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

/ 34

Actions

file_download Download Options Download this page PDF - Pages #1-34 Image - Page 25 Plain Text - 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
Subject terms
reports
Item type:
reports

Technical Details

Link to this Item
https://name.umdl.umich.edu/5571095.0504.060
Link to this scan
https://quod.lib.umich.edu/c/cohenaids/5571095.0504.060/26

Rights and Permissions

The University of Michigan Library provides access to these materials for educational and research purposes, with permission from their copyright holder(s). If you decide to use any of these materials, you are responsible for making your own legal assessment and securing any necessary permission.

Manifest
https://quod.lib.umich.edu/cgi/t/text/api/manifest/cohenaids:5571095.0504.060

Cite this Item

Full citation
"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 11, 2025.
Do you have questions about this content? Need to report a problem? Please contact us.

Downloading...

Download PDF Cancel