A new business model for cell-based therapeutics
Date
2011-06Author
Medcalf, Nicholas
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Abstract
Cell-based therapeutics have attracted large amounts of investment as they may offer
effective treatments for a wide variety of health problems. In spite of extensive research
relatively few examples of successful businesses exist. The products have several
features that are challenging to manage when manufacturing at full scale. This feature is
an obstacle to commercialisation that is often overlooked during research.
For some cell-based therapeutics this may not be a problem. Traditional, centralised
business models can be used with confidence for low volume production to treat high
value indications, such as life-threatening disorders: the margins justify the expense. By
contrast, when the products are required in large numbers and applied at high cell doses
for less dramatic conditions the traditional model of business will be difficult to manage
and to fund at full scale. An example is the cell-based repair of osteoarthritic damage to
joints such as the knee. Overall business value for this target is high because the market
is large and is growing. Effective therapy requires large cell doses and commands a
modest value per dose. When using a traditional business model (requiring centralised
manufacture and a long-distance, low temperature supply chain) very large sums of
money must be put at risk during development in order to build adequate capacity.
New ways of manufacturing and supplying such products are needed. A new model of
business is developed in this thesis. The model requires lower initial capital investment
and the business can be grown incrementally in line with demand rather than putting all
the investment at risk at once.
Data from published work and from laboratory experiments are used to derive the direct
costs of manufacture. Structured Analysis and Design Technique and Activity Based
Cost analysis are used to build a quantitative model of a centralised business. The model
is compared with suitable alternatives based upon the extended enterprise model. The
points of sensitivity in the cost model for the extended enterprise are identified and the
model is refined to provide a less capital-intensive route for business development. The
results and methods are of general applicability to similar products.