Economic Framework for Global Vaccine Supply

Vaccine industry economics: Cost (I)
Vaccine cost economics are highly scale (utilisation) sensitive: Low volume vaccines/produce
all other things being equal, be higher cost than high volume vaccines/producers.

rs will,

Vaccine industry average (Products and companies)

Illustrative vaccine industry scale curve

19%
(12-30%)

R+D: Cost/dose falls with
increasing sales volume

1000 -

31%
(30-35%)

Selling, distribution and
overhead: Cost/dose falls with
increasing sales volume

100 -

Log
cost per
dose)
10 -
Scale: 70%

16%
(12-18%)

Site fixed costs: Cost/dose falls
with increasing plant output
e.g. Depreciation, engineering

X

1 -
24%
(18-27%)
10%
(5-20%)

Batch fixed costs: Cost/dose
falls with increasing batch size
e.g. QC testing
Variable costs: Variable with
volume
e.g. vials

Log doses

Note: (1) Vaccines involving significant royalty payments have effectively higher variable costs, and are therefore less scale sensitive
LolGcUFOA009.P Mercer Maaeet osligi

Lon 1 /GMC/UCF003A-020497. PPT

Mercer Management Consulting