Report on the United States Vaccine Industry
Vaccine Industry Economics Overview The aggregate U.S. vaccine industry contribution to R&D, interest, taxes, and earnings is similar to the pharmaceutical industry, though vaccine return on assets is probably lower, due to higher capital requirements. Individual product contribution varies depending on the competitive environment, the product complexity and scale, and the stage of the product life cycle. Royalties may be a major cost of many new vaccines and may change the core economics of the business. And "contribution" is significantly higher for private versus public sector sales. As shown in Exhibit 22, we have simplified the vaccine value-chain to include five cost categories: production, distribution, returns, sales and marketing, and administration. Because R&D investment is not addressed, "contribution" is calculated as the difference between these costs and net revenue and is thus defined as "contribution to R&D, interest, taxes, and earnings." Earnings are necessary to fund capital expenditures (to maintain and expand research and production facilities) and dividends (to attract investors). Production costs include bulk production, filling and finishing, QA/QC, other indirect support (such as engineering), and royalties expense; distribution includes storage, pick-pack, and shipping; and sales and marketing covers the costs of the sales force, promotional discounts, and other marketing activities. Exhibit 22 Vaccine Industry Value-Added Chain Disti- Sales and I Admini- Contribution to R&D, Production bution etng stton nterest, Taxes and j - Earnings m jl ii ~ | ~ i i i ~ iii Returns Costs i t Net Revenue * List Price * Volume discounts Elements: * Bulk production * Filling/ finishing "*QA/QC " Indirect Support * Royalties " Shipping * Storage * Pick and pack * Materials * Sales force * * Promotional discounts * * Promotional materials/ activities Corporate overhead LegaVl/ liability management R&D Interest Taxes Dividends Capital expenditures Earnings Mercer Management Consulting Page 25
About this Item
- Title
- Report on the United States Vaccine Industry
- Author
- Mercer Management Consulting
- Canvas
- Page 25
- Publication
- Mercer Management Consulting
- 1995-06-14
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- Marketplace > Press releases, reports, and newsletters
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- Jon Cohen AIDS Research Collection
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https://name.umdl.umich.edu/5571095.0504.060
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https://quod.lib.umich.edu/c/cohenaids/5571095.0504.060/26
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"Report on the United States Vaccine Industry." In the digital collection Jon Cohen AIDS Research Collection. https://name.umdl.umich.edu/5571095.0504.060. University of Michigan Library Digital Collections. Accessed June 10, 2025.