pharmaceuticals

The Pharmaceutical market is made up of businesses that manufacture medicinal and botanical products, pharmaceutical preparations, in vivo and in vitro diagnostic substances, and biological products.2 Nationwide, there are about 2500 pharmaceutical facilities.4 One hundred and twelve of these are large sites and are shown grouped by state in the map below.1

Location of large pharmaceutical plants
Location of large pharmaceutical plants
(Energy and Environmental Analysis, Inc, 2004; see also 
CHP Installation Database - 2006 Status Report, Energy and 
Environmental Analysis, Inc, www.eea-inc.com)


More than 32 of the large pharmaceutical sites use CHP. Combined they generate more than 740 MW of capacity.1

For more general background, see the EPA's Profile of the Pharmaceutical Manufacturing Industry.

Issues

Competition in this market is high. In recent years this industry has seen a number of horizontal consolidations among pharmaceutical companies; as well as vertical mergers between pharmaceutical companies and other health-related businesses like pharmacy benefit managers.5

Industry consolidation, rising raw material and labor expenses, personal importation of drugs, competition from generics, and the cost of new product development all put pressure on the pharmaceutical market to reduce costs and increase efficiencies.1

Specifically, the pharmaceutical industry is interested in:

  1. securing reliable and high quality sources of power
  2. improving efficiencies
  3. decreasing energy costs
  4. reducing emissions outputs
To see how CHP has addressed these needs in the Pharmaceutical market, see the Case Studies section below.

Market Characteristics

Typically, this market is characterized by:

These factors make CHP attractive for this market. However, careful economic screening of individual projects is still critical to making a sound CHP decision.

Case Studies

CHP systems provided energy cost savings, increased energy efficiencies, lowered emissions, and improved energy reliability. Issues included a landlord's discomfort with landfill gas technology, and one site was unable to sell their excess capacity to the utility.

For additional case studies, visit Distributed Energy Case Study Database supported by the United States Department of Energy. Cases may be searched by market sector, site name, state, power size range, prime mover, fuel type and thermal energy use.

References

  1. Sector Profiles of Significant Large CHP Markets, Energy and Environmental Analysis (2004) - Presentation profiles three large CHP markets (Chemicals, Food, and Pharmaceuticals) identified as having the greatest near-term CHP growth potential.
  2. Profile of the Pharmaceutical Manufacturing Industry, EPA (1997) - This profile includes geographic and economic information, industrial process descriptions, pollution outputs, statutory and regulatory framework, and the compliance history for the pharmaceutical manufacturing industry.
  3. Combined Heat and Power Installation Database, Energy and Environmental Analysis (2005) -
    Database provides information on CHP sites by state including city, site and organization name, business activity, year of installation, prime mover, fuel type and capacity.
  4. Pharmaceutical and Medicine Manufacturing, Bureau of Labor Statistics (2005) -General career guide to the industry that includes an overview of the industry, working conditions, occupations, training, earnings and outlook.
  5. The Pharmaceutical Industry: A Discussion of Competitive and Antitrust Issues in an Environment of Change - Executive Summary, Federal Trade Commission (1999) - This summary discusses the impact that information technology and corporate mergers (both horizontal and vertical) has had on the Pharmaceutical industry. This report is written from the perspective of a regulatory agency and speculates on how these changes might negatively impact the consumer.