Capacity Investment Planning for Multiple Vaccines Under Uncertainty: 1: Capacity Planning

In the coming years, competition in the vaccine market is likely to increase and vaccines will begin to resemble the model for conventional pharmaceutical products, requiring rapid market entry in order to gain maximum financial return and avoid the threat of competition. Therefore, companies will need to enhance their manufacturing capabilities, in terms of capacity investment and efficiency, in order to compete effectively within this market. The focus of this work is to describe a scenario-based approach to support capacity-related decision-making and the investment strategy subject to uncertainty of demands for multiple vaccines given the details of processing time, investment costs and production scale. Our model is appropriate for products in different stages of R&D and development, since they may have different expected clinical trial outcomes. These outcomes may have different probabilities of occurrence and because the information from different trials will become available at different times, this means that the investment planning model becomes a stochastic multi-period, multi-stage and multi-scenario mixed integer optimisation model. A probabilistic analysis is also used to find an approximate expression for the expected net present value (eNPV) for vaccine production with different scenarios. To complement the use of financial risk management, definitions of some classical risk measures are developed and applied in Part 2 of this paper.