1831. Innovation in vaccine supply chains: Profit-sharing contract
Invited abstract in session TD-11: Pharmaceuticals and manufacturers, stream OR in Healthcare (ORAHS).
Tuesday, 14:30-16:00Room: Clarendon SR 1.03
Authors (first author is the speaker)
| 1. | Milad Asadpour
|
| School of Business and Management, Queen Mary University of London | |
| 2. | Guven Demirel
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| School of Business and Management, Queen Mary University of London | |
| 3. | Brigitte Granville
|
| School of Business and Managemnet, Queen Mary University of London, Queen Mary University of London |
Abstract
Glass vials are widely preferred in pharmaceutical packaging due to their unique attributes, particularly their ability to maintain the liquid inside from contamination by factors such as moisture, oxygen, and chemicals. Despite their advantages, glass vials pose significant drawbacks that may hinder the efficient delivery of vaccines. The most critical drawback is breakage, which can occur at various stages — from pre-filling to post-filling processes. Official reports indicate that vaccine vial breakage rates can average around 10% of total vials. Given the large-scale production of vaccines, even this seemingly modest percentage translates into a substantial number of damaged vials, potentially disrupting supply chains. To address this challenge, vial suppliers must prioritise enhancing vial quality. Using a game-theoretical framework, we investigate the effectiveness of profit-sharing contracts in promoting innovation to reduce vial breakage. Our analysis considers a market structure where the manufacturer determines the final price of the vaccine, and demand is price sensitive. We model the interactions between one vial supplier and one vaccine manufacturer, exploring a profit-sharing contract in which the vaccine manufacturer shares a percentage of its profit with the supplier to support R&D projects. We evaluate the contract’s effectiveness in fostering innovation and lowering the vial breakage rate.
Keywords
- Game Theory
- Health Care
- Supply Chain Management
Status: accepted
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