What are the major problems facing Vaxess Technologies?

Case study

Research Paper (undergraduate) 2018 31 Pages

Business economics - Operations Research


Table of contents

Chapter 1
1. Introduction
1.1 Background of the study
1.2 Statement of the problem
1.3 Research questions
1.4 Research objectives
1.5 Structure of research

Chapter 2
2. Case brief
2.1 SWOT analysis of Vaxess Technologies

Chapter 3
3. Problem Statement and Plan of analysis
3.1 Problem statement
3.2 Plan of analysis

Chapter 4
4. Case Analysis and Findings
4.1 Analysis
4.2 Findings

Chapter 5
5. Solutions and Recommendations
5.1 Solutions
5.2 Action Plan
5.3 Limitations
5.4 Scope for further research


Chapter 1

1. Introduction

1.1 Background of the study

Vaxess Technologies Inc. was established as an initiative of four entrepreneurs: Michael Schrader, who is chief executive of the firm; Kathryn Kosuda, who is responsible for the research and development; Patrick Ho, who is lawyer and looks after operations and legal affairs and Livio Valenti – responsible for policy and strategy (Vaxess, 2016). The company had obtained exclusive license to patents of silk protein technology from Tuffts University in 2013. The aim of the company is to enhance access to vaccines globally by eliminating requirement of cold storage of the goods between manufacture and usage. Silk protein that is main ingredient of the innovative technology if it is added to vaccines makes the medicine more stable at high temperature and allows vaccines to be transported without the necessity for refrigeration. This technology can work on both existing vaccines such as measles or mumps and those that are still in development (Joseph, 2015). Therefore, the firm decided to licence vaccine stabilizer such as the properties of silk fibroin from Tuffs University and looked for the ways of commercialization of this unique technology. To commercialize the innovative product and enter the market, Vaxess has to implement several tests and examinations in order to prove efficacy of the silk technology. The development of the further studies is time consuming and expensive therefore the firm wants to find a partner who will cover the cost of research (Cohan, 2012). The pharmaceutical companies such as Sanofi, Pasteur, Merck, GlaxoSmithKline, Novartis, Johnson&Johnson or Takeda which constitute 85% of the sold vaccines worldwide or the largest customers of the vaccines such as governments and international organizations like UNICEF, GAVI, Bill&Melinda Foundation, PAHO or PATH can constitute potential partner for Vaxess (Quelch et al. 2014). The company's aim is to enter the market in quickest possible time frame. However, currently Vaxess lacks financial resources to sustain a lengthy research, therefore it debates which partner will be suitable either pharmaceutical company or governmental organization.

1.2 Statement of the problem

In 2013, Vaxess started to carry out experiments on the effectiveness of the silk in vitro that would demonstrate its stabilization properties in vivo tests that illustrates no impact of the silk fibroin on vaccine antigens. The completion of vitro tests were time consuming and lasts up to six months per vaccine target and expensive approximately $300,000 for experiments on small animals per trial. Therefore, Vaxess had to obtain funds from the external organization in order to continue performing in vivo tests (Savage, 2016). In addition, Vaxess Technologies outlined to enhance the silk stabilizer formula in order to prepare it for mass production. Therefore, the firm had to meet some standards such as ‘’good laboratory and manufacturing practices’’ set by the U.S. Food and Drug Administration. In order to meet those standards, the Vaxess team secured the quality of stabilizer by improving sourcing and extracting operations (U.S. Federal Food and Drug Administration, 2009).

The organization such as the Gates Foundation, PATH . US National Institutes of Health or U.S. Canters for Disease Control and Prevention (CDC) were all interested in partnership with Vaxess. Furthermore, the firm cooperated with various universities and research enterprises in order to outsource a portion of laboratory testing (Quelch et al. 2014).

However, after one year of partnering with government healthcare agencies such as UNICEF and GAVI, the Vaxess Technologies came to a decision of targeting its initial sales at the leading manufacturers in order to move quickly with the product into market.

1.3 Research questions

1. What are the major problems facing Vaxess Technologies?

2. What are the factors that generated these issues?

3. What can be done to enhance the current state of Vaxess Technologies?

1.4 Research objectives

1. To examine the major problems that Vaxess Technologies is facing.

2. To analyse the factors that generated these issues.

3. To advocate what can be done in order to enhance the current state of Vaxess Technologies?

1.5 Structure of research

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Figure 1.5: Structure of research

Source: Author (2016)

1. Chapter One

The chapter constitutes an introduction of the study that contains background of the study and statement of the problem. In addition, this part indicates the research objectives together with the research questions.

2. Chapter Two

This section outlines the current state (case brief) of the Vaxess Technologies.

3. Chapter Three

This part presents the major problems that Vaxess Technologies struggles with and the plan of analysis. Furthermore, this section will critically analyse specific literature related to the study that will be useful for examining the case.

4. Chapter Four

This part discusses the analysis and findings taken from the theories and models that have been presented in chapter three.

5. Chapter Five

The final section highlights the potential alternatives for the problems introduced earlier in the essay. Furthermore, this chapter will emphasize the best choice from the possible options, action plan, limitation of the study and scope for further research.

Chapter 2

2. Case brief

The case study presents the challenge of transforming silk protein technology into product marketable to a global organization. Vaxess Technologies debates which vaccines to focus on and whether to target large vaccine companies or smaller emerging manufacturers. The other issue is that the company is lacking financial resources to do further research on the effectiveness of silk protein hence it is critical to find a partner to sustain the research in possible quickest way.

The research on the efficacy of vaccines is time-consuming (six months per vaccine target) and high-priced process (from $300,000 for trials on small animals up to millions of dollars on humans), thus the Vaxess is looking for partners to gain financial resources on further studies. In the short term, the company intended to concentrate on live attenuated and lyophilized vaccines that will utilize the silk fibroin solution the most efficiently.

In the long- run, Vaxess decided to partner with government agencies. However, after a year of cooperation with government healthcare agencies, the firm had to resolve agreement. Johnson&Johnson, Takeda, Sanofi, Pasteur, Merc, GlaxoSmithKline (GSK), Pfizer and Novartis were main global players on the vaccine market. Despite Takeda’s strong position in Japanese market, the firm didn’t have international sales. Merck was moving its focus from developed countries to more global focus. Pfizer concentrated on vaccines for developed world. GSK and Sanofi were globally focused with higher margins in developed regions and small profits in cost-sensitive countries.

Nevertheless, the largest customers for vaccines were governments and international organizations such as Bill&Melinda Gates Foundation, UNICEF, GAVI or the Pan American Health Organization (PAHO).

According to Schrader, Vaxess Technologies need a partner who could enable the company to move quickly to enter the market and governmental organizations couldn’t secure these requirements, therefore the firm changed the target for leading manufacturers of vaccines rather than global government organizations. According to Kosuda (Quelch et al. 2014), the vaccine manufacturers could get the silk material more quickly into market than organizations such as GAVI or UNICEF that operate without profit incentive. The Vaxess team came to conclusion that the best solution for the enterprise will be tie partnership with one or more drug manufacturers.

The partnership could be not only beneficial for Vaxess, but first of all for the vaccine manufacturers. The major problem of the cold chain is poor quality of the refrigerators, therefore many vaccines are wasted due to expire and temperature spikes. These failure in cold chain system increase the cost of the whole process, thus the thermo-stable vaccines could not only prevent the wastage of the medicine, but also increase savings, which could be spent in more efficient way. Through injecting silk fibroin into medicine, there wouldn’t be a need for vaccines to be refrigerated or kept in cold storage, therefore the pharmaceutical firms could minimize time related to the shipping and cost associated with maintenance of warehouses and transportation. Vaxess technology could enable the manufacturers to increase demand through differentiation, thus the partner would probably prefer the exclusivity.

Although, Vaxess has access to the innovative technology, there are various thermo-stable technologies e.g. “spray dry” (PATH and Bend Research) or sugar glass techniques (Oxford and Nova Bio-Pharma Technologies) under development. However, according to the Vaxess management (Quelch et al. 2014) early mentioned techniques are not effective as silk solution. Even though the Vaxess technology is superior, from the Big Pharma point of view is potentially risky, because the silk protein has never been utilized in an injectable format.

In addition, Kosuda (Quelch et al. 2014) highlights that the silk fibroin material could be also effectively utilized in conjunction with “competitive” thermo-stable technologies.

In terms of partnership, Vaxess Technologies was looking for pharmaceutical firm which could pay for the license to the silk technology and cover R&D costs. Despite negotiations between Vaxess and several vaccine manufacturers, the conversations about the terms of the contract stretched over entire year not giving a reasonable solution for Vaxess.

The enterprise’s aim was partnering with many vaccine manufacturers in order to increase the thermo-stability of as many vaccines as possible in quickest way. However, for the pharmaceutical companies, silk technology was first of all the way to achieve differentiation and most of them were interested in exclusive contracts.

Indeed, there were more reasons why the vaccine manufacturers didn’t want to invest funds into silk technology up front. Firstly, this innovative technology was unknown and it has never been applied into any vaccine before, therefore the potential partners were waiting for more tests and data before being engaged. In the short term, this strategy could save time and money, but in the long term, if the technology turns out successfully and if the prospective firm will want gain the access later, then it will be higher priced. Secondly, before licensing this technology, the firms expected a confirmation of the effectiveness of the silk fibroin through variety laboratory test and extensive animal studies. There is a risk that the companies could lose rights over the firms which could afford to pay up front. Furthermore, some pharmaceutical firms had stability problems in certain departments and thought the Vaxess technology could help to solve them. Indeed, the problems were responsible for slowing decision making. Finally, some companies before involving in expensive scientific research expected from Vaxess Technologies long term agreements, what could result higher cost and long negotiation time, but first of all protect the partnership.

2.1 SWOT analysis of Vaxess Technologies

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Title: What are the major problems facing Vaxess Technologies?