Analytical Framework for Examining the Value of Antibacterial Products. 5.1.7 Costs of Supply Chain Activities

04/15/2014

Rapid POC diagnostic developers, like drug and vaccine sponsors, need to undertake a variety of additional activities concurrently with clinical development, including manufacturing a sample of devices using validated processes for use in clinical trials and other demonstrations and acquisition of GMP-compliant capabilities.18  For antibacterial drugs, the ratio of supply chain activity costs to the sum of pre-clinical, clinical, and post-clinical research is 2.8.  In the absence of published figures for rapid POC diagnostic manufacturer supply chain activity costs, we estimate the costs of these activities at $9.9 million by applying the same ratio to total estimated rapid POC diagnostic development costs of $3.5 million (i.e., sum of R&D, clinical research, and FDA approval costs).  We further assume that these costs are evenly distributed across the average 4.39 years it takes to bring a device to market in the model.


18 Along with the manufacturing SOPs, device sponsors must develop a manufacturing system capable of producing their device according to their SOPs in a rigorous and consistent fashion.  Sponsors who are new to manufacturing might acquire this manufacturing capability from contract manufacturers, thereby avoiding the risk of a substantial capital investment in the, as yet, un-marketed product.  Contract manufacturers of medical devices are familiar with the relevant GMP requirements and are able to charge higher manufacturing prices as a result.  Manufacturers who have previously introduced medical devices to market successfully are likely to have developed their own good manufacturing capability (Eastern Research Group, Inc., 2012).

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