Pharmaceutical companies have a
significant impact on the United States economy, and their products
greatly influence the well being of the nation’s citizens. It is
fair to say that the performance of this industry is critical to the
U.S. This mission-critical industry relies greatly on backup
generators, which are tightly regulated in many states.
The
20 largest pharmaceutical companies each have total revenues of more
than approximately $9 billion, with the largest totaling $53 billion.
U.S. firms dominate the pharmaceutical market, but non-US
pharmaceutical companies also do substantial business and product
development in the U.S.
Pharmaceutical
companies frequently engage in several types of business activities
including manufacturing, administration, sales, R&D, and product
testing. Many pharmaceutical company facilities are situated in
business park settings not unlike college or university campuses and
employ thousands of people. Some of these buildings and facilities
are used on a 24/7 or multiple-shift basis, while others are limited
to a regular office schedule. The operations and maintenance of these
manufacturing, testing, and office facilities create general and
mission critical energy supply requirements.
Manufacturing
and product development processes, product handling, and distribution
(including refrigeration for storage), laboratories, computing
equipment, security, and other common building faculties such as
elevators, HVAC, and lighting drive the energy and reliability needs
of large pharmaceutical companies.
Product
development, i.e., the discovery and development of new drugs, is at
the heart of the pharmaceutical business. Discovery and development
are also cost-intensive and highly competitive. Of the thousands of
compounds investigated for possible human use each year, the U.S.
Food and Drug Administration (FDA) ultimately approves just a few,
necessitating a substantial and continuous R&D investment by each
company. In the first six months of 2009, the FDA approved a total of
only about 40 original, new drugs for sale and
distribution.
Manufacturing and refrigerated
storage facilities and buildings where drug research and development
take place require a consistent flow of power. Loss of power during
the manufacturing process can result in an entire “run” being
lost, with a heavy cost in expenses and time. FDA guidelines require
sterility and uniformity in the manufacture of drugs (See 21 CFR
Parts 210 et seq). Sterility and uniformity can be lost during the
manufacturing process or while medicines are stored. Manufacturers
cannot guarantee the sterility of most injected medicines and other
products in the aftermath of a power outage during the manufacturing
run. For this reason, most pharmaceutical companies install backup
generation in buildings where manufacturing takes place.
Pharmaceutical products that require
refrigeration may continue to be viable for several hours after a
loss of refrigeration. The same would be true for products that are
kept or shipped frozen, although the length of time during which a
power loss could continue would be greater before spoilage would
occur. But once those products attain a certain temperature, which
would depend on the nature of the drug products, they can no longer
be sold, according to 21 CFR Section 211.142.
Tablets
can also become contaminated if the power goes out in a manufacturing
facility. In large facilities, different drugs are frequently
manufactured in adjacent rooms that are walled off from each other.
If the air handling system fails, dust or powder from a product in
one room can travel to another room, destroying the purity of the
product in that other room. Air handling systems must be kept up and
running with back-up generation if there is a power outage or the
manufacturing “run” will have to be terminated since the products
may not meet FDA standards, according to 21 CFR Section
211.46.
Developing and testing drugs involves
humane animal experiments that, if interrupted, can result in
extensive delays in readying drugs for submission for FDA approval
and marketing. Loss of equipment or extreme temperatures in the
laboratory can cause tests to be invalidated or sicken or kill the
animals used for testing. FDA regulations require that laboratory
animals be maintained and controlled in a manner that ensures their
suitability for their intended use (21 CFR Section 211.173).
Temporary loss of air handling equipment can cause viruses or
bacteria to spread from sick animals to healthy animals. Sudden power
loss can also disrupt and delay other research and experimentation.
These losses can delay the development of new drugs from a few months
to more than a year and impose heavy costs upon the pharmaceutical
company.
These financial losses are unlikely
to be recoverable from the utility in the event that there is a
service interruption. Utility tariffs generally protect utilities
from the payment of damages to customers that result from outages of
electric service unless the utility was negligent. Some utility
tariffs even protect the utility from liability for outages unless it
was grossly negligent. Utility tariffs can also provide that
utilities can cut power to certain subsets of customers in order to
avoid a system-wide outage.
In buildings
dedicated to manufacturing or R&D, backup generators must be
available to pick up electric load on an instantaneous basis if there
is a utility power interruption. These generators must be sized to
critical building loads. In R&D buildings, this is frequently the
entire building load. Backup generators must be serviced in
accordance with the manufacturers’ requirements and tested not less
than monthly to ensure that they will be operational in an outage.
Emergency generators are and should be used
in buildings and areas other than those housing manufacturing
facilities and R&D laboratories. These include generators backing
up a power supply and essential air conditioning for data/server
center computer equipment. Backup generation may also be need for
steam generation plants, pilot plant operations, telephone, security,
fire, and other equipment that may be essential in the event of an
emergency. In addition to the necessary electricity needed to back-up
the area surrounding a steam generating plant, back-up steam can be
provided by a cogeneration unit, which will also supply all or some
percentage of the steam used in processing or for other uses on the
site.
Many states limit the hours of operation
of generators installed to supply emergency power, for environmental
limitations. Appropriately sized emergency generation may be used
within such hourly limitations, for other purposes that provide
revenues for the company or reduce electric utility costs. These
additional purposes might include providing capacity to an
Independent System Operator (ISO) or a utility that offers payment to
end users for capacity under a demand-response program. In addition
to participating in demand-response programs, emergency generators
can be used to peak shave and save costs on utility demand
charges.
Emergency generators can be operated
“behind the fence” such that there is no connection with the
utility distribution system. Alternatively, pharmaceutical companies
that plan to run their emergency generators at the same time that
they take power from the utility system (known as “running in
parallel”) must interconnect with the utility in order to offer
capacity to the utility system and generally enter into an
interconnection agreement with the utility based on a form agreement
provided by the utility. These agreements can and should be
negotiated, as many provisions tend to favor the utility. The
principal concern of the utility is that customer’s generating
equipment is equipped to protect the utility’s lines so as to
neither damage its equipment nor injure its line personnel as a
result of back feeding power from the customer’s generator into the
utility’s power lines.
In addition, the
generator may require the addition of emissions control equipment to
reduce both the type and amount of emissions from fuel burned to
power the generator, so that the generator complies with air quality
requirements. Emissions agreements may also be form agreements
presented to the customer by the equipment supply company. These
contracts should be negotiated to ensure that the provisions are not
one sided in favor of the supply company and to protect the
pharmaceutical company against defects or failure to meet the
specifications necessary in order to comply with regulatory
requirements. In a large facility, saving could be in excess of $1
million annually.
Emergency generators are
generally fueled by diesel (No. 2) oil. One consideration is whether
the fuel source can or should be changed to natural gas, which is a
cleaner fuel and can be burned for a greater number of hours given
lower emissions. Whether or not an emergency generator is
participating in a demand-response program or being used for peak
shaving, there must be an adequate supply of fuel available on the
premises. In addition, the pharmaceutical company must ensure that
there is sufficient space for fuel storage and/or a contract that
provides for deliveries to guarantee that the plant will not run
short of fuel when it is needed.