Economic Feasibility Study
of Vaccine Production in Thailand
Arthorn Riewpaiboon1, Siriporn Pooripussarakul1,
Charung Muangchana2, Unchalee Siripitayakunkit2
1 Division
of Social and Administrative Pharmacy, Department of
Pharmacy, Faculty of Pharmacy, Mahidol University
2 National Vaccine Institute, Department of Disease Control, Ministry
of Public Health
Acknowledgments
• WHO Thailand office, for the research grant
• Dr. Suwanchai Wattanayingcharoen, Vice Director of the Department of
Disease Control
• Government Pharmaceutical Organization:
Mr. Somchai Srichainak, Deputy Director
Mr. Sit Thirapakpoomanunt, Senior Expert
Mr. Chakkrit Prapaipittayakun, Acting Director of Biological
Product Department
Mr. Ruengchai Kaweepornpoj, Head of Administration,
Biological Product Department
Mr. Pattharachai Lakornrach, Head of JE Production Section
Mr. Chanasak Dechkum, Acting Head of Bacterial Vaccine Division
• Graduate students of the Mahidol University Pharmacy Administration
Program: Ms. Tuangrat Phodha, Ms. Onwipa Rochchanathimoke and Ms.
Chadarat Issararak, for data collection.
Background (1)
• Thailand spends about 3 billion baht each year
on vaccine procurement by government and
private sectors.
• At present, only BCG and JE vaccines are
produced.
• Neighboring countries, e.g. India, Vietnam and
Indonesia, have invested in vaccine production
for their own countries as well as for export.
Background (2)
• In April 2011, the Thai cabinet approved the national
agenda on vaccination.
• Vaccine production is a major part of the agenda.
• As part of the overall 10-year plan, nine vaccines for
seven diseases are targeted as follows:
- four-year plans for diphtheria, tetanus,
pertussis, and hepatitis B;
-five-year plans for BCG, acellular pertussis, and
JE (cell-derived);
-ten-year plans for dengue and live attenuated JE.
Objectives
• To develop an analytical model and an Excelbased template for the analysis.
• To conduct preliminary analysis of the
economic feasibility of vaccine production in
Thailand.
Process of the study:
1.
2.
3.
4.
Systematic review of an economic feasibility study
Model development of an economic feasibility study
Supply-demand mapping
Economic analysis of the vaccines; a systematic
review of the efficacy of the vaccine, including costof-illness and cost-effectiveness analysis.
5. Estimation of costs of research and development
(R&D); costs of R&D for all vaccines were reviewed.
In addition, a field study was conducted by interview.
6. Cost-benefit analysis (CBA) of vaccine production
7. Development of an Excel-based template for the CBA
Results
• Feasibility study is to determine whether a
project opportunity is possible, practical and
viable before starting the project.
• A feasibility study can be categorized into
economic or financial, technical or technological,
and administration or management.
• Economic analysis is the method for evaluating
the efficiency of a new system. Cost-benefit
analysis (CBA), the procedure is to determine the
benefits and savings that are expected from a
candidate system and compare them with costs.
Economic Analysis of Vaccines
CBA of vaccine
business
Economic feasibility
R &D
Policy &
planning
Manufacturing and Commercialization
production cost/ management cost/ marketing cost
Cost analysis
Cost of R & D
Price setting
Cost of illness
Willingness-to-pay
CEA=Cost-effectiveness analysis
CBA=Cost-benefit analysis
BIA=Budget impact analysis
Vaccination
program
CEA/ CBA/ BIA
for national immunization program
EE_TP_case.pptx
Cost of vaccination program
8
Demand-supply mapping
• Demand is presented in terms of population,
number of annual births, and Global Alliance for
Vaccines and Immunization (GAVI) eligibility by
country including the NIP.
In terms of supply, current producers of target vaccines
and market prices are presented. The prices presented
were from the following sources:
• purchasing prices of the National Health Security
Office (Thailand)
• UNICEF purchasing prices
• CDC vaccine prices
Cost-benefit analysis of the study vaccines
where NPV = net present value of the program
Bt = benefits or revenue from selling in year t
Ct = total costs of production and business
management in year t
r = discount rate
• Costs are composed of capital or investment cost
(or fixed costs) and operating cost (variable
costs). In addition to durable assets, costs of
research and development or start-up costs (e.g.
training) are categorized as capital costs.
Capital cost = Current price / annuity factor
where
n = useful years
r = discount rate
• Benefits are revenue (unit price x sale volume).
Base case and one-way sensitivity analysis
• Three production programs were evaluated: JE, DTP-HB
and DTP-dT-TT.
• Data on production plans and resources used were
collected from the GPO as program operator.
• Analysis of each production program generated two
extreme scenarios:
• Scenario 1, the analysis used the lowest vaccine price
(based on market prices), a discount rate of 8.19%,
production waste of 30%, and
administration/marketing costs of 30% of the price.
• Scenario 2 used the highest vaccine price (based on
market prices), a discount rate of 3%, production waste
of 25%, and administration/marketing costs of 10% of
the price.
Discussion and conclusion
• Regarding cost-benefit analysis of the
programs, there is a range of losses and gains
(profit) for all three programs. The findings
are based on the following factors:
• Internal factors are related to resources used
and efficiency of production (production
waste).
• External factors are market prices and
discount (interest) rate.
• Therefore, the programs have to be carefully
implemented.
• There are other existing competing producers,
both in Asia and developed countries. Those
producers may have a large market share, and
with production at more efficient levels than
those in Thailand. Therefore, they can reduce
prices when faced by competition.
Limitations of the study
• In essence, estimates of costs of R&D, production,
and administration/marketing costs were roughly
forecasted as marginal costs to existing GPO
facilities.
• Therefore, the program costs tend to be
underestimated in terms of economic cost
concepts.
• However, the study has produced Excel-based
models for all programs. These can be continually
revised based on the availability of more accurate
data.
In conclusion,
• there is enough demand for designed
production levels of all programs.
• However, the vaccine market is an
oligopoly.
• Business success is thus not only based
on production feasibility
• but also on marketing or business
strategies.
• These analyses should be revised as
more accurate data become available.
• The findings of this study could be
useful as a tool for program
implementers and policy makers in
decision making and for adopting and
monitoring these programs.