Report on the United States Vaccine Industry

Distribution Costs Vaccine distribution costs are relatively high in the United States, reflecting, in part, the high number of small shipments; in fact, almost 50 percent of shipments are made to individual physicians. Furthermore, vaccines are supplied and thus split by four major producers, further reducing average order size. Exhibit 24 shows the typical distribution costs for a vaccine supplier, segmented by the size of the customer channel served and the number of doses in a vial. Shipping small orders to individual physicians can cost from 1 to 2 dollars per dose, while shipping multi-dose orders to state warehouses, large wholesalers, and major HMOs can cost less than a ten cents per dose. Overall, distribution costs average 10 percent of sales, although that figure varies by individual supplier, based on the mix of single versus multi-dose vials as well as on customer channels. Exhibit 24 Major U.S. Vaccine Distribution Costs - Example - State Warehouses/ State Private Small HMOs/ Large Wholesaler/ Warehouses/ Physicians Hospitals/ Distributors and Select HMOs and Direct Distributors HMOs Wholesalers Total Multi Single Multi Single Multi Single Dose Dose Dose Dose Dose Dose Average Order 25 doses 400 doses 2,000 doses 10,000 doses Size Shipping and $30 $30 $150 $150 $500 $500 $1,600 Handling Cost per Order Total cost per $1.20 $.08 $.38 $.08 $.25 $.05 $.16 Dose Channel MIx 49% 4% 3% 13% 9% 13% 9% 100% - % of doses Channel Cost $33 M $.2 M $1 M $.6 M $1 M $.3 M $1 M $37 M - 10% of sales Sales and Marketing Costs Vaccine industry sales and marketing investments are focused primarily in three areas: (1) sales forces, which "detail" (an industry term for educating and selling to physicians) products and negotiate sales to large buyers; (2) promotional discounts, which support channel-based market share maintenance and expansion strategies; and (3) market development materials. Individual company investments depend on both the competitive environment and lifecycle stage of each product in their portfolio. On average, vaccine companies annually spend about 16 to 18 percent of sales on sales and marketing activities. Mercer Management Consulting Page 28

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Title
Report on the United States Vaccine Industry
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Mercer Management Consulting
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Page 28
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Mercer Management Consulting
1995-06-14
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reports
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reports

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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 12, 2025.
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