Contract Spray Drying Cost and Minimum Order Quantities

TL;DR

Hendrik Grobler of Advanced Powder Dynamics explains that cost per dry pound depends mainly on feed solids concentration, batching efficiency, yield, logistics, testing and quality requirements. APD uses tiered pricing, so unit cost falls as volume rises. Trials need 50 to 200 milliliters at the benchtop, 20 to 40 kilograms of wet feed on the pilot dryer and 200 to 400 kilograms on the midsize dryer, and APD has no real minimum order quantity, producing 5 to 25,000 kilograms dry per campaign.

• Feed solids concentration is a primary cost driver: the less water that has to be evaporated, the cheaper the drying.
• Batching sequence and equipment, yield optimization, raw material logistics, testing and quality requirements all feed into the cost per dry pound.
• APD uses tiered pricing, so higher volumes lower the cost per dry unit.
• Benchtop work needs 50 to 200 milliliters, pilot trials on the 2.5 kg/hour evaporation dryer need 20 to 40 kg of wet feed, and midsize trials on the 25 kg/hour dryer need 200 to 400 kg.
• Scale-up demonstrations need roughly 200 to 2,000 kg of wet feed, depending on whether they run on the midsize or full scale dryer.
• APD has no real minimum order quantity. Its three production lines, up to a 250 kg/hour evaporation dryer, handle 5 to 25,000 kg dry per campaign, and work can start with about ten grams at the lab level.

What drives the cost of contract spray drying?

Hendrik Grobler: I break this up into two different buckets when I explain this to the customer. First, it’s the development work and the related cost, and then the manufacturing cost, which is critically important to customers. They want to know the cost per dry pound and what drives that cost. I use that objective of the customer to explain to them why development work is so important.

Things that drive it include feed solids concentration. Can we optimize the solids concentration? The less water you have to evaporate, the cheaper it is. That is the basic principle for spray drying.

Additional to that is batch optimization, dryer efficiency, and dryer utilization against how long it will take to do the liquid batching and the formulation. What is the sequence? What equipment is required so that we can optimize the batching side and spend more time on drying the product, and not waste time with ineffective equipment or equipment that’s not up to standard on the batching side? Those things are critically important when you determine cost.

Then there is the yield optimization that we do during the development process. When customers have high value products, they want optimum yields and product recovery. How would we achieve that? It’s not only per production run. It’s how we would achieve that on a scaled version and during every production run.

Then there are requirements like logistical arrangements. Are we providing the raw materials? Is the customer providing the ingredients in a timely manner? There’s testing that is involved, and then there are quality requirements.

How is development work priced?

Hendrik Grobler: When I do the pricing, I focus on why R&D is important and what we are going to focus on during the development work. I break that up into the different phases: the lab evaluation, the benchtop evaluation, formulation development, the cost for the initial dryer trials, and optimization trials. It could include a scale-up demonstration. And then, once we’ve done that, the optimized production volumes and the production process.

When you explain that to customers, they have a good understanding of why they are investing in product development and innovation, so that we can provide them a product that’s not only to specification, but at optimized volumes. APD, like many other spray drying companies, has a tiered pricing system. The higher the volumes, the lower the cost per dry unit.

How much material do spray drying trials require?

Hendrik Grobler: There are two buckets here that I’m looking at. The first one is the development work, and then there is the production. Customers are always concerned about development cost, specifically because we work with high value products with costly ingredients. R&D is expensive, so APD has developed a robust process, but also a very specific process that goes through the specifications and requirements of the customer to achieve those as effectively as possible. Although we have a defined process, we can think outside the box, and we can address the specific requirements of the customer.

If I mention some volumes here, we work with the customer to see how we can achieve their objectives in the shortest time frame, with the least amount of waste and with the least R&D, rework and redevelopment work.

The first step is our lab evaluation, and that could be three aspects. There is a normal lab evaluation, where we evaluate the liquid specification requirements for the customer for the objective to do toll drying or contract manufacturing. The second option is formulation development. Do we adjust the formulation? How much formulation work do we have to do? The third one is benchtop work for cyclodextrin inclusions. The requirements could be anything from 50 milliliters up to 200 milliliters, depending on those requirements.

The next step is our pilot scale dryer trials, which we perform on our smallest dryer, the 2.5 kilogram per hour EVAP dryer. That could be anything from 20 kilograms to 40 kilograms on the wet side. That is the feed product that we actually feed to the dryer.

The next step after that is our midsize dryer, which is the 25 kilogram per hour dryer. For that, on the wet side, it’s about 200 to 400 kilograms of the feed product. Then, depending on the scale-up demonstration requirements, is it the midsize dryer? Is it a full scale dryer? That could be anything from 200 kilograms up to 2,000 kilograms on the wet side. That is the liquid feed product that we will require. It depends on the actual objectives for the development work and the volume requirements for production.

Is there a minimum order quantity for spray dried production?

Hendrik Grobler: On the production side, I’ll refer to finished product, the final product that the customer requires. APD does not really have a minimum order quantity. We have three production lines, anything from a 2.5 kilogram per hour EVAP dryer up to a 250 kilogram per hour EVAP dryer. We can handle dry product requirements, per campaign, anywhere from five kilograms dry up to 25,000 kilograms dry.

I also want to mention that APD is in the process of expanding our capacities and our capabilities. When I say per campaign, normally we do one or two campaigns per order for a customer.

Will West: The conclusion that people should take away from this is that we can work with very high volumes at the top end, but our work often starts with literally a teaspoon of material, ten grams at the benchtop or the lab level. We can work anywhere in between, depending upon where we are in the process and what the customer needs.

We meet the customer where they are, where they are in market, where they are in their internal process, where they are in development, where they are in their business plan. Anyone that has an idea or a process or a portfolio or a product that they want to branch out, do a variation of, or take to a new market can just talk to us, and we’ll start where they are and help them get where they need to go.

Edited for length and clarity from a recorded conversation with Hendrik Grobler and Will West.