H1 N1 Vaccine Production

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H1 N1 Vaccine Production

  1. 1. H1N1 Vaccine Production<br />Namrata Uberoi - Andrew Helicher<br />HPA 545<br />December 1, 2009<br />
  2. 2. DrugCo:Who We Are<br />2<br /><ul><li>Bio-technology company
  3. 3. Established manufacturer of the seasonal flu vaccine
  4. 4. Situated in the United States</li></li></ul><li>Agenda<br />3<br /><ul><li>Problem Definition
  5. 5. Risk Assessment
  6. 6. Profitability Analysis
  7. 7. Recommendation
  8. 8. Problem Definition
  9. 9. Risk Assessment
  10. 10. Profitability Analysis
  11. 11. Recommendation</li></li></ul><li>H1N1Global and National Environment<br />4<br />World Health Organization, 2009.<br />Flu.gov<br />
  12. 12. H1N1 Options<br />Utilize existing capacity<br />Build a vaccine plant<br />Purchase an existing vaccine plant<br />Do not enter the market<br />5<br />
  13. 13. Agenda<br />6<br /><ul><li>Problem Definition
  14. 14. Risk Assessment
  15. 15. Profitability Analysis
  16. 16. Recommendation</li></li></ul><li>H1N1 Vaccine Production<br />Oct Dec<br />7<br />Gerdil, C. (2003)<br />
  17. 17. Associated Risks<br /><ul><li>Demand is highly unpredictable
  18. 18. Virus production
  19. 19. Costs
  20. 20. Legal liability </li></ul>8<br />
  21. 21. Risk Mitigation<br /><ul><li>Government involvement
  22. 22. Pre-order payment
  23. 23. Other revenue streams</li></ul>9<br />
  24. 24. Agenda<br />10<br /><ul><li>Problem Definition
  25. 25. Risk Assessment
  26. 26. Profitability Analysis
  27. 27. Recommendation</li></li></ul><li>Profit Equation<br />11<br />Revenue (Price x Quantity)<br />- Cost . (Fixed + Marginal) <br /> Profit (Market Forces)<br />
  28. 28. Market Forces<br />12<br />Profit ↓<br />Profit ↑<br /><ul><li>Vaccines are commodities
  29. 29. Bertrand Paradox2
  30. 30. Monopsony1
  31. 31. Fixed Cost to Market Size3
  32. 32. Hershaft index
  33. 33. Govn. price based on AWP3
  34. 34. Regionalshortages1</li></ul>Herrick, D., 2004<br />Wikipedia, 2009<br />Danzon, P. et al., 2005<br />
  35. 35. Demand Curve Shifts<br />13<br />Shift Out – Price ↑<br />Shift In – Price ↓<br /><ul><li>WHO Pandemic Alert Level 61
  36. 36. Severe in early months2
  37. 37. Recommended population3
  38. 38. Government subsidies
  39. 39. Extended vaccination timeline3
  40. 40. 1 dose needed (vs. 2)
  41. 41. Virus responds to antivirals
  42. 42. Fear of getting sick from vaccine3
  43. 43. Mild winter perception3
  44. 44. Winner’s curse4</li></ul>Putting Influenza H1N1 in its Place, 2009<br />Yoo et.al, 2009<br />Orenstein, W. et al, 2008<br />Danzon, P. et al., 2005<br />
  45. 45. Supply Curve Shifts<br />14<br />Shift Up – Price ↑<br />Shift Down – Price ↓<br /><ul><li>Manufacturing issues1
  46. 46. Market restrictions
  47. 47. Input shortage/price increase
  48. 48. Aging technology
  49. 49. Government subsidies
  50. 50. New firms enter market (H1N1)
  51. 51. New technology
  52. 52. Nasal spray2
  53. 53. Cell-culture1</li></ul>Danzon, P. et al., 2005<br />Orenstein, W. et al, 2008<br />
  54. 54. Cost Considerations<br />15<br />Fixed Costs<br />Marginal Costs<br /><ul><li>Factory
  55. 55. Management
  56. 56. Regional regulations
  57. 57. Small market1
  58. 58. $6B vs. $340B (pharma)
  59. 59. Inputs (eggs)
  60. 60. Labor-intensive
  61. 61. Technology
  62. 62. Distribution channels</li></ul>Economies of Scale<br />Economies of Scope<br />Brown, D., 2004<br />
  63. 63. Agenda<br />16<br /><ul><li>Problem Definition
  64. 64. Risk Assessment
  65. 65. Profitability Analysis
  66. 66. Recommendation</li></li></ul><li>Recommendation<br />17<br /><ul><li>Use existing capacity- determine optimal mix of seasonal and pandemic vaccine manufacturing
  67. 67. Lobby for supply-side and demand-side subsidies
  68. 68. Supply-side: pricing, inventory buy-back, liability
  69. 69. Demand-side: insurance, public health, mandates
  70. 70. Invest in new technology: cell-based culture</li></li></ul><li>Questions?<br />
  71. 71. References<br />19<br />Bertrand Paradox. Retrieved from http://en.wikipedia.org/wiki/Bertrand_paradox_(economics). 2009 Nov. 29.<br />Brown, D. (2004 Oct. 17) How U.S. Got Down to Two Makers of Flu Vaccine. Washington Post. Retrieved from http://www.washingtonpost.com/wp-dyn/articles/A38776-2004Oct16.html. <br />Collin, N. & Radigues, X. (2009) Vaccine production capacity for seasonal and pandemic (H1N1) 2009 influenza. Vaccine. Vol. 27, 5184-5186. <br />Danzon, P., Pereira, N. & Tejwani, S. (2005) Vaccine Supply: A Cross-National Perspective. Health Affairs. Vol. 24, No. 3. <br />Feeney, M. (2006) Flu Vaccine Case Study. The Electronic Hallway. Retrieved from www.hallway.org<br />Gerdil, C. (2002) The Annual Production Cycle for Influenza Vaccine. Vaccine. Vol. 21, 1776-1779. <br />Herrick, D. (2004 Oct. 28) What’s Behind the Flu Vaccine Shortage. National Center for Policy Analysis. No. 493. <br />Orenstein, W. & Schaffner, W. (2008) Lessons Learned: Role of Influenza Vaccine Production, Distribution, Supply, and Demand—What It Means for the Provider. The American Journal of Medicine. Vol. 121, S22–S27.<br />Preparation for Pandemic: Influenza A H1N1. (2009 May 8). The Lancet – Leading Edge. Vol. 9, June 2009. <br />Putting Influenza H1N1 in its Place. (2009 May 8). The Lancet – Leading Edge. Vol. 9, June 2009. <br />Osterholm, M. (2005) Preparing for the Next Pandemic. The New England Journal of Medicine. May 5, 2005. Vol. 352, Iss. 18.<br />Yoo, B., Kasajima, M., Fiscella, K., Bennet, N., Phelps, C., Szilagyi, P. (2009) Effects of an Ongoing Epidemic on the Annual Influenza Vaccination Rate and Vaccination Timing Among the Medicare Elderly: 2000-2005. American Journal of Public Health. Suppliment 2, 2009, Vol. 99, No. S2. <br />

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