00
Engineer
Product Product 907.38 1 10,888.50
Planning and Planning and
Development Development
Department Manager
Product 362.95 2 8,710.80
Design Team
Quality 362.95 2 8,710.80
Control team
Quality 362.95 1 4,355.40
Control
Supervisor
Sales and Marketing 907.38 1 10,888.50
Marketing Manager
Department Marketing 362.95 2 8,710.80
Staff
Total 49 303,136.00

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Table 2.6 Total of indirect worker costs

Indirect Workers Cost Cost (USD)

Fixed cost 303,136.00
Variable cost 3,031.25

Total 306,167.25

For the indirect labors annually the salary will be $303,136.00. So the total
salary for direct and indirect labor will be $306,167.25 or Rp4,217,760.00. The
salary hasn’t included insurance costs which will be added every month to the
salary.

2.1.3 Utility
Utility costs are costs that used to finance the main necessities of the
production such as water, electricity, and plant infrastructure. Variable utility
costs are costs for utilities that used for production processes. Those utilities are
such as electricity and fuel for the generator when there is no electricity supply
from PLN or when it is black out. We have also the utility for water.
To calculate the cost of electricity on production process, we will use data
of power needed by equipments to operate. Calculation of energy balance is done
based on the assumption that power needed by each equipment to be operated in
one hour in one day.
a. Electricity Utility
Table 2.7 Main equipment electricity
Energy Energy
Total Requirement Supplied Energy
Equipment Power
operation for Process by PLN Losses
Name (kW)
time (hours) per year per year (15%)
(kW) (kW)
Process Equipment
Media Blending
0.75 2.41 235.0 270.2 35.2
Tank
Heat
Sterilization E- 0.5 0.39 25.4 29.2 3.8
28
Cooling
Sterilization E- 7.2 0.39 365.0 419.8 54.8
29
Seed Fermentor 0.75 5.7 555.8 639.1 83.4

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Table 2.7 Main equipment electricity (Continued – 1)

Energy
Energy
Total Supplied Energy
Power Requirement
Equipment Name operation time by PLN Losses
(kW) for Process per
(hours) per year (15%)
year (kW)
(kW)
Fermentor 0.75 5.7 555.8 639.1 83.4
Centrifugation 7.5 4 3,900.0 4,485.0 585.0
Cooling E-31 0.5 0.39 25.4 29.2 3.8
Salting In 0.75 0.34 33.2 38.1 5.0
(Precipitation 1)
Salting Out 0.75 0.34 33.2 38.1 5.0
(Precipitation 2)
Preservatives 0.75 12.245 1,193.9 1,373.0 179.1
Addition
Adjuvant 0.75 12.245 1,193.9 1,373.0 179.1
Addition
Freezer Box for 5 0.25 162.5 186.9 24.4
Vaccine Vials
Holder
Vaccine Vials 10 24 31,200.0 35,880.0 4,680.0
Storage
Utility Equipment
Reverse Osmosis 0.75 0.16 15.60 17.94 2.34
Ultraviolet Lamp 1.5 0.16 31.20 35.88 4.68
Ion Exchanger 0.5 0.16 10.40 11.96 1.56
(Kation and
Anion)
Ion Exchanger 0.5 0.16 10.40 11.96 1.56
(Anion)
HE for Heater 0.5 5.7 370.50 426.08 55.58
Water Bath Seed
Fermentor
HE for Heater 1.2 5.7 889.20 1022.58 133.38
Water Bath
Fermentor
Boiler for Heat 9 0.39 456.30 524.75 68.45
Sterilization
Boiler for Water 200 1 26000.00 29900.00 3900.00
Treatment
Heat Exchanger 44 0.16 915.20 1052.48 137.28
WT 1
Heat Exchanger 38 0.16 790.40 908.96 118.56
WT 2

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Table 2.7 Main equipment electricity (Continued – 2)

Energy Energy
Total Requirement Supplied Energy
Equipment Power
operation for Process by PLN Losses
Name (kW)
time (hours) per year per year (15%)
(kW) (kW)
Waste Treatment Equipment
Neutralization 0.75 0.34 33.15 38.1225 4.9725
tank
Aeration tank 1 10 0.33 429 493.35 64.35
Aeration tank 2 10 0.33 429 493.35 64.35
Sedimentation 0.5 0.5 32.5 37.375 4.875
tank
Chloration tank 0.75 0.33 32.175 37.00125 4.82625
Incinerator 20 0.16 416 478.4 62.4
Total 70339.815 80890.787 10550.972
3
Total Cost/ Year (USD) 8,773.17

Table 2.8 Supporting equipment electricity

Energy
Total Supplied Energy
Power Working
Equipments Qty Power / by PLN Losses
(kW) Time (h)
year (kW) per year (15%)
(kW)
Computer PC 8 0.075 8 1,752 2,015 262.80
Central Air
5 5 8 73,000 83,950 10,950.00
Conditioner
Dispenser 3 0.42 8 3,679 4,231 551.88
Faximile
2 0.017 24 298 343 44.68
Machine
Printer +
Scanner + 1 0.65 8 1,898 2,183 284.70
Photocopy
CCTV 5 0.05 24 2,190 2,519 328.50
Attendance
2 0.005 8 29 34 4.38
Machine
LCD Projector 2 0.015 1 11 13 1.64
Paper Shredder 1 0.075 1 27 31 4.11
Long Neon
39 0.02 12 3,416 3,929 512.46
Lamps
Refrigerator 2 0.155 24 2,716 3,123 407.34
Total 89,017 102,369 13,352
Total Cost/ Year (USD) 10,864.08
Total Cost/ Year (IDR) 149,663,550.73

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For the electricity based on PT PLN, we categorized our plant as a medium

industry (above 1300 kVA). It is mentioned that the price for the medium industry
since November 2016, is equal to Rp. 1,462 /kWh. The total electricity per year is
183,260 kWh. So the total electricity cost per year is $19,448.74.

b. Water Utility
We have counted our water utility in previous assignment 3. Now we are
going to calculate the water utility cost. For the water requirement, we are going
to use water that obtained directly from the PDAM. The price for water in
industry is Rp. 2,500/m3. So we can calculate our water utility cost.
Table 2.9 Water utility cost

Cost Type Quantities (m3) Cost/ m3 Cost/day

Cleaning in place Equipment 10 0.18 1.81
Water for Process 60 0.18 10.89
Total per day 12.70
Total per year (USD) 4,623.98
Total per year (IDR) 63,700,000.00

c. Fuel Utility
In case of a power outage, Hepatitis Vaccine Plant uses a generator to keep
the continuity of the production. For diesel motor generators, we assumed used a
diesel not every time but at one month just used a diesel one time. The
specification of the generator is about 750kW. Based on those assumption, diesel
needed for Butanol Factory generator is equal to:
Table 2.10 Total fuel cost
Cost Type Quantities Price (USD) Total Price
Solar for genset 30 0.38 11.22
Total/month 11.22
Total/year (USD) 1 134.58
Total/year (IDR) 1,854,000.00

Based on the calculation above total utility based of our plant is

summarized in the table below

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Table 2.11 Total utility cost

Cost Type Price (USD)

Electricity Main Equipment 8,584.66
Electricity Supporting Equipment 10,864.08

Water 4,623.98

Fuel 134.58

Total (USD) 24,207.31

Total (IDR) 333,479,881.69

2.2 Maintenance
Maintenance can be defined as an activity to maintain condition of the
facilities or plant equipment and made repairs or replacement that necessary in
order to obtain a satisfactory state of production operations, as well as planned
before. Maintenance is required both for factories, offices, and supporting
equipment so it can be used continuously and optimal production quality can be
assured.
Maintenance process is performed with the three parts, i.e major
equipments maintenance, plant and office building maintenance, and supporting
equipment maintenance. Maintenance cost consists of cost for maintaining and
repairing equipment. It is usually takes 10% of total investment cost production
(Ir. Yuriadi Kusuma, M.Sc "Effective Maintenance Management"). This can be
calculated by:
𝑇𝐶𝐼
𝑀𝑎𝑖𝑛𝑡𝑒𝑛𝑎𝑛𝑐𝑒 𝑐𝑜𝑠𝑡 = 10% 𝑥 (3)
𝑙𝑖𝑓𝑒𝑡𝑖𝑚𝑒

49,797,915
𝑀𝑎𝑖𝑛𝑡𝑒𝑛𝑎𝑛𝑐𝑒 𝑐𝑜𝑠𝑡 = 0.1 𝑥 ( )
10

𝑀𝑎𝑖𝑛𝑡𝑒𝑛𝑎𝑛𝑐𝑒 𝑐𝑜𝑠𝑡 = $ 4,979,791.47/𝑦𝑒𝑎𝑟

𝑀𝑎𝑖𝑛𝑡𝑒𝑛𝑎𝑛𝑐𝑒 𝑐𝑜𝑠𝑡 = 𝑅𝑝 68,601,607,334.04/𝑦𝑒𝑎𝑟

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2.3 Fixed Cost

Fixed costs are expenses that have to be paid by a company, independent of
any business activity. It is one of the two components of the total cost of a good or
service, along with variable cost. This fixed cost is including insurance,
depreciation, tax, etc. However in this chapter, we only explain the insurance. For
the depreciation and tax, it will be explained at the next chapter.

2.4 Insurance
For our plant, we use two types of insurance, there are insurance for
workers and insurance for plant. Based on the working safety insurance PP No 84
Year 2010, the amount of insurance given must be 1% from the worker salary. On
the other hand, the amount of building / plant insurance must be 5% from the
plant cost. The calculation of insurance cost can be seen from table below:
Table 2.12 Insurance Cost

Assurance
Percentag Price of Source
Insurance Source Total Price (USD)
e (USD)
Raw
2% Raw material 86,850,713.11 1,737,014.26
Material
Building and
Plant 1% 43,302,535.73 433,025.35
Equipment
Worker 4% Salary for worker 449,895.47 15,746.34
TOTAL of Insurance (USD) 2,185,785.95
TOTAL of Insurance (IDR) 30,111,387,236.86

2.5 Plant Overhead Cost

For this cost breakdown such as safety and protection, packaging, storage
facility, etc. We have implied the cost into some groups. For the example for the
packaging, we have calculated the cost in the raw material expenses and for
laboratory we have calculated the salary for the labor and the equipment for
laboratory in the indirect labor salary and supporting equipment. Therefore, we
don’t need to calculate again. After we get the direct production cost we continue
to the general expense or supplementary cost. This cost is to support the
production of vaccine hepatitis B.

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2.6 Other Cost

In general expenses there are CSR, R&D, and royalty for operating cost.
Corporate Social Responsibility is consisted of national disaster, academic, and
social infrastructure. According to Indonesian law, the CSR cost is 5% of the
revenue of the plant. For royalty itself the cost is 2% of revenue. For Research and
Development the cost is 1% from CAPEX.
Table 2.13 Other Cost

Other Total Cost (USD)

R&D 497,979.15
Total (USD) 497,979.15
Total (IDR) 6,860,160,733.40

2.7 Operating Cost (OPEX) Breakdown

After we get all of the cost breakdown from operational cost, we can get
the total operational cost per year. The total operational cost per year is shown in
the table below:
Table 2.14 Total OPEX

Operational Cost
Type
Price (USD)
Raw Material 86,850,713
Direct Labor 143,728
Indirect Employee 306,167
Utilities 24,207
Maintenance 4,330,253
Assurance 2,185,786
Other Cost 497,979
Total Operational Cost
94,338,834
(USD)

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OPEX
1.34%
0.28% 1.34%
2.77%
3.31%
1.30%

91.00%

Raw Material Direct Labor Indirect Employee Utilities

Maintenance Assurance Other Cost

Figure 2.1 OPEX Breakdown

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3 ECONOMIC EVALUATION

3.1 Hepatitis B Vaccine Price Prediction (Sales)

Hepatitis B vaccine product of our plant is intended to cover the world
demand of vaccine, especially the Hepatitis B Vaccine. We estimating to cover up
to 50% of distribution across the world, with 5% of market share within the
Hepatitis B Vaccine. The production capacity of our plant is calculated using
elasticity theory in our introduction, and product will be packages as multidose
ampule with 5 mL each package, and our production capacity calculated as
1,008,048 vials annually.

3.2 Cash Flow

To determine the cash flow we need to predict the depreciation of our
assets, which is main equipment, supporting equipment and also plant building
and also the loan or equity. For calculating our cash flow we need MARR. MARR
is the minimum rate of return on a project a manager or company is willing to
accept before starting a project, given its risk and the opportunity cost of forgoing
other projects. However, to find MARR of our project we can assume the MARR
as WACC. WACC is weighted average cost of capital. This WACC is the rate that
a company is expected to pay on average to all its security holders to finance its
assets.
This WACC, we can calculate form the equation:
𝐷 𝐸
𝑊𝐴𝐶𝐶 = 𝑉 𝑘𝑑 (1 − 𝑇𝑚 ) + 𝑉 𝑘𝑒 (4)

Where:
D : Presentage of loan in bank
E : Presentage of loan from investor
V : Total presentage
Kd : Value of loan interest from bank
Ke : Value of loan interest from Investor
Tm : Value of goverment interest

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Table 3.1 Cumulative cash flow

Net Profit
Cash All Gross Net Profit Cummulative
Sold Product OPEX Maintenance Depreciation Revenue Before Cash Flow
Year Expenses expenses Profit After Tax Cash Flow
Volume Price (USD) Cost (USD) (USD) (USD) Tax (USD)
(USD) (USD) (USD) (USD) (USD)
(USD)

2018 0 0 0 0 0 0 0 0 0 -49,797,915 -49,797,915

2019 5,040,241 18 94,338,834 4,330,253 1,156,826 90,724,331 98,669,088 99,825,914 -7,944,757 -9,101,583 -6,826,187 -5,669,361 -55,467,276
2020 5,040,241 18 94,338,834 4,330,253 1,109,746 90,724,331 98,669,088 99,778,834 -7,944,757 -9,054,503 -6,790,877 -5,681,131 -61,148,407
2021 8,064,385 18 94,338,834 4,330,253 1,065,317 145,158,930 98,669,088 99,734,405 46,489,842 45,424,525 34,068,394 35,133,710 -26,014,697
2022 8,064,385 18 94,338,834 4,330,253 1,023,334 145,158,930 98,669,088 99,692,422 46,489,842 45,466,508 34,099,881 35,123,215 9,108,518
2023 8,064,385 18 94,338,834 4,330,253 983,613 145,158,930 98,669,088 99,652,701 46,489,842 45,506,229 34,129,672 35,113,284 44,221,803
2024 10,080,481 18 94,338,834 4,330,253 945,985 181,448,662 98,669,088 99,615,073 82,779,574 81,833,589 61,375,192 62,321,177 106,542,980
2025 10,080,481 18 94,338,834 4,330,253 910,299 181,448,662 98,669,088 99,579,387 82,779,574 81,869,275 61,401,957 62,312,255 168,855,235
2026 10,080,481 18 94,338,834 4,330,253 876,413 181,448,662 98,669,088 99,545,501 82,779,574 81,903,161 61,427,371 62,303,784 231,159,019
2027 10,080,481 18 94,338,834 4,330,253 844,202 181,448,662 98,669,088 99,513,290 82,779,574 81,935,372 61,451,529 62,295,731 293,454,750
2028 10,080,481 18 94,338,834 4,330,253 813,549 181,448,662 98,669,088 99,482,637 82,779,574 81,966,025 61,474,519 62,288,068 355,742,818
2029 10,080,481 18 94,338,834 4,330,253 784,349 181,448,662 98,669,088 99,453,437 82,779,574 81,995,226 61,496,419 62,280,768 418,023,586
2030 10,080,481 18 94,338,834 4,330,253 756,503 181,448,662 98,669,088 99,425,591 82,779,574 82,023,071 61,517,303 62,273,806 480,297,392
2031 10,080,481 18 94,338,834 4,330,253 729,925 181,448,662 98,669,088 99,399,013 82,779,574 82,049,649 61,537,237 62,267,162 542,564,554
2032 10,080,481 18 94,338,834 4,330,253 704,532 181,448,662 98,669,088 99,373,620 82,779,574 82,075,042 61,556,281 62,260,814 604,825,367
2033 10,080,481 18 94,338,834 4,330,253 680,251 181,448,662 98,669,088 99,349,339 82,779,574 82,099,323 61,574,492 62,254,743 667,080,111
2034 10,080,481 18 94,338,834 4,330,253 657,012 181,448,662 98,669,088 99,326,100 82,779,574 82,122,562 61,591,921 62,248,934 729,329,044
2035 10,080,481 18 94,338,834 4,330,253 634,754 181,448,662 98,669,088 99,303,842 82,779,574 82,144,820 61,608,615 62,243,369 791,572,413
2036 10,080,481 18 94,338,834 4,330,253 613,419 181,448,662 98,669,088 99,282,506 82,779,574 82,166,156 61,624,617 62,238,035 853,810,449
2037 10,080,481 18 94,338,834 4,330,253 592,952 181,448,662 98,669,088 99,262,040 82,779,574 82,186,622 61,639,966 62,232,919 916,043,367
2038 10,080,481 18 94,338,834 4,330,253 573,306 181,448,662 98,669,088 99,242,394 82,779,574 82,206,268 61,654,701 62,228,007 978,271,374

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Table 3.2 Weighted Average Cost of Capital (WACC)

Number of Cost of Std Dev in Cost of Tax After-tax Cost of Cost of
Beta E/(D+E) D/(D+E)
Firms Equity Stock Debt Rate Debt Capital
Drugs (Pharmaceutical) 157 1.02 8.37% 88.49% 77.30% 4.52% 3.90% 2.71% 11.51% 7.72%

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Based on calculation, our WACC is 8.622%. For our capital cost we rent
from bank 60% with interest rent 12% and 40% from investor with interest rate
20%.

3.2.1 Equity
For our operational of cash flow, we don’t have any capital, so we rent
capital cost. we rent from bank 60% with interest rent 12% and 40% from investor
with interest rate 20%. We need USD 49,797,914.73. for our first capital. In
building factory, the most important factor that will be reviewed is whether the
plant is profitable or not. Owners can only invest a whole, but it would be very
risky if something happens when the factory is still in the active period. We
choosing Bank Rakyat Indonesia (BRI) for 10 years with interest 12% per year.
Table 3.3 Percentage of equity source

LOAN
Capital Source Interest Rate Capital Share (USD)
Bank 0.60 0.12 29,878,748.84
Investor 0.40 0.20 19,919,165.89

Table 3.4 BRI equity

Total Loan after
Initial Loan Loan Interest Payment
Year Payment Payment
(USD) (USD) (USD)
(USD) (USD)
0.00 29,878,748.84 - - - 29,878,748.84
1.00 29,878,748.84 3,585,449.86 2,987,874.88 6,573,324.74 26,890,873.95
2.00 26,890,873.95 3,226,904.87 2,987,874.88 6,214,779.76 23,902,999.07
3.00 23,902,999.07 2,868,359.89 2,987,874.88 5,856,234.77 20,915,124.19
4.00 20,915,124.19 2,509,814.90 2,987,874.88 5,497,689.79 17,927,249.30
5.00 17,927,249.30 2,151,269.92 2,987,874.88 5,139,144.80 14,939,374.42
6.00 14,939,374.42 1,792,724.93 2,987,874.88 4,780,599.81 11,951,499.54
7.00 11,951,499.54 1,434,179.94 2,987,874.88 4,422,054.83 8,963,624.65
8.00 8,963,624.65 1,075,634.96 2,987,874.88 4,063,509.84 5,975,749.77
9.00 5,975,749.77 717,089.97 2,987,874.88 3,704,964.86 2,987,874.88
10.00 2,987,874.88 358,544.99 2,987,874.88 3,346,419.87 0.00
Total 19,719,974.23 49,598,723.07

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Table 3.5 Investor equity

Total Loan after
Initial Loan Loan Interest Payment
Year Payment Payment
(USD) (USD) (USD)
(USD) (USD)
0.00 19,919,165.89 - - - 19,919,165.89
1.00 19,919,165.89 3,983,833.18 1,991,916.59 5,975,749.77 17,927,249.30
2.00 17,927,249.30 3,585,449.86 1,991,916.59 5,577,366.45 15,935,332.71
3.00 15,935,332.71 3,187,066.54 1,991,916.59 5,178,983.13 13,943,416.12
4.00 13,943,416.12 2,788,683.22 1,991,916.59 4,780,599.81 11,951,499.54
5.00 11,951,499.54 2,390,299.91 1,991,916.59 4,382,216.50 9,959,582.95
6.00 9,959,582.95 1,991,916.59 1,991,916.59 3,983,833.18 7,967,666.36
7.00 7,967,666.36 1,593,533.27 1,991,916.59 3,585,449.86 5,975,749.77
8.00 5,975,749.77 1,195,149.95 1,991,916.59 3,187,066.54 3,983,833.18
9.00 3,983,833.18 796,766.64 1,991,916.59 2,788,683.22 1,991,916.59
10.00 1,991,916.59 398,383.32 1,991,916.59 2,390,299.91 0.00
Total 21,911,082.48 41,830,248.37

Table 3.6 Total financial interest

Financial Interest
Year
(USD)
1.00 7,569,283.04
2.00 6,812,354.74
3.00 6,055,426.43
4.00 5,298,498.13
5.00 4,541,569.82
6.00 3,784,641.52
7.00 3,027,713.22
8.00 2,270,784.91
9.00 1,513,856.61
10.00 756,928.30
Total 41,631,056.72

3.2.2 Depreciation
Depreciation is the reduction in value of an asset. The method used to
depreciation an asset is a way to account for the decreasing value of the asset to
the owner and to represent the diminishing value of capital funds invested in it.
Salvage value is the estimated trade-in or market value at the end of the asset’s
useful life. The salvage value, S expressed as an estimated dollar amount or as a
percentage of the first cost, may be positive, zero, or negative due to dismantling
and carry-away costs.

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Now, we can make a list of our assets from late section. We have
equipment and building as our assets. The equation used in this declining balance
method of depreciation is: (Blank & Tarquin: 5th edition. Ch.16 Authored by Dr.
Don Smith, Texas A&M University):
𝑑𝑚𝑎𝑥 = 0,2
𝑑𝑡 = 𝑑𝑚𝑎𝑥 (1 − 𝑑𝑚𝑎𝑥 )𝑡 (5)
𝐵𝑉𝑡 = 𝐵𝑉𝑡−1 (1 − 𝑑𝑡 )𝑡−1 (6)
Where:
dmax = maximum depreciation rate
dt = depreciation rate for t-year
BVt = book value for t-year
t = year of depreciation
The depreciation rate is for main equipment, supporting and also building.
We have the assumption of 10% for main equipment and than 3% for supporting
and building this is according to main depreciation for national assets.
Table 3.7 Depreciation
No. of Year Depreciation (USD)
0 -
1 1,156,825.80
2 1,109,746.39
3 1,065,316.83
4 1,023,333.87
5 983,612.75
6 945,985.37
7 910,298.71
8 876,413.36
9 844,202.21
10 813,549.27
11 784,348.60
12 756,503.38
13 729,924.98
14 704,532.27
15 680,250.84
16 657,012.39
17 634,754.19
18 613,418.52
19 592,952.23
20 573,306.29
TOTAL 16,456,288.23

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This depreciation each year leads to the salvage value. Salvage value is the
estimated resale value of an asset at the end of its useful life. After we end our
production we can get back the money from our assets which are called salvage
value. The salvage value counted in the table at Appendix for Depreciation cost.
From the calculation in Appendix Table, we can, at least, have salvage value
around USD 16,456,288.23 at the end of the plant life time.

3.2.3 Before and After Tax Cash Flow

The annual cash flow contains inflow and outflow. Inflow comes from
income before and after taxes and residual value or salvage value. Cash flow out
of which is the cost of investment, and operating. Figure 3.1 will shown about
NPBT (Net Profit Before Tax) and NPAT (Net Profit After Tax)

90,000,000
80,000,000
70,000,000
60,000,000
50,000,000
NPBT
40,000,000
NPAT
30,000,000
20,000,000
10,000,000
-
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
(10,000,000)

Figure 3.1 Net Profit Before Tax (NPBT) and Net Profit After Tax (NPAT) cash flow

From figure 3.1 we can se that out profit can be seen in 3rd year. For after
tax cash flow, this cash flow is calculated with tax. The income tax we assume is
25% after depreciation according to Direktorat Jenderal Pajak, 2013.Because it is
after tax, the cash flow will have the lower cumulative income; this after tax cash
flow is used for calculating the profitability analysis such as ROI, IRR, BEP, and
Payback Period. The calculations of after tax and before tax cash flow are shown
in the appendix.

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3.3 Profitability Analysis

A profitability analysis is carried out to analyze whether our vaccine
production plant is economically feasible or not. It is also used to know our
extend of profits if our plant is economically feasible. The most crucial data
obtained will be used in the latter section for sensitivity analysis. Our team
perform profitability analysis by accounting payback period (PP), break-even
point (BEP), internal rate of return (IRR), and net present value (NPV).

3.3.1 Payback Period

The payback period is the length of time required to recover the cost of an
investment. The payback period of a given investment or project is an important
determinant of whether to undertake the position or project, as longer payback
periods are typically not desirable for investment positions. The better investment
is the one with the shorter payback period. If the payback period is less than a
predetermined period, the project is acceptable.
Payback Period is the duration (in years) of an investment will be returned.
Here is the graph of payback period taking into account the Time Value of
Money.
400,000,000
350,000,000
300,000,000
250,000,000
200,000,000
150,000,000
100,000,000
50,000,000
0
0 2 4 6 8 10 12
(50,000,000)
(100,000,000)
Figure 3.2 Payback Period Curve

Payback Period can also be seen from the plot the graph between the net
profit by the time (years), so we can obtain the payback period for this plant is
3.74 years.

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3.3.2 Break Even Point

The break-even concept has universal applications across all businesses in
any industry whether they are big or small. The break-even point is the production
level where total revenues equal total expenses. In other words, the break-even
point is where a company produces the same amount of revenues as expenses
either during a manufacturing process or an accounting period. Breakeven point
(BEP) is an analysis to determine and find the amount of goods or services to be
sold to consumers at a given price to cover the costs incurred and the profit /
profit. Calculation to find the BEP is:
𝑇𝑜𝑡𝑎𝑙 𝐹𝑖𝑥𝑒𝑑 𝐶𝑜𝑠𝑡
𝐵𝐸𝑃 = (7)
𝑃𝑟𝑖𝑐𝑒 𝑝𝑒𝑟 𝑢𝑛𝑖𝑡−𝑉𝑎𝑟𝑖𝑎𝑏𝑙𝑒 𝑐𝑜𝑠𝑡 𝑝𝑒𝑟 𝑢𝑛𝑖𝑡

The total fixed cost is the fixed cost values tend to be stable and not
influenced by the amount of production and the variable cost is the variable cost
of the value depends on the amount of goods produced. value depends on the
amount of goods produced.
In this case the BEP can be previously seen from the graph, Payback
Period occurs on 3.74 years when total production reached 5,040,240.61 unit sale
or 80% production sale. The BEP we get is $10,080,481.22. We can see table
below:
Table 3.8 Break even point
Year %production sale Unit sale
1 0.5 5,040,241
2 0.5 5,040,241
3.00 0.8 8,064,384.98
3.74 0.8 8,064,384.98
BEP 26,209,251.18

3.3.3 Internal Rate of Return (IRR)

The internal rate of return (IRR), is a profitability metric used by
businesses to determine which projects are likely to yield the greatest return per
dollar of capital investment. Though it is closely related to the net present value,
the IRR reflects anticipated gains as a percentage of the initial investment rather
than as a net dollar amount.

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The IRR is the interest rate, also called the discount rate, which is required
to bring the net present value (NPV) to zero. That is, the interest rate that would
result in the present value of the capital investment, or cash outflow, being equal
to the value of the total returns over time, or cash inflow:
𝐶𝑡
𝑁𝑃𝑉 = ∑𝑇𝑡=1 (1+𝑟)𝑡 − 𝑇𝐶𝐼 = 0 (8)

By using Microsoft Excel, then we can obtain for the IRR of 40.21%
Hepatitis Vaccine Plant. Those facts give us a good impact, so that our plant and
product may be compared with other plant and also visible to be built.

3.3.4 Net Present Value (NPV)

Net Present Value (NPV) shows the net benefits received by a project over
the life of the project at a certain interest rate. NPV is used in capital budgeting to
analyze the profitability of a projected investment or project. NPV can also be
interpreted as the present value of the cash flows generated by the investment. A
project can be counted as feasible if the NPV>0, which means the project is
profitable or provide benefits if implemented. If NPV<0, the project is not eligible
to run because it does not generate profit. Cash flow in year-n drawn into present
value with a reasonable interest rate by using the following formula:
𝐶𝑡
𝑁𝑃𝑉 = ∑𝑇𝑡=1 (1+𝑟)𝑡 − 𝐶𝑜 (9)

Where, Ct is net cash inflow during the period t, Co is total initial

investment costs, r is discount rate, and t is number of time periods. A positive net
present value indicates that the projected earnings generated by a project or
investment (in present dollars) exceeds the anticipated costs (also in present
dollars). Generally, an investment with a positive NPV will be a profitable one
and one with a negative NPV will result in a net loss. This concept is the basis for
the Net Present Value Rule, which dictates that the only investments that should
be made are those with positive NPV values.
After pulling the value of profit each year to present value, all the values are
summed and with MARR of 8.622% obtained NPV is $547,794,059.22. In
another words, this project is very advantageous to be implemented.

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3.4 Sensitivity Analysis

In this section, we’re going to make a sensitivity analysis from cash flow.
The variable that we use to see the effect towards the cash flow is selling price,
raw material cost, and civil work cost. The reason we choose raw material cost as
free variable is because those two have actually contributed a lot in operational
cost 91.7%. The reason we chose to civil work because building cost in our plant
has 89% from total capital investment. The reason we choose selling price is
because, generally the selling price itself is the most contributed variable that
affect the cash flow. Those changes concluded the selling price fluctuations,
changes in operating expenses, and rising raw material costs. Parameters -
parameters used in the sensitivity analysis is NPV, IRR, and Payback Period.
Below is the result:

3.4.1 Selling Price Fluctuation

This sensitivity analysis was performed in the decrease and increase of the
product sales price. The following is the calculation of the parameters of the
economic viability while a decline in the level of product sales. When a decrease
in the selling price is occur, the percentage IRR obtained is smaller, which means
the rate of return will become more long until undefined. It is also evident from
the lower sales price, then the value of the payback period become higher.
Table 3.9 Selling price fluctuations
Product Price per
Deviation IRR (%) NPV (USD) PP (years)
Unit (USD)
-15% 15,30 25,88 175.804.828,24 5,60
-10% 16,20 30,61 226.318.175,31 5,04
-5% 17,10 35,38 276.831.522,38 4,28
0% 18,00 40,21 327.344.869,45 3,74
5% 18,90 45,12 377.858.216,52 3,39
10% 19,80 50,11 428.371.563,59 3,03

As we can see from the table above, the selling price of Hepatitis B
Vaccine is very sensitive. The fluctuation by 5% higher or lower really impact the
IRR, payback period, and NPV.

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3.4.2 Operational Cost Changes (Raw Material)

Sensitivity analysis was performed on the change of the operational costs
of this product. An increase in the cost of that support production activities can
impact the NPV values are getting smaller. So does the value of its IRR will be
lower, which means the returns would be lower. It is also evident from the
payback period is the longer the payback. The factory is said to be visible because
it is not easily swayed by these changes despite the cost breakdown can be seen
that most influence the production process is the cost of raw materials.
Table 3.10 Raw material cost fluctuations
Raw Material
Deviation IRR (%) NPV (USD) PP (years)
Price (USD)
-15% 73.823.106 40,41 329.032.332,64 3,71
-10% 78.165.642 40,34 328.469.844,92 3,72
-5% 82.508.177 40,28 327.907.357,20 3,73
0% 86.850.713 40,21 327.344.869,45 3,74
5% 91.193.249 40,14 326.782.381,76 3,75
10% 95.535.784 40,07 326.219.894,05 3,76
15% 99.878.320 40,01 325.657.406,33 3,77

From the table above, we can see the sensitivity of raw material. If the raw
material cost is increase about 5%, can effect are IRR will become lower, NPV
lower and PP longer.

3.4.3 Civil Work Fluctuation

This sensitivity analysis was performed based on the capital investment,
because cost for civil work has 89% from total capital investment.
Table 3.11 Distribution cost fluctuations

Deviation Civil Work (USD) IRR (%) NPV (USD) PP (years)

-15% 27.731.029 43,76 337.198.416,45 3,50

-10% 29.362.266 42,50 333.913.900,79 3,58

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Table 3.12 Distribution cost fluctuations (Continued)

Deviation Civil Work (USD) IRR (%) NPV (USD) PP (years)
-5% 30.993.503 41,32 330.629.385,12 3,66
0% 32.624.740 40,21 327.344.869,45 3,74
5% 34.255.977 39,17 324.060.353,78 3,81
10% 35.887.214 38,18 320.775.838,11 3,89
15% 37.518.451 37,25 317.491.322,45 3,97

The deviations of civil work cost not affect so much with the IRR, NPV,
and Payback Period. This is because the civil work is a cost in total capital
investment which is paid only once in a project of this plant, so the changes are
not too significant on existing cash flow.

3.4.4 Sensitivity Graph

To see the sensitivity easily we can make graphs that consist of the
deviation between the product price, raw material cost, and civil work cost that
affect to value of NPV, IRR, and Payback Period.

60.00

50.00

40.00
IRR

30.00 Selling Price

Raw Material
20.00
Civil Work
10.00

0.00
-20% -10% 0% 10% 20%
Deviation

Figure 3.3 Sensitivity chart for IRR

From the chart above that greatly affects the IRR is the selling product
price. It can be seen that the increase in the value of the product price causes a

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very significant increase in the IRR. And if raw materials and civil work cost will
lead to increased salary decreases IRR.
6.00

5.00

4.00
PBP

3.00 Selling Price

Raw Material
2.00
Civil Work
1.00

0.00
-20% -15% -10% -5% 0% 5% 10% 15% 20%
Deviation

Figure 3.4 Sensitivity chart for payback period

From the chart above to obtain a rapid payback period greatly affects the
product is the increase in the price of products. The higher a value of the product
price will accelerate the payback period. And other factors such as raw materials
and civil work cost to improve the salary if it will add value payback time period.
600,000,000.00

500,000,000.00

400,000,000.00
NPV

300,000,000.00 Selling Price

Raw Material
200,000,000.00
Civil Work
100,000,000.00

0.00
-20% -10% 0% 10% 20%
Deviation

Figure 3.5 Sensitivity chart for NPV

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From the graph above the product price is an important factor, because the
increasing value of the product price will change into a higher NPV while other
factors are raw materials and civil work cost.

3.4.5 Strategy
With the sensitivity analysis above we can conclude is the most sensitive
and can make IRR, Payback Period, and NPV change is selling price of Hepatitis
Vaccine. The raw material less sensitive than selling price of product because the
portion of our operating cost and TCI that is civil work cost is almost the same for
each component and not significant give differences of IRR, PP, and NPV. Selling
price of Hepatitis Vaccine is very sensitive because it can affect the IRR below
the MARR so that can affect how many investor that will invest their money in
our plant. Therefore we have some strategy to the sensitivity of selling price. The
strategies are we maintain the selling price 10% higher than it’s original price due
to the sensitivity. It is very possible to do because vaccine plant in Indonesia is
very limited and many are not recognized by BPOM, as well as the needs of
hepatitis B vaccine in Indonesia and foreign is very high. If we have to decrease
our selling price because of unpredicted things happens maybe inflation. We can
reduce our production capacity so our plant is still profitable

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 4 CHAPTER 4
5 CONCLUSION

In this section we will conclude all of the report for economic analysis of
our plant. The result of that analysis is listed below:
1. The total capital investment (CAPEX) for our plant is $49,797,914.73.
2. Operational cost of our company is $94,338,834.44.
3. The price of Hepatitis B vaccine is $18.00 per vial.
4. To fulfil the need of starting capital, we are given loan by BRI and
investor with the ratio of 6:4, with period of instalment payment 10 years.
5. We calculate every cost needed and predicting the profitability to make
cash flow before tax and cash flow after tax.
6. ROI for our company is 183.10%.
7. The payback period of our company is 3.74 year, which is considered as a
very fast payback period.
8. The BEP of our company is 80% production sale, in another word we have
to sell 26,209,254.18 unit sale until we start to gain profit.
9. IRR of our company is 40.21%, which is considered high and highly
appealing for investors.
10. The calculation of NPV, or Net Present value of our product with MARR
of 8.622% results with $547,794,059.22.
11. The sensitivity analysis shows that Hepatitis B vaccine product is most
sensitive for the value of selling price.
12. From the economic research, we can conclude our company worth it to be
implemented.

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 6 REFERENCES

Blank & Tarquin. 5th edition. Ch.16 Authored by Dr. Don Smith, Texas A&M
University
Branan, Carl. 2002. Rules of Thumb For Chemical Engineers. Houston : ElSevier.
Brownell, Lloyd E and Edwin H. Young. 1959. Process Equipment Design. John
Wiley & Sons, inc.
Cheremisinoff , Nicholas P. 2000. Handbook of Chemical Processing Equipment.
Butterworth-Heinemann.
Coulson & Richardson. 1983. Chemical Engineering Design. Oxford : El-Sevier.
Chemical And Process Design Handbook. New York : McGraw-Hill.
Perry, Robert H. 1999. Perry’s Chemical Engineers’ Handbook. McGraw-Hill
Companies, Inc.
Seider, W. D., Seader, J. D. & Lewin, D. R. 2003. Product and Process Design
Principles, John Wiley and Sons, Inc.
Sinnott, R. K. 2005. Chemical Engineering Design 4th edition. Elsevier.
Wallas, Stanley M. 1988. Chemical Process Equipment Selection and Design.
Butterworth-Heinemann

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