Cost of goods sold analysis and recommendations to reduce costs of co‑packaged mifepristone–misoprostol for medical abortion
Publication date: 2020
Chinery et al. Reprod Health (2020) 17:171 https://doi.org/10.1186/s12978-020-01012-8 RESEARCH Cost of goods sold analysis and recommendations to reduce costs of co-packaged mifepristone–misoprostol for medical abortion Lester Chinery, Chadia Allaouidine, Alessandra Tomazzini, Melanie Larson and A. Metin Gülmezoglu* Abstract Objective: Understanding the price components of the mifepristone/misoprostol (combi-pack) for medical abor- tion to improve access is critical for identifying strategies to reduce product costs for quality-assured formulations and expanding its availability and use. Methods: We constructed a cost of goods sold analysis using data collected from manufacturing companies in Bangladesh, China and India supported by publicly available information related to the product formulation, active pharmaceutical ingredients (API), manufacturing location, manufacturer profiles and other individual model compo- nents. Key model components were the active pharmaceutical ingredients (quality-assured or not), excipients, labour cost, operating cost and packaging. Results: Combi-pack direct production cost ranges from US$1.08 for finished products which are not quality assured to US$3.05 for products containing quality assured active pharmaceutical ingredients, which means that with a 30% administrative fee applied to those prices, it could be made available between US$1.40 and US$3.97 depending on location, manufacturer’s profile, optimal market situation and the quality of the active pharmaceutical ingredients. The main model component impacting on the cost range is the purchase price of mifepristone active pharmaceutical ingredient and the current differential between quality-assured material supported by adequate documentation and API for which quality assurance cannot be demonstrated. Compared to India cost of goods sold is lower in Bangla- desh primarily due to lower operating costs, including the cost of labour. Conclusions: It is feasible to lower the cost of quality-assured combi-packs, through reducing mifepristone API cost and selection of the manufacturing location. However, manufacturers need to be incentivised to achieve WHO pre- qualification with a carefully built business case and require support in identifying and sourcing competitively priced material and manufacturing products to the necessary standard. © The Author(s) 2020. Open Access This article is licensed under a Creative Commons Attribution 4.0 International License, which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons licence, and indicate if changes were made. The images or other third party material in this article are included in the article’s Creative Commons licence, unless indicated otherwise in a credit line to the material. If material is not included in the article’s Creative Commons licence and your intended use is not permitted by statutory regulation or exceeds the permitted use, you will need to obtain permission directly from the copyright holder. To view a copy of this licence, visit http://creat iveco mmons .org/licen ses/by/4.0/. The Creative Commons Public Domain Dedication waiver (http://creat iveco mmons .org/publi cdoma in/zero/1.0/) applies to the data made available in this article, unless otherwise stated in a credit line to the data. Plain English summary We conducted a study to assess the price components of two medicines used together for medical abortion. Identifying the individual price components is helpful to understand whether product costs can be reduced and access increased, to quality-assured products. We compared production costs for manufacturing in Bang- ladesh and India, two countries with substantial generic manufacturing capability and, we also looked at price differentials for manufacturing a quality-assured or non- quality-assured product. Quality-assured products are those approved by stringent regulatory authorities or Open Access *Correspondence: firstname.lastname@example.org Concept Foundation, Avenue de Sécheron 15, 1202 Geneva, Switzerland http://orcid.org/0000-0003-4674-0998 http://creativecommons.org/licenses/by/4.0/ http://creativecommons.org/publicdomain/zero/1.0/ http://creativecommons.org/publicdomain/zero/1.0/ http://crossmark.crossref.org/dialog/?doi=10.1186/s12978-020-01012-8&domain=pdf Page 2 of 10Chinery et al. Reprod Health (2020) 17:171 achieved World Health Organization Pre-Qualification status. We found that mifepristone–misoprostol combi- packs could be made available between US$ 1.40 and US$ 3.97 depending on location, manufacturer’s profile, optimal market situation and the quality of the active pharmaceutical ingredients. The purchase price of mife- pristone active pharmaceutical ingredient is the main model component impacting on the cost range. Com- pared to India cost of goods sold is lower in Bangladesh primarily due to lower operating costs, including the cost of labour. It is feasible to lower the cost of quality- assured combi-packs, through reducing mifepristone active ingredient cost and selection of the manufacturing location. Introduction Access to quality-assured (QA) medicines (defined as products that have been WHO prequalified or approved by a stringent regulatory authority https ://www.who. int/medic ines/regul ation /sras/en/) for the termina- tion of pregnancy remains limited for women in need in many parts of the world. One of the key barriers limit- ing procurement and access to these essential medicines is affordability in low-resource settings. Understanding the price components of the combination mifepristone/ misoprostol (combi-pack) for medical abortion and determining if this may be impacting access is critical for identifying strategies to reduce product costs and expanding its availability and use. WHO guidelines for medical abortion recommend the use of 1 tablet of mifepristone 200 mg and 4 tablets of misoprostol 0.2 mg, and a combi-pack containing both products in the one packaging has been developed as the optimal product for this indication. The price of a combi-pack containing one tablet of mifepristone and four tablets of misoprostol is cur- rently marked by significant variances. Based on prior work undertaken by Concept Foundation, International Planned Parenthood Federation and Gynuity Health Projects, the cost of medical abortion commodities was found to vary significantly across brands and products (i.e., misoprostol, mifepristone and the combi-pack) as well as geography in low- and middle-income countries (LMIC) . Therefore, it is difficult for procurement institutions and other customers to evaluate whether the prices offered by manufacturers are reasonable, accu- rately reflecting true production costs, whether they could be lowered, or if low cost reflects a lack of docu- mented quality-assurance. Customer price is driven by a range of components which can be grouped under production and commer- cial. Commercial cost factors may vary drastically from one manufacturer to another and involve different con- siderations such as a manufacturer’s business positioning, assessment of the competition, investments, demand, commercial risks, size and scope of operation and inter- nal cash flow situation or business objective. Production cost factors, however, are similar across manufacturers. Production costs, which will be referred to as the cost of good of sold (COGS), can be defined as the sum of the direct costs attributable to the production of the goods sold by a company. It includes the cost of the materials used in creating the product (i.e., active phar- maceutical ingredient (API), excipients and packaging), operating expenses (i.e., utilities maintenance, electric- ity and energy costs), and the direct labour costs used to produce the goods (Fig. 1). The COGS excludes admin- istrative fees—distribution costs and sales force costs (https ://www.inves toped ia.com/terms /c/COGS.asp) and does not include the profit margin. To elucidate some of the key costs at the point of man- ufacturing that drive production costs upstream, a COGS analysis was performed. The objective of this report is to provide insights into the COGS of the combi-pack, in order to identify if the current costs of quality assured brands are reasonable and assess if, and if so how, the costs could be reduced through targeted initiatives. Methods To build a model applicable to a broad range of combi- pack manufacturers, several assumptions related to the product formulation, manufacturing location, manufac- turer profiles and the COGS model components were made. Product formulation The combi-pack is the combination of two drugs: mis- oprostol (4 tablets) and mifepristone (1 tablet) in the strength 0.2 mg and 200 mg respectively, packaged and ideally blistered in Alu/Alu (Table 1). Manufacturing location Guided by the objective to increase access globally and particularly in high-need, low-resource settings, the COGS model explores the production cost of manufac- turers located in India and Bangladesh. These countries were selected for the following reasons: • Both are/expected to continue to lead the pharma- ceutical market in terms of combi-pack supplies for LMIC. • Due to differences in the economic development pro- gress between the two countries , the model can explore different production cost configurations. https://www.who.int/medicines/regulation/sras/en/ https://www.who.int/medicines/regulation/sras/en/ https://www.investopedia.com/terms/c/COGS.asp Page 3 of 10Chinery et al. Reprod Health (2020) 17:171 • Concept Foundation has longstanding experience in collaborating with manufacturers located in these markets and consequently, access to the required data. Manufacturer profiles The model assumes that the manufacturers are already producing the combi-pack with the following implications: • A discount of 15% is applied to the base cost of the raw materials to reflect the existing commercial rela- tionship between the manufacturer and its suppliers. • The model does not assume a significant upfront investment, which needs to be recovered in a short period of time as may be the case for a new manufac- turing market entrant. For comparison purposes, the model includes the fol- lowing additional assumptions: • The raw material, API included, is not manufactured internally and needs to be purchased from a third- party; • 97% (Based on United States Pharmacopeia (USP) Grade) assay for the correction of mifepristone API and 95% (Based on WHO Pharmacopeia) assay for the correction of the misoprostol API. Usually man- ufacturers adjust the amount of API weight/added to the batch based on the assay results and/or on anhydrous basis to obtain theoretically 100% of the amount of each ingredient in compounded formula- tions. Calculations must account for the active ingre- dient, or active moiety, and water content of drug substances, which includes that in the chemical for- mulas of hydrates; Table 1 Misoprostol and mifepristone formulations a The API procured for most part of the manufacturers is a dispersion of 1% misoprostol in hydroxypropyl methyl cellulose (HPMC). For this reason, the weight of the API introduced into the process is proportionally adjusted to ensure that each tablet will contain 0.2 mg of Misoprostol. The weight of the misoprostol component (1% misoprostol in HPMC) is therefore 20.2 mg per tablet, however it contains 0.2 mg of misoprostol Misoprostol Measurementa Per tablet Per combi-pack Misoprostol solid dispersion (1% in HPMC) mg 20.20 80.80 Microcrystalline cel- lulose mg 172.10 688.50 Sodium starch gly- colate mg 6.30 25.20 Hydrogenated castor oil mg 1.40 5.60 Mifepristone Mifepristone mg 200.00 200.00 Magnesium stearate mg 3.75 3.75 Corn starch mg 75.75 75.75 Microcrystalline cel- lulose mg 60.00 60.00 Povidone mg 14.50 14.50 Silica colloidal anhy- drous mg 6.75 6.75 Fig. 1 COGS model components Page 4 of 10Chinery et al. Reprod Health (2020) 17:171 • 25,000 tablets of misoprostol compressed per hour; • The depreciation on equipment is set at 15%/year; • The batch size is set at 100,000 units for each prod- uct; which in terms of combi-pack is equivalent to: • 100,000 units of mifepristone; • 400,000 units of misoprostol; • All units that are manufactured can be commercial- ised (During the production process the manufacture may experience a loss of tablets which is commonly referred as the yield. The global yield is defined by losses of powder (all components mixed) at com- pounding, losses of tablets during compression, blis- ters during secondary packaging, etc. which could be caused by human failure, low quality or variability on raw materials, losses during the transferences (reten- tion on vacuum systems, etc.), old fashion/obsolete machinery. The model didn’t explore the impact of the global yield as part of the manufacturing process). • Operating expenses. • Equipment is manufactured and insured in accordance with European Union standard prac- tices. • Manufacturing is assumed to operate in compli- ance with internationally accepted GMP (if a man- ufacturer is not GMP compliant then their operat- ing costs may be lower). • The manufacturer doesn’t profit from any condi- tion entreprise zone with particular tax benefits for instance. The COGS model components The COGS model includes five components: 1 API (QA product vs non-QA product); 2 Excipients; 3 Labour cost (manufacturing; support area workers; quality unit); 4 Operating cost (infrastructure maintenance, depre- ciations); 5 Packaging (Alu/Alu; other packaging (leaflet, carton, label, etc.)). While not part of the standard definition of the COGS model, administrative fees is an important consideration to understand if the final buyer/customer product price is reasonable. Consequently, we explored administrative fees as part of the final cost calculation. Administrative fees usually cover indirect coordination and running costs such as commercialization activities, which are not directly attributable in the production cost breakdown. However, this indicator tends to consider fewer tangible elements such as cost recovery relating to regulatory activities and upfront research and develop- ment investments, which, once recovered, are not sub- sequently deducted from the final product price. As a result, a level of profit is often hidden behind this indi- cator, which can explain the lack of transparency over this component of the price on the part of manufactur- ing companies. Based on our experience in COGS mod- elling and working with multiple manufacturers, the administrative fee is estimated at between 30 and 40% of the direct production cost per unit. Manufacturers may add a further profit margin, in addition to the adminis- trative fee, dpending upon the range of elements already included and other external market factors. In summary, key production components are impor- tant to understanding the final price of the COGS, and the admistrative fee is critical to identifying at which price point it may start to be viable and interesting for a manufacturer to produce a drug. The COGS model was based on our knowledge and work with manufacturers and on information collected from pharmaceutical manufacturers and chemical sup- pliers (Pharmacompass: www.pharm acomp ass.com; Seair Exim Solutions: https ://www.seair .co.in; Spectrum Chemical: https ://www.spect rumch emica l.com). Parameters investigated to explain the price variances of the combi-pack To identify the drivers behind combi-pack costs we explored each of the different components in-depth. Based on these parameters, two manufacturer profiles were developed and explored in two different manufac- turing locations. • Profile A: A company which does NOT procure QA API to manufacture the combi-pack (it can also be assumed that such companies may also not be man- ufacturing in compliance with international GMP standards as there is evidence that in both markets products are available below these price points). • Profile B: A Company which procures QA API to manufacture the combi-pack. Limitations of the model A COGS model cannot exactly reflect the specificity of each company and the circumstances. Therefore, the model must be based on selected parameters applicable across manufacturers. As a result, the following elements were not assessed as part of the process: http://www.pharmacompass.com https://www.seair.co.in https://www.spectrumchemical.com Page 5 of 10Chinery et al. Reprod Health (2020) 17:171 • Import taxes on raw material. A tax should be applied to the raw material imported towards the production of the combi-pack. However, some man- ufacturers can procure the raw material in their local market. For comparison purposes, this element was removed from the model. • Raw material self-production. The model assumes that the manufacturer must purchase all raw material components of the Finished Pharmaceutical Prod- uct (FPP). However, in some cases, the manufacturer is also the producer of the API composing the FPP. For comparison purposes, this element was removed from the model. • Packaging. The combi-pack is currently sold pack- aged in different material such as Alu/Alu or plastic (e.g. Alu-PVC, Alu-PVdC. OPA/Alu/PVC). Guided by the objective of assessing the costs pertaining to QA combi-pack, the model didn’t explore the impact of the different packaging materials on COGS and the costing is based upon the use of single Alu/Alu blister packs containing both the mifepristone and misoprostol tablets. WHO prequalified combi-packs are exclusively packaged in single Alu/Alu blisters. Other packaging such of PVC or PVdC were identi- fied as material which could affect the stability of the product adversely. Results The COGS modelling exercise showed that the combi- pack direct production cost ranges from US$1.08 to US$3.05 (Total COGS), which means that with a 30% administrative fee applied to those prices, a combi-pack could be made available at a cost of between US$1.40 and US$3.97 depending on location, manufacturer’s profile and optimal market situation (i.e. all manufactured units are consumed). Results for a combi-pack manufactured in India The key variable determining the COGS for product manufactured in India is the cost of mifepristone API. Using QA API at a (discounted) cost of US$7036/kg results in a cost per unit of $3.97 as demonstrated under Profile B below. Using API that is not demonstrably QA and available on the market the cost per unit is $2.09 as shown under Profile A. The cost of API for this profile is US$875/kg (which is not the lowest price point avail- able, but which reflects current purchasing prices based upon limited evidence from manufacturers). The price outcomes for Profile B is broadly consistent with existing LMIC public sector access pricing from Sun Pharmaceu- ticals for the Medabon combi-pack of between US$3.75 and US$4.00. Results for a combi-pack manufactured in Bangladesh The key variable determining the COGS for product manufactured in Bangladesh is the cost of mifepristone API. Using QA API at a (discounted) cost of US$7036/ kg results in a cost per unit of US$3.29 as demonstrated under Profile B below. Using API that is not demon- strably quality assured the cost per unit is US$1.40 as shown under Profile A. The cost of API for this profile is US$875/kg (which is not the lowest price point available, but which reflects current purchasing prices based upon limited evidence from manufacturers). There are cur- rently no QA combi-packs manufactured in Bangladesh. India v Bangladesh With both models containing identical direct costs, the key cost differentials between India and Bangladesh relate to the operating and maintenance costs and cost of labour, both directly for the purpose of manufacturing and indirectly with labour as a component of the operat- ing and maintenance costs line item. The result of this, is that it may be feasible to achieve a price point of $3.29 for a QA combi-pack if it were manufactured in Bangla- desh. Furthermore, if there was greater competition and/ or quantifiable market incentive, resulting in a reduction of the cost for quality assured and documented mifepris- tone API, combi-pack unit prices in the future could be even lower. In practice, there will be a wide variety of variables, unique to individual companies which may increase or decrease operating costs. This paper has established thor- oughly researched and accurate benchmarks for making comparison in support of the central premise. Discussion Considering the WHO, UNFPA and Concept Founda- tion commitment to the availability of QA products, we believe this COGS analysis will support further think- ing and work towards access to affordably priced combi- packs in LMIC. We regard Profile B i.e. QA profile as the standard/existing profile for further analysis. Based upon India production costs, the COGS is esti- mated at US$3.05 and with the addition of adminis- trative fees, the commercial offer price to institutional public sector and social marketing organizations (SMO) customers is estimated at US$3.97. For Bangladesh, the COGS is estimated (considering lower labour and oper- ating costs) at US$2.53 for the COGS and with the addi- tion of administrative fees, the commercial offer price to institutional public sector and SMO customers is esti- mated at US$3.29. The COGS model details for Profile B, showed that the two principal drivers of the cost fluctuation identified Page 6 of 10Chinery et al. Reprod Health (2020) 17:171 are, procurement of QA API mifepristone and the oper- ating expenses (driven by the individual countries cost of living reflected in operational costs and the cost of labour and other linked costs) (Fig. 1). Procurement of QA API mifepristone Procurement of QA and documented mifepristone API accounts for the largest single expense in the combi-pack COGS, accounting for 48% of the combi-pack production cost in the Indian setting and 57% of the combi-pack pro- duction cost in Bangladesh. Through confidential discus- sions with manufacturers, it was possible to identify an indicative purchase price of quality assured mifepristone API at US$8278 per kg, while non-QA mifepristone API can be sourced at an average price of only US$875 per kg (and less). The ratio between non-QA to QA API mife- pristone cost is 1:9.4. For comparison, the ratio for non- QA to QA misoprostol API is 1:3.4 (QA API at US $2941/ kg). As a result, using QA mifepristone API increases the product cost to US$1.30/tablet while the purchase of QA misoprostol API only increases the product cost by US$0.04/tablet (Total of US$1.45 difference between COGS for the QA combi-pack vs Non-QA combi-pack). The pie charts below highlight the increasing impact on the cost configuration depending on the quality of the product. While QA mifepristone API accounts for 95% of the costs of raw material, this reduces to 78% for non-QA API. The COGS elements graphs (Figs. 2 and 3) show that operating expenses relating to misoprostol are the second highest expense and account for US$0.76 of the Indian combi-pack costs while only US$0.35 for the model developed for Bangladesh. This indica- tor includes utilities maintenance such as cleaning or electricity. It is therefore a heterogenous factor—com- posed of indirect labour costs but also energy costs for example. The COGS model assumes that the manufacturer uses EU equipment subject to high maintenance stand- ard practices and insured adequately. The model doesn’t explore other factors pertaining to operating expenses such as equipment origin, maintenance procedures, insurance setting or enterprise zones options which could decrease operating expenses. When comparing the COGS of India to Bangladesh, we see that under similar scenarios, the costs of the combi-pack are systematically lower in Bangladesh than in India. The COGS model shows that the explanation for this outcome is not primarily due to cheaper direct labour costs in Bangladesh but rather the lower overall operating expense costs in the country, of which labour is both a direct and indirect component. Despite the difference in direct manufacturing labour costs between the countries, because of the importance of the batch size, the impact of labour costs on the total cost per tablet is marginal, as illustrated in the charts below. Moreover, the model indicates that the competi- tive advantage in terms of production cost of Bangla- desh over India is instead driven by indirect operating expenses. This can be observed through analysing the operating expenses relating to the misoprostol tablet. The operating expenses account for 56% of the production costs of one tablet of misoprostol in Bangladesh vs. 72% for one tablet of misoprostol in India. Prospect Final Price USD 3.97 USD 0.0 USD 0.5 USD 1.0 USD 1.5 USD 2.0 USD 2.5 USD 3.0 USD 3.5 USD 4.0 USD 4.5 1 Combi-pack COGs, India Admin fees (30%) Packaging Mife: Opera�ng Expenses Mife: labour cost Mife: Excipients Mife:QA API (Assay 97%) Miso: Opera�ng Expenses Miso: labour cost Miso: Excipients Miso:QA API (Assay 95%) Total COGS USD 3.05 USD 0.76 (Misoprosol- Opera�ng Exp) USD 1.45 (Mifeprostol- QA API) 25% of COGS 48% of COGS Fig. 2 COGS elements in India Page 7 of 10Chinery et al. Reprod Health (2020) 17:171 Overall, this analysis is in alignment with general macro-economic theory which highlights the challenge for more advanced economies to remain competitive in the manufacturing of cheap goods. Therefore, due to its economic dynamics and growth trajectory, Bangladeshi manufacturers are expected to be better placed to offer a lower priced QA combi-pack product for the medium term. Can the combi-pack price be lowered? The COGS of the combi-pack is driven by both macro- and micro economic factors. The macro level compo- nents, which impact operating expenses, are related to economic indicators of sovereign states which will only change as a result of progress (or otherwise) and changes to the broader national context which determine energy costs and labour for example. This may include providing manufacturers with tax breaks or other incentives. How- ever, at the micro level, we have identified that the most effective way to reduce cost, whilst maintaining quality is through a decrease in the QA mifepristone API price, which is the most significant cost factor in the model. This could be achieved by creating competition among suppliers of API for QA material, which requires either an incentive to encourage investment and lower per kg price points, or a much larger market for quality assured combi-packs—and probably both. Case scenario: impact of reduced cost of API mifepristone on combi-pack COGS The modelling undertaken and shown above is based upon a price of US$8278/kg with a discount of 15% making the material available at US$7036/kg. If mife- pristone API was made available to manufacturers at US$5000/kg, a price which we believe is both feasible and viable for the producers, the reduction by itself, would be sufficient to reduce the cost of the combi-pack. The tables below provide an indication of how this would impact the existing COGS model for manufacturing in both India and Bangladesh (Tables 2, 3, 4 and 5). The low cost of non-QA mifepristone API gives an indication that this high price cannot solely be explained by production cost considerations. Consequently, trying to implement reforms on the market dynamics may be Prospect Final Price USD 3.29 USD 0.0 USD 0.5 USD 1.0 USD 1.5 USD 2.0 USD 2.5 USD 3.0 USD 3.5 1 Combi-pack COGs, Bangladesh Admin fees (30%) Packaging Mife: Opera�ng Expenses Mife: labour cost Mife: Excipients Mife:QA API (Assay 97%) Miso: Opera�ng Expenses Miso: labour cost Miso: Excipients Miso:QA API (Assay 95%) Total COGS USD 2.53 USD 1.45 (Mifeprostol - QA API) USD 0.35 (Misoprosol Opera�ng Exp) 57% of COGS 14% of COGS Fig. 3 COGS elements in Bangladesh Table 2 COGS for company with Profile A in India Page 8 of 10Chinery et al. Reprod Health (2020) 17:171 the most optimal pathway. This can be implemented in a couple of ways with market shaping interventions such as volume guarantees to drive the current supplier(s) to decrease their price or more liberal initiatives supporting greater competition through additional QA mifepristone API and consequently greater competition and choice of combi-packs in markets. A decrease based on the US$5000/kg example above on the cost of QA mifepristone API would have posi- tive impact for both manufacturers located in India and Bangladesh. An Indian manufacturer could potentially offer a decreased combi-pack price of US$3.42 and in Bangladesh, the price could reduce to US$ 2.74 as shown in the Profile C tables below. Greater reductions in the cost of QA mifepristone API would accordingly, reduce these prices even further (Figs. 4, 5). Limitations The paper is based upon the existing market situation and considers price reduction opportunities in the context of reducing the cost of API, labour and operating expenses through increasing competition (API) and location of manufacturing. There are conceivably other additional scenarios for achieving a similar level of price reduction, for example, an external intervention by donor agencies whereby a level of subsidy is provided to incentivize com- panies to improve product quality and lower prices in return for direct financial support and/or through guar- anteeing volumes for a time-limited period in an effort to shape a larger future market. The impact of the packaging material was not explored in-depth as part of the COGS model. However, this is rec- ognized to play a role as a cost component of the COGS. The use of Alu/Alu material by manufacturers was esti- mated at US$0.346 to produce misoprostol in Bangla- desh. At the present time, manufacturers in Bangladesh do not co-blister misoprostol and mifepristone and the cost of doing so as well as the cost of Alu/Alu packaging associated with the QA combi-pack may also contribute Table 3 COGS for company with Profile B in India Table 4 COGS for company with Profile A in Bangladesh Table 5 COGS for company with Profile B in Bangladesh Page 9 of 10Chinery et al. Reprod Health (2020) 17:171 to disincentivizing manufacturers located in Bangladesh to enter its products into the QA market. Conclusions Considering that the final price relies heavily on an individual manufacturer’s commercial interests, it is important to ensure a business case exists or is devel- oped for QA mifepristone API manufacturers to sus- tainably produce the material at a lower price (Tables 6 and 7). We recommend conducting market assessment activ- ities on the combi-pack market and invest in advocacy activities to establish and identify market opportunities for QA mifepristone API manufacturers and partner with finished product manufacturers of combi-packs. Based upon our market assessment activities, ensur- ing that buyers/customers prioritise quality over price considerations remains the key commercial challenge that manufacturers must consider before entering into the QA market for combi-packs. However, additional API manufacturers can be incentivised by technical support provided to achieve WHO prequalification especially in Bangladesh. Miso API (Assay 95%) 8% Miso Excipients 7% Mife:API (Assay 97%) 78% Mife: Excipients 7% Non-QA Raw Material Cost distribu on Miso:QA API (Assay 95%) 3% Miso Excipients 1% Mife:QA API (Assay 97%) 95% Mife: Excipients 1% QA Raw Material Cost distribu on Fig. 4 Cost distribution of raw materials QA API (Assay 95%) 33% Excipients 9% labour cost 2% Opera�ng Expenses 56% Bangladesh QA API (Assay 95%) 21% Excipients 5% labour cost 2% Opera�ng Expenses 72% India Fig. 5 Misoprostol tablet production cost distribution Page 10 of 10Chinery et al. Reprod Health (2020) 17:171 • fast, convenient online submission • thorough peer review by experienced researchers in your field • rapid publication on acceptance • support for research data, including large and complex data types • gold Open Access which fosters wider collaboration and increased citations maximum visibility for your research: over 100M website views per year • At BMC, research is always in progress. Learn more biomedcentral.com/submissions Ready to submit your researchReady to submit your research ? Choose BMC and benefit from: ? Choose BMC and benefit from: Abbreviations API: Active pharmaceutical ingredient; COGS: Cost of goods sold; LMIC: Low and Middle Income Countries; QA: Quality-assured; USP: United States Phar- macopeia; WHO: World Health Organization. Acknowledgements We thank Ms. Ana Maria Fernandes for her technical contribution to the data collection and analysis. Authors’ contributions The conceptual idea for this study was envisaged by LC and primarily written by CA. AT provided substantial technical inputs and AMG reviewed and edited the manuscript. ML collected and validated the data and other relevant infor- mation. All authors read and approved the final manuscript. Funding This publication was developed with financial support from the Department of Sexual and Reproductive Health and Research (includes the UNDP/UNFPA/ UNICEF/WHO/World Bank Special Programme—HRP). Availability of data and materials The contact author can be contacted for publicly available data access. Some details are proprietary information of the manufacturers and not available. Ethics approval and consent to participate Not applicable. Consent for publication No individual person data are used in this study. Competing interests Concept Foundation works with manufacturers of generic reproductive health medicines including medical abortion combi-packs, to achieve quality- assured products and enhance access in the public sector of low- and middle- income countries. Received: 8 May 2020 Accepted: 7 October 2020 References 1. Medical abortion commodities database. https ://www.medab .org/. Accessed 30 Apr 2020. 2. World Bank. https ://datab ank.world bank.org/data/downl oad/GDP.pdf. Accessed 30 Apr 2020. Publisher’s Note Springer Nature remains neutral with regard to jurisdictional claims in pub- lished maps and institutional affiliations. Table 6 Impact of lower priced QA mifepristone API on costs in India Table 7 Impact of lower priced QA mifepristone API on costs in Bangladesh https://www.medab.org/ http://databank.worldbank.org/data/download/GDP.pdf Cost of goods sold analysis and recommendations to reduce costs of co-packaged mifepristone–misoprostol for medical abortion Abstract Objective: Methods: Results: Conclusions: Plain English summary Introduction Methods Product formulation Manufacturing location Manufacturer profiles The COGS model components Parameters investigated to explain the price variances of the combi-pack Limitations of the model Results Results for a combi-pack manufactured in India Results for a combi-pack manufactured in Bangladesh India v Bangladesh Discussion Procurement of QA API mifepristone Can the combi-pack price be lowered? Case scenario: impact of reduced cost of API mifepristone on combi-pack COGS Limitations Conclusions Acknowledgements References
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