Appendix I-A 
A Case Study of 
Acetaminophen Production 
Siimmnry 
The ohjectixf ot ihis rase study is to demonstrate 
the eronomir teasibility of a|)[)lying a f'enetirally 
engineered strain to make a ihemiral product not 
now produri'd In termentation. 
K \(:k(;k()i \i) 
Acetaminophen ( \l’ \P) was chosen tor the case 
study. As an analf'('sic. it lacks some ot the side ef- 
fects of aspirin, and is the largest aspirin substitute 
on the market. .Around 20 million pounds (lb) are 
manufactured annually. Mallinckrodt, Inc., produces 
00 to 70 percent: the remainder is manufactured f)ri- 
marih In ( I’C International and Monsanto (A). AP.AP 
is sold to health care com[)anies, \\ hich market it to 
retailers. 
The .\lc.\eil (Consumer Products di\ ision of John- 
son & Johnson, which markets APAP undei' the 
trade name, lAlenol. has the largest share of the 
market. ()\er a dozen other com[)anies in the L’nited 
States sell it undei’ other trade names. 
One chemical manufacturer's hulk selling price for 
APAP is around S2.05 Ih.' By the time the consumer 
purchases it at the drug store, the markup results in 
a selling price of around S25 to SoO'lh, depending on 
dosage and package sizes. Thus, the total \ alue of 
AP AP to the manufactures is some $50 million annu- 
ally, w hile the total retail value falls in the range of 
$500 million to $1 billion. 
APPROACHES 
• A consen ative approach was taken, in that only a 
con\ entional batch fermentation process was con- 
sidered. 
• \ ariables were selected pertaining to the choice of 
the microbial pathway: the nature of the feed- 
stock: conversion efficiencies of feedstock to 
.AP.AP: and the final yield of .APAP. 
• Costs w ere based on proprietary processes involv- 
ing startup, large-scale fermentation, and recovery 
of APAP. 
• Costs were itemized for materials and supplies: 
labor distribution: utilities (broken down by specif- 
ic energy requirements according to process and 
equipment): equipment (grouped according to 
'('hi'micnl Markflin^ Hciwrlcr, .\o\ {>ml)er and Decemlier 1979. 
process): and building rec|uirements (space needs 
allocated according to pi’ocess). 
CO\CLUSIONS 
• The [irojecled cost for manufacturing APAP by 
means of batch fei’inentation, using a genetically 
engineeretl sti ain, amounts to $l.()5/lb. Phis cost is 
ba.sed on a plant [u-oducing 10 million lb of APAP 
annually. 
• .As a rule of tbumb, the gross margin for manufac- 
ture of a chemical such as APAP should approx- 
imate 50 [lercent of sales, '('he gross margin repre- 
sents the |)i'ofit before general and administrative, 
marketing and selling, and research and develop- 
ment expenses. Tbe gross margin for all of the 
products made by Mallinckrodt, the largest man- 
ufacturer of AP.AP, amounted to 39 and 37 percent 
of sales in 1977 and 1978, respectively.^ The gross 
margin foi' Monsanto, a much larger company 
than .Mallinckrodt but a smaller manufacturer of 
AP.AP, amounted to 27 and 26 percent of all sales 
in 1976 and 1977, respectively.^ If the gross mar- 
gin for APAP is as high as 50 percent of sales, its 
current cost of manufacture should amount to 
$1,325/11), based on a bulk selling price of $2. 65/lb. 
Therefore, its projected cost when produced by 
fermentation is around 20 percent lower than its 
estimated cost udien produced by chemical syn- 
thesis. 
• If the selling price of APAP produced by fermenta- 
tion is marked up 100 percent, the bulk selling 
price becomes $2. 10/lb. This decrease of $0. 55/lb 
could be transformed into cost savings of around 
$5 to $10/lb to the consumer. These economies 
would result in an annual cost saving to the con- 
sumer of $100 million to $200 million. 
• Current processes for synthesizing APAP from 
nitrobenzene do not appear to pose significant 
pollution problems, although a number of side 
products are formed and must be removed.” ® ® 
Howev'er, a fermentation process would be ev'en 
^Mallinckrodl, \m-.. Annual Heport, 1978. 
■'Monsanto Co., Annual Rcporl, 1977. 
•*H. C. Benner, "Proress for i’repariiif' .Xminoplienol," U.S. Patent 
;i,;i83.4i(;. i968. 
■9\ ,\. Baron, R. C. Benner, and ,\. f,. Weinherg, ' Piiril ication of 
/)- Aminophenol," U.S. Patent ;{.(i94.,')08, 1972. 
“f. ,\. Baron and R. C. Bennei', "Pui'iliealion of /)-Aminophenol," 
U.S. Patent 3,717,880, 1973. 
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