A bioreactor system for manufacturing and extracting a desired biomaterial from a microorganism by fermenting the microorganism in the bioreactor. The system includes a horizontal reactor vessel, one or more vertical discs rotatably mounted around a hollow shaft, a motor to power the shaft, and one or more spray nozzles arranged to spray required liquids on to the discs. The system is arranged so that the microorganism is not kept submerged within the reactor vessel during the fermentation process. The system is suitable for any type of microorganism, including fungi and bacteria, and can be modified to produce many types of desired biomaterials, including antibiotics, enzymes, ethanol, butanol, chitin, and chitosan. The method of the present invention generally provides steps for placing substrate on the vertical discs of the reactor vessel, inoculating the discs, introducing media, fermenting the microorganism, and extracting the desired biomaterial from the reactor vessel.