Download Analysis of the upstream supply chain for Artemisinin Combination

Analysis of the upstream supply chain for
Artemisinin Combination Therapy (ACT)
treatments for malaria
Student: Song Lijie
Advisor: Prashant Yadav
Santiago Kraiselburd
Malaria & ACT
Malaria
 Transmitted disease- by mosquito bite
 Symptom: Mild flu to death in a few hours
 1B cases every year, 1.2 million deaths
 Hardest hit region: sub-Sahara, 80% of the
world deaths
 Preventable and curable- ACT
Malaria & ACT
(con´t)
ACT
 Artemisinin-based Combination Therapy
 Artemisinin derivative (eg. artesunate) + partner drug
(eg. lumefantrine)
 The only effective antimalarial drug
 $1.00 at public sector
Background
Global Subsidy
 Subsidize the price of ACT at global level in
public as well as private sectors
 Lower the ACT price paid by first-line buyers
such as private national wholesalers or
ministries of health
 AMFm-Affordable Medicines Facility for
Malaria
Source: RBM Task Force/Dalberg
Background
Upstream Supply China of ACT
 Planting, harvesting and drying of A. annua

Seeding in December to January, harvesting in August
 Extraction and purification of artemisinin

Done by extractors located close to growing area
 Production of artemisinin derivatives

Disconnected from the previous phase
 Production of ACT


Prequalified ACT manufacturers
Total lead time = 18 months
Research Question
 What will be the impact of subsidy on te
upstream supply chain of ACT?
 What subsidy structure will lead to optimal
outcomes in the upstream supply chain?
Modeling Approach
SP 1
Y1 =P1-SP1
ACT1 (P1)
Manufacturer
Upstream
Supply
Chain
Before
Subsidy
ACT2 (P2)
Manufacturer
Global
Subsidy
(AMFm)
SP 2
1. SP1= k * P1; SP2 = k * P2
2. SP1=SP2
3. Y1=Y2
After
Subsidy
Y 2=P2-SP2
Modeling Approach
Intermediate supplier 1
Manufacturer A
Component A1
Intermediate 1
Drug A (AM+LF)
Intermediate supplier 2
Component 2
Intrermediate 2
Modeling Approach
 1 player in one market (Monopoly)
 2 players in one market (Cournot Equilibrium)
 2 players in 2 markets
 Multiple players in multiple markets
-------------------------------------------- Equilibrium prices and supply quantities for
different ACTs and intermediates in the
above scenarios under different subsidy
structures