Economic Framework for Global Vaccine Supply

Vaccine industry economics: Summary

* Volume effects dominate the cost behaviour of the vaccine industry
- Scale and utilisation drive fixed cost per dose
- Learning drives batch yields
-* Marginal volume has significant value
* But revenue effects (pricing) are even more critical to the industry's profitability
- Market mix is characterised by low volumes at high prices, high volumes at low prices
- 'Home' markets historically protected: Now product innovation and technical know-how are
key pricing drivers
- Historically driven by product life cycle
- If forced to choose, a commercial supplier will opt for low volumes at high prices
* But, this choice is suboptimal: For both commercial suppliers and for public and private customers
- For commercial suppliers it reduces available volume and thus increases costs
- For customers it limits availability
* The most profitable route (cost and price) for a supplier is to maximise volume, serving all
segments of demand at appropriate price points
- Equally true for biotechs and academics relying on royalty revenues
* How to achieve this objective is the key dilemma facing participants here today

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