A review of the existing literature (Chapter 2) found that economic evaluations of vaccine production in developing countries have been limited. Constant changes have been reported to take place in the vaccine market. These changes, which stem from advances in biotechnology and tighter regulatory requirements, pose challenges for vaccine manufacturers to remain economically viable whilst at the same time producing vaccines that are efficacious and of high quality. Maintaining the global supply of vaccines has, therefore, been challenging, particularly to maintain the supply of vaccines to non-premium markets such as those in developing countries.
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The cost-per-dose of vaccines produced by DCVMs, over three specified production scale and scope settings63, was found to be an average of $2.05. The average and range of costs-per-dose ($0.92 - $4.40) were in line with reported costs of vaccines produced by multinationals64. The vaccine markets faced by DCVMs however are mostly non-premium markets65, yet this may be compensated by other features found in developing country vaccine markets, such as the large size of the population and the high need for vaccines due to disease burden profiles66 and low domestic competition67. DCVMs may find particular challenges to sustain their viability when they produce vaccines for the export market, or when they produce new technology vaccines.
From the three analyses conducted in this thesis, the following critical factors were found to influence viability of vaccine production in developing countries.
In establishing vaccine manufacturing facilities.
a. To offset high fixed costs associated with vaccine production, two specific characteristics are important: large production scales (ideally over 20 million
annual doses) and a multi-vaccine facility.
b. Given the step-fixed-cost characteristics of fixed costs, manufacturers should have a high level of certainty over the production scale and scope.
c. An estimated 10% of cost savings through economies of scale and scope can potentially be achieved by increasing the scale and scope of production
63 The three settings observed were 1) Scenario A with 20 million annual doses of 1 vaccine
product (average cost-per-dose: $2.30); 2) Scenario B with 20 million annual doses of 5 vaccine products (average cost-per-dose: $2.02); and 3) Scenario C with 100 million annual doses of 5 vaccine products (average cost-per-dose: $1.82).
64 No studies have presented the industry-wide cost of producing vaccines in developing
countries. One report based its costing on vaccine production by multinational manufacturers, with costs ranging between $0.05 to $3-$4 per dose (Mercer Management Consulting, 2002). It is not clear however whether those costs included attrition rates, which were included in the calculations in this thesis.
65 WHO report that vaccine markets in low and middle income countries contribute to only 18%
of the total market value of vaccines.
66 WHO report that 85% of the world’s population live in low and middle income countries, while
93% of the burden of disease is found in these countries.
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facilities, regardless of whether they are viral or bacterial vaccines. Recombinant vaccines can achieve higher cost savings (31%) while conjugate vaccines can achieve lower cost savings (15%). If the vaccine is recombinant, economies of scale can be twice as high, whereas if conjugate, only one-third as high. With regards to formulation presentation, economies of scale are achieved in order (from highest to lowest) by: prefilled syringe vaccines, and lyophilised, multi-dose and single-dose vaccines.
d. Almost 20% of cost savings can be achieved if more vaccine products are produced in a facility, regardless of whether they are viral or bacterial vaccines. Recombinant vaccines can achieve higher cost savings (31%) while conjugate vaccines can achieve lower cost savings (15%). Little variation in cost savings was found based on formulation presentations, except for multi-dose types (26%).
Once production is up and running, the following aspects were found to be significant in ensuring a DCVM’s viability:
a. In the domestic market: viability is enhanced by: larger scale of vaccines production, production supplies that are sustainable and reliable, producing vaccines with higher technology levels, manufacturers having autonomous management structures, and countries having higher income levels.
b. In export markets, viability is enhanced by: larger numbers of vaccine types being produced, production supplies that are sustainable and reliable, sizes of production and supply that can sufficiently meet demand, prequalified vaccines, and manufacturers with autonomous management structures.
In selling its vaccines, the following procurement factors influence a DCVM’s pricing
downwards: volume size of procurement, bulk-procurement method, larger formulation sizes, and higher vaccine technology, as well as lower income levels of procuring and producing countries. Also influential towards a DCVM’s pricing is the
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category of vaccine technology (bacterial, viral and combination vaccine types in particular). The importance of all these factors varied by vaccine technology levels: a. Traditional EPI vaccines: the downward factors were UN procurement transactions, bacterial vaccine categories and number of competing vaccines. While the upward factors were producing and procuring countries with higher income levels (upwards), and viral vaccine categories.
b. New and underused vaccines: downward factors were volume size of procurement, formulation sizes required and recombinant vaccine types. While upward factors were transactions involving producers with higher income levels68 and the number of competing vaccines.