Monday, September 1, 2014

Forecasting in the Vaccine Production Industry

            The readings this week shed light on the importance of forecasting in accurately meeting market demand in a timely fashion. Most industries produce goods year round and forecast demand for these goods at various different times of year. However, vaccine production is one industry in which the good is only available seasonally and manufacturers work year round to efficiently and effectively deliver these products.
            Flu vaccination production begins eight months before the vaccine is released for public use due to a complicated manufacturing procedure involving breeding the WHO recommended strains of virus to create antigens that can be isolated and packaged for consumer use [1].  Vaccinations for the flu often see a spike in demand during the typical flu seasons, and therefore the World Health Organization can work with pharmaceutical companies to create vaccines in a timely fashion.
            However, in some cases such as with H1N1 in 2010, widespread patient panic can heavily increase the demand for vaccines that may have been forecast differently. For this reason, companies must ensure that every vaccine manufactured is made with enough supply to meet the highest potential customer demand or at least have enough substitutes that patients can be treated [2]. According to the CDC, roughly 135-139 million doses of vaccine were produced for the 2013-2014 flu season, which is less than half of the current US population [3]. 
            Although the demand for vaccinations is highest annually in October and November, production continues until January [3]. The World Health Organization reports that despite vaccine forecasting being a largely consistent process, large variability can occur due to human error such as improper storage and inefficient stock management [4]. Vaccines that are not used in a current flu season must be disposed and destroyed, as they will no longer be effective in defending against the next season’s strain of the virus. In the event of the 2010 H1N1 vaccine, this meant almost 30% of all vaccines produced had to be destroyed by the manufacturers [1].
            I found the process of destroying unused vaccines to be a very interesting ethical consideration, when comparing this surplus with the shortage of vaccines in third world countries around the world. Considering that the same vaccine recommendations are made by the WHO in a global capacity, I wonder why excess (unexpired vaccines) can’t be sent to other countries as demand in the USA tapers off. Putting aside distribution cost considerations, this seems like a much more useful way to get rid of surplus vaccines. However, further research suggested that this would push funding away from vaccine delivery for more lethal diseases such as measles[5]. In light of this constraint, I put forth two questions:

When considering forecasting vaccines and the potential savings if the eventually discarded doses were never even created, is there a more accurate way to predict for market goers that ethically choose to not have their families vaccinated or simply skip the vaccine for other reasons (over 50% of the current population)?

For a company like GlaxoSmithKline(GSK), one of the leaders in vaccine production, are they ethically obligated to create a large surplus in the event that everyone may choose to get a vaccine this season or should they be allowed to stick with business sensibility and only supply what is predicted through time series forecasting?

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