Team:UCSC/Entrepreneurship
The Vaccine and Cold Chain Market
Total Worldwide Market
The vaccine market includes all the supply and consumption of all vaccines. The growing demand for vaccines has increased the vaccine market from USD 5B in 2000 to USD 24B in 2013 and a global market projected to be 61B by 2020. This is due to new emerging markets in Latin America, China, India and Russia, and with 20% of the population currently making up 80% of the demand, an increase in supply and demand is inevitable. There are 5 major vaccine manufacturers that capture the majority of the vaccine market; Merck, Pfizer, Sanofi-Pasteur, GlaxoSmithKine, Novartis. [1]
The cold chain market includes the storage, transportation and monitoring of temperature sensitive materials. This market’s estimated value is USD 167.99 B in 2018 with pharmaceuticals making up an estimated 12.5% of the total market [2] . Raising innovations and regional expansion of biopharmaceuticals will likely drive the growth of this section within the cold chain market.
What is costs to set up a cold chain system
The World Health Organization in May 2016 released a practical guidance paper outlining the response plan for utilizing the Ebola vaccine in the case of an outbreak. This guide was used to serve as a resource to governments and partners to optimize the response. The vaccine the document refers to must be kept at a -80 °C to -70 °C, therefore the cold chain the WHO must set up in response to an outbreak must compile with this temperature range [4] [5] . The figure below outlines the estimated cost to set up such a cold chain.
Labor: Each vaccine storage facility must staff trained and qualified vaccine personnel. This staff is well versed in the equipment and proper handling of all the vaccines stored at that location.
Storage: Refrigerated vaccines must be kept between 2 °C to 8 °C and frozen vaccines must be kept between -50℃ to -15 °C. The equipment in order to maintain these temperatures accurately at location can include; Ultracold -85 °C freezers, remote temperature tracking devices, standard -20 °C freezer, a backup power supply, remote temperature tracking devices and a computer laptop for managing the cold chain [4] . The maintenance and upfront cost of all this equipment can be costly.
Transport: The vaccines must be transported at their required temperatures. This transportation relies on refrigerated trucks and or reliable freezers and refrigerators on the trucks. The shipping costs of temperature regulated items is much higher.
Building: A building with uninterrupted access to power is required and a backup generator is recommended. Must be large enough to accommodate all the equipment and vaccine volume.
Affect of Thermostable Vaccines
How will Thermostable Vaccines Affect the Economy?
Using the software program HERMES, Highly Extensible Resources for Modeling Event-Driven Supply Chains, a team was able to use a computational simulation to evaluate the impact of replacing a variety of vaccines with thermostable formulations in the Republic of Benin, the state of Bihar and Niger [3] . This simulation directly answers the question of the economic impact a thermostable formulation like ours would have.
The Simulation
The HERMES simulation took into consideration four main components that was used to calculate the total savings a country’s economy would benefit from when switching to a thermostable vaccine. The first variable they calculated was the logistics cost savings, using the difference between the labor costs, storage costs, transport costs, and building costs with normal and thermostable vaccines. Then the procurement cost, medical cost savings and production loss averted was all calculated to get a total cost savings.
The study quantified the potential economic impact a thermostable vaccine formulation would have on the three case study nations. Even when charging a price premium triple the price of the normal vaccine a major savings was still seen. When adding up all the total savings for every vaccine calculated in this study for each location, the Republic of Benin saved $32,930,000, the state of Bihar saved $526,439,000, and Niger saved $199,076,000 [3] . These total savings are astronomical and lend a major argument to the high value a thermostable vaccine formulation would have.
SWOT Analysis
Looking further into the value of our IP
SWOT is an analytical tool that is used to determine internal and external strengths, weaknesses, opportunities and threats in order to formulate an effective business strategy within a given market. This analysis is used to determine where a thermostable vaccine formulation fits in the market. Based on this SWOT analysis our vaccine formulation is a viable and valuable product. With the reliance on refrigeration eliminated, vaccines can be distributed more cost effectively and with greater efficiency, outweighing the possible increase in production cost. An increase in vaccine accessibility opens up a larger and currently untapped market, specifically in resource constrained areas, as well as limits the threat of push back from established pharmaceutical companies, since their profits will correlate with the increase in vaccines procured.
Industry Interest
To find the true value of this project’s intellectual property we spoke with people from the industry to evaluate their interest. We corresponded with three individuals from Merck & Co, a large pharmaceutical company that makes up 12% of the global vaccine market, to see if a thermostable vaccine formulation would be of interest. Jeffery Blue, the director of vaccine drug product development, found the project fascinating and very much a technology that pharmaceutical companies would be interested in. The other members of Merck we spoke to echoed this sentiment. Another person we spoke to was Lawrence Deghetlidi, the director of the Santa Cruz division of the Palo Alto Medical Foundation, he insisted that a thermostable vaccine would be a cost saving technology that in his experience would benefit the patient and the health care sector.
Future Goals
As a team we will be filing a patent containing the intellectual property for our thermostable vaccine formulation. The novel, non obvious and useful nature of our idea gives us the ability to file for a patent. We also conducted research and have decided that we have the freedom to operate within the market. The value of this intellectual property is immense and difficult to accurately evaluate. With the known information about the millions of dollars the WHO spends on setting up a reliable cold chain, the hundreds of millions of dollars the HERMES simulation estimates thermostable vaccines save national economies and the increases in vaccine market, the IP and its subsequent licensing will have a large monetary value.
References
1.) Kaddar, Miloud. "Economic Characteristics of Vaccines and Immunizations." Workshop on Business Modeling for Sustainable Influenza Vaccine Manufacturing, 14 Jan. 2013, Washington DC. Presentation.
2.) "Cold Chain Market Size & Share | Industry Trends Report, 2019-2025." Market Research Reports & Consulting | Grand View Research, Inc, www.grandviewresearch.com/industry-analysis/cold-chain-market.
3.) "Economic Impact of Thermostable Vaccines." PubMed Central (PMC), May 2018, www.ncbi.nlm.nih.gov/pmc/articles/PMC5547751/.
4.) World Health Organization. Global Ebola Vaccine Implementation Team Practical Guidance on the use of Ebola vaccine in an outbreak response. World Health Organization, 2016. www.who.int/csr/resources/publications/ebola/gevit_guidance_may2016.pdf.
5.) "Vaccine Storage and Handling Resources." Centers for Disease Control and Prevention, 11 Sept. 2019, www.cdc.gov/vaccines/hcp/admin/storage/index.html.
