Case study: Bioprocess scale-up & biomanufacturing economics — a startup-to-enterprise scale story

When Ginkgo Bioworks announced its 2024 financial results—$227 million in revenue against a $547 million net loss—it crystallized the central paradox of biomanufacturing: the technology works, but the economics remain brutally challenging. The synthetic biology pioneer had designed over 1 million genetic variants at a 62% success rate, yet adding programs did not drive the economies of scale that investors expected. Meanwhile, Perfect Day had raised over $825 million since 2014 to produce animal-free whey protein, only to discover that precision-fermented ingredients still cost 2-5x more than traditional dairy. These stories encapsulate the critical inflection point facing the $24 billion next-generation biomanufacturing sector in 2025: the gap between laboratory promise and commercial viability remains stubbornly wide, but the companies that bridge it will capture disproportionate value in markets spanning pharmaceuticals, food, materials, and industrial chemicals.

Why It Matters

The next-generation biomanufacturing market reached $24.09 billion in 2024 and is projected to grow at an 8.4% compound annual rate to $68.74 billion by 2037. This growth reflects the technology's potential to address critical sustainability challenges—reducing Scope 3 emissions in supply chains, enabling biodiversity-positive production methods, and creating traceable, compliant ingredients for increasingly regulated industries. The U.S. National Biotechnology Initiative has committed $15 billion toward achieving 30% domestic chemical production via bio-based methods by 2040, while China invested $4.17 billion in biomanufacturing infrastructure in 2024 alone.

Yet the sector's promise remains constrained by a fundamental scale-up challenge: biology does not behave like software. Unlike cloud computing, where marginal costs approach zero as utilization increases, each biomanufacturing program requires custom organism design, specialized fermentation conditions, and complex downstream processing. Ginkgo Bioworks operated 140 active programs in Q2 2024—a 33% increase from the prior year—yet revenue declined slightly while losses widened. The company has not demonstrated that servicing more programs automatically reduces per-unit costs, calling into question whether the "AWS of biology" thesis can deliver the capital efficiency that venture investors require.

For decision-makers evaluating biomanufacturing investments, partnerships, or in-house capacity, understanding the unit economics—and the specific conditions under which scale actually reduces costs—has become essential for avoiding the fate of failed predecessors like Zymergen and Amyris.

Key Concepts

Techno-Economic Analysis (TEA): The quantitative framework for evaluating whether a bioprocess can achieve cost competitiveness at commercial scale. TEA models incorporate feedstock costs, fermentation yields, downstream processing efficiency, capital expenditures, and operating costs to project per-unit production economics across different scales. Industry practitioners increasingly recognize that TEA must be conducted early in process development—not after laboratory success—to avoid investing in inherently uneconomic pathways. A Lang factor of 3.5 (total installed cost as a multiple of equipment cost) is commonly applied when estimating new biomanufacturing facility construction.

Downstream Processing (DSP): The purification and concentration steps that transform raw fermentation output into usable products. DSP typically accounts for 50-80% of total production costs in precision fermentation and often determines whether a process can achieve commercial viability. Unlike upstream fermentation (where scaling to larger tanks reduces costs by approximately 35-40%), DSP costs do not decline linearly with scale and require fundamentally different engineering approaches—chromatography, filtration, crystallization—depending on the target molecule's characteristics.

Continuous Manufacturing: A production paradigm that maintains steady-state fermentation rather than discrete batch processing. Continuous upstream processes captured 45.3% of the biomanufacturing market in 2024 and offer theoretical advantages in consistency, yield, and capital utilization. However, implementing continuous manufacturing requires sophisticated process control, real-time analytics, and regulatory frameworks that many biomanufacturing facilities have not yet established.

Single-Use Systems (SUS): Disposable bioreactors and processing equipment that eliminate cleaning validation requirements and reduce cross-contamination risks. Single-use systems are the fastest-growing segment in biomanufacturing infrastructure, projected to reach 28% market share by 2026. While SUS reduces capital requirements and accelerates facility commissioning, consumable costs can exceed traditional stainless-steel systems for high-volume production, creating complex optimization decisions for scale-up planning.

What's Working and What Isn't

What's Working

Strategic Partnership Models: Impossible Foods' decision to partner with OSI Group—a major McDonald's supplier—rather than building all manufacturing capacity in-house proved transformative. After 2019 debates about vertical integration, President Dennis Woodside concluded: "We don't have to do everything ourselves." OSI's expertise helped quadruple production by year-end 2019, while Impossible maintained focus on R&D and product development. This partnership model—combining biotech innovation with established manufacturing infrastructure—has become the dominant strategy for companies seeking rapid scale without the 18-24 month lead times required for new facility construction.

Dedicated Biomanufacturing Teams: Separating biomanufacturing from R&D has proven essential for companies transitioning from laboratory to commercial scale. Impossible Foods created a dedicated biomanufacturing team in 2020 led by VP Smita Shankar, with a mission to "scale up core R&D discoveries to achieve mass-market economies of scale." This organizational structure—distinct from discovery research—allows specialized focus on the unique engineering, operations, and supply chain challenges that determine commercial success.

Co-Located Renewable Integration: Perfect Day's joint venture with Zydus Lifesciences for a Gujarat, India facility demonstrates the emerging model of integrating precision fermentation with low-cost energy and established fermentation infrastructure. The facility, expected to begin operations in H2 2026 with ramp-up through 2027, targets "instant profitability at plant launch" by leveraging India's competitive energy costs, existing pharma-grade manufacturing capabilities, and proximity to Asian markets.

What Isn't Working

The Scale-Volume Assumption: Industry data increasingly contradicts the assumption that larger fermentation volumes automatically deliver cost parity. Analysis shows that scaling to larger tank volumes reduces costs by only 35-40%—not the multi-fold reduction needed for commodity competitiveness. Perfect Day's precision-fermented whey proteins still cost 2-5x more than traditional whey at $8.50/lb, despite over a decade of development and nearly $1 billion in funding. The "scale-up catch-22" persists: insufficient demand prevents production volumes that would reduce prices, while high prices constrain demand growth.

Platform Company Profitability: Ginkgo Bioworks' financial trajectory illustrates the challenges facing horizontal platform companies. Despite operating the world's largest cell programming foundry with 220,000 square feet and 215+ specialized engineers, the company generated a $293 million adjusted EBITDA loss in 2024. Over 70% of 2024 revenue came from government contracts, creating concentration risk, while the collapse of biosecurity revenue from K-12 testing programs eliminated a high-margin revenue stream. The company has initiated a 35% workforce reduction and facility consolidation into its new Biofab1 facility, targeting $250 million in annualized savings by Q3 2025.

Venture-Funded Capacity Investment: Traditional venture capital structures—with 5-7 year fund lifecycles—poorly match the capital intensity and long timelines of biomanufacturing infrastructure. Banks remain unwilling to finance unproven technology at scale, leaving companies dependent on co-manufacturers that may lack specialized capabilities. The industry has witnessed multiple high-profile failures: Zymergen collapsed entirely, while Amyris entered distressed restructuring. Sector-wide skepticism about commercial viability has driven public market valuations to multi-year lows.

Key Players

Established Leaders

Ginkgo Bioworks — The largest cell programming platform globally, with over 4.4 billion genetic sequences in its codebase and 146+ patents. Despite financial challenges, Ginkgo maintains partnerships with Pfizer, Moderna, Bayer, and Novo Nordisk. The company's Q4 2024 cell engineering revenue grew 29% year-over-year to $35 million, suggesting enterprise adoption may be accelerating even as overall revenue contracts.

Perfect Day — The precision fermentation pioneer for animal-free dairy proteins, with products commercialized through partnerships with Nestlé and Starbucks. The company's Gujarat facility represents the largest dedicated precision fermentation investment in food ingredients, with total funding exceeding $825 million.

Impossible Foods — The plant-based meat leader that demonstrated successful co-manufacturing partnerships, achieving 15% price reductions to distributors through manufacturing efficiencies in 2020. The company has raised over $2 billion and maintains the largest plant-based meat R&D operation globally.

ADM (Archer Daniels Midland) — The agricultural processing giant that partnered with Perfect Day in September 2024 for large-scale fermentation capacity expansion. ADM's existing fermentation infrastructure positions it to become a critical contract manufacturing partner for precision fermentation startups unable to fund proprietary facilities.

Emerging Startups

Imagindairy — Israeli precision fermentation company that acquired a 100,000-liter facility in early 2024 and claims price parity with traditional dairy in prototype formulations. The company's AI-led microflora method using Aspergillus oryzae reportedly achieves 20x efficiency versus traditional fermentation approaches.

Prolific Machines — Raised $54.6 million in 2024 for light-based biotech manufacturing that eliminates expensive growth factors from cell culture. The technology could reduce costs for cultivated meat and therapeutic protein production by 10-50x.

Windfall Bio — Secured $28 million for methane-to-fertilizer technology that converts agricultural waste gases into nitrogen products. The approach addresses both Scope 3 emissions reduction and input cost optimization for regenerative agriculture.

Capra Biosciences — Part of SOSV's Ireland Biomanufacturing Fund portfolio, converting brewery waste streams into valuable organochemicals. The circular economy model reduces feedstock costs while addressing industrial waste disposal challenges.

Key Investors & Funders

SOSV — The most active deep tech investor globally in climate, agtech, and biotech, with $1.5 billion AUM. SOSV launched a $65 million Ireland Biomanufacturing Fund in 2024 targeting Series A+ companies scaling precision fermentation operations in the EU. The fund has made initial investments in California Organic, VIA Fuels, and Capra Biosciences.

Breakthrough Energy Ventures — Bill Gates-led $1 billion+ fund making 60+ first-check pre-seed investments annually in climate technology. Recent biomanufacturing-adjacent investments include Savor ($33 million for animal-free butter) and continued support for sustainable protein platforms.

Temasek — Singapore's sovereign wealth fund and major investor in Perfect Day's $90 million Series E (January 2024). Temasek has committed over $500 million to alternative protein and sustainable food systems investments globally.

Ireland Strategic Investment Fund (ISIF) — Government-backed fund partnering with SOSV to develop Ireland as a European biomanufacturing hub, leveraging the country's established pharmaceutical manufacturing infrastructure and favorable corporate tax environment.

Examples

1. Ginkgo Bioworks — The Cloud Lab Model Under Stress Test

Ginkgo Bioworks' journey from $16 billion SPAC valuation in 2021 to approximately $545 million market cap in mid-2025 illustrates both the promise and peril of platform biomanufacturing. The company's thesis—that centralized, automated labs could dominate biology the way AWS dominates cloud computing—attracted partnerships with 77 companies and $52.3 million in collaborative research revenue in 2023.

However, the unit economics have proven more challenging than anticipated. Operating 140+ programs generated slight revenue decline with widening losses, contradicting expectations that economies of scale would emerge. The company's response has been aggressive cost restructuring: 35% workforce reduction, facility consolidation into the purpose-built Biofab1 facility (expected mid-2025), and a shift toward enterprise pharmaceutical customers with larger program values.

The critical question for 2025-2026 is whether Biofab1—designed for higher automation and lower per-program costs—can finally unlock the economies of scale that have remained elusive. Cash burn improved from $114 million in Q3 2024 to $55 million in Q4 2024 (52% improvement), suggesting operational discipline, but the company must achieve adjusted EBITDA breakeven by end-2026 to validate the platform model.

2. Impossible Foods — Partnership Strategy for Rapid Scale

Impossible Foods' scale-up success—quadrupling production in 2019 while maintaining R&D focus—demonstrates the alternative to Ginkgo's vertically integrated approach. When severe product shortages affected all 9,000+ restaurant locations following the Impossible Burger 2.0 launch, the company chose partnership over capital-intensive facility construction.

The OSI Group partnership provided manufacturing expertise from McDonald's largest supplier, enabling production increases that internal capacity could not have achieved within the required timeframe. Importantly, Impossible maintained ownership of its core technology—particularly the heme protein produced via precision fermentation—while outsourcing the commodity aspects of burger manufacturing.

This "capital-light" strategy allowed Impossible to achieve 15% price reductions to distributors through manufacturing efficiencies, moving closer to the price parity with conventional beef that determines mass-market adoption. The company hired senior manufacturing executives (Sheetal Shah, Don DiMasi) to manage the co-manufacturing relationships, recognizing that partnership models require dedicated oversight to maintain quality and efficiency standards.

3. Perfect Day — The Long Road to Commercial-Scale Precision Fermentation

Perfect Day's decade-long journey—from 2014 founding to projected 2026 commercial facility launch—illustrates the extended timelines that precision fermentation requires. Despite $825+ million in funding and commercial products through partners like Nestlé, the company's precision-fermented beta-lactoglobulin (whey protein) remains 2-5x more expensive than traditional dairy.

The Gujarat, India joint venture with Zydus Lifesciences represents Perfect Day's bet that geographic arbitrage—lower energy costs, established pharmaceutical manufacturing capabilities, favorable regulatory environment—can close the cost gap where technology alone has not. The facility targets "instant profitability at plant launch," a claim that depends on India's competitive fermentation infrastructure costs rather than fundamental process improvements.

The September 2024 partnership with ADM for US-based large-scale fermentation capacity demonstrates a hedge strategy: rather than betting entirely on proprietary facilities, Perfect Day is building optionality through multiple manufacturing partnerships. This approach reduces execution risk but complicates the path to the cost parity that would enable 33% dairy market capture—the company's ultimate prize.

Action Checklist

• Conduct early-stage techno-economic analysis: Before committing to scale-up, model production economics at commercial volumes using realistic assumptions for feedstock costs, fermentation yields (typically 50-100 g/L for high-performing strains), downstream processing efficiency, and capital requirements. Apply a Lang factor of 3.5 for new facility cost estimation.

• Evaluate partnership versus build decisions systematically: Compare 18-24 month timelines and $50-200 million capital requirements for proprietary facilities against co-manufacturing partnerships that offer faster deployment but reduced margin capture and technology control.

• Design downstream processing for scale from inception: DSP accounts for 50-80% of production costs and does not scale linearly. Engage process engineers during strain development to ensure target molecules are compatible with economically viable purification approaches.

• Establish separate biomanufacturing teams: Create organizational structures that separate scale-up operations from discovery R&D, with dedicated leadership focused on manufacturing economics, supply chain optimization, and co-manufacturer relationship management.

• Build Scope 3 traceability into production systems: As corporate buyers increasingly require supply chain emissions data, implement measurement and reporting systems that document the environmental benefits of bio-based production versus conventional alternatives.

• Develop regulatory strategy early: FDA GRAS (Generally Recognized as Safe) approval pathways are established for precision fermentation ingredients—Perfect Day, Remilk, and Imagindairy have all received approvals—but the 12-18 month timeline should be incorporated into commercial launch planning.

FAQ

Q: Why haven't economies of scale materialized for biomanufacturing platforms like Ginkgo Bioworks despite operating 140+ programs?

A: Unlike software platforms where marginal costs approach zero, biomanufacturing involves irreducible complexity in each program. Custom organism design, specialized fermentation conditions, and product-specific downstream processing prevent the standardization that enables traditional scale economics. Ginkgo's programs span pharmaceuticals, agriculture, industrial chemicals, and consumer products—each requiring distinct technical approaches that limit shared learning and infrastructure utilization. The company's bet on Biofab1—a purpose-built facility designed for higher automation—tests whether consolidation and specialization can finally unlock the economics that horizontal scaling has not.

Q: What is the realistic timeline for precision fermentation to achieve cost parity with traditional proteins?

A: Current precision-fermented proteins cost 2-5x more than traditional equivalents despite over a decade of development. Industry projections target 2026-2027 for initial cost parity in select applications, but this depends on specific facility launches (Perfect Day's Gujarat plant), continued yield improvements (current high-performers achieve 50-100 g/L), and downstream processing innovations that remain unproven at commercial scale. Analysts estimate that at price parity, precision-fermented dairy could capture 33% of the dairy market; at a 25% premium, only 22% market share. The gap between these scenarios—representing hundreds of billions in market value—explains why cost reduction remains the sector's defining challenge.

Q: How do biomanufacturing companies address Scope 3 compliance requirements for corporate customers?

A: Leading biomanufacturing companies are implementing comprehensive traceability systems that document emissions from feedstock sourcing through product delivery. This includes life cycle assessments comparing bio-based production to conventional alternatives, third-party verification of environmental claims, and integration with customer sustainability reporting platforms. Perfect Day has published TNFD (Taskforce on Nature-related Financial Disclosures) case studies demonstrating biodiversity benefits versus traditional dairy. As EU CSRD (Corporate Sustainability Reporting Directive) requirements expand and SEC climate disclosure rules take effect, bio-based production's environmental advantages become commercially valuable only when systematically documented and verified.

Q: What distinguishes successful biomanufacturing scale-up strategies from failures like Zymergen and Amyris?

A: The critical differentiator is realistic assessment of unit economics before committing to scale. Zymergen and Amyris pursued ambitious capacity expansion without demonstrating that target products could achieve commercial viability at projected costs. Successful companies like Impossible Foods focused on products with clear demand signals and established partnership models before building proprietary infrastructure. Additionally, portfolio diversification—Ginkgo's government contracts, Perfect Day's multiple CPG partnerships—provides revenue stability during the extended timelines required for technology maturation. The sector's survivors maintain cash runways exceeding 18 months while targeting specific applications where bio-based production offers demonstrable advantages over conventional alternatives.

Sources

• Ginkgo Bioworks. (2025). "Fourth Quarter and Full Year 2024 Financial Results." SEC Form 8-K Filing.

• AgFunder News. (2024). "Perfect Day Says Gujarat Facility on Track for 2026 Start, 2027 Ramp-up for Recombinant Whey Protein."

• Research Nester. (2025). "Next-Generation Biomanufacturing Market Size 2025 | $68.74 billion Global Estimates by 2037."

• Good Food Institute. (2024). "State of the Industry: Fermentation for Meat, Seafood, Eggs, Dairy, and Ingredients."

• SOSV. (2024). "Introducing SOSV's Ireland Biomanufacturing Fund."

• The Mills Fabrica & Bolt Threads. (2024). "Synbio Playbook for Techstyle Startups: A Complete Guide for Founders."

• SynBioBeta. (2024). "Biomanufacturing Breakdown: Lessons Learned from Scale-Up Failures and Successes."

• GM Insights. (2024). "Precision Fermentation Dairy Proteins Market Size, 2034 Report."