1. Student: Song Lijie Advisor: Prashant Yadav Santiago Kraiselburd
Analysis of the upstream supply chain for Artemisinin Combination Therapy (ACT) treatments for malaria
Student: Song Lijie
Advisor: Prashant Yadav
Santiago Kraiselburd

2. 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

3. 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

4. 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

5. Source: RBM Task Force/Dalberg

6. 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

7. 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?

8. Modeling Approach UpstreamSupply Chain SP1= k * P1; SP2 = k * P2
Global
Subsidy
(AMFm)
ACT1 (P1)
Manufacturer
Y1 =P1-SP1
Y 2=P2-SP2
SP 1
SP 2
Before
After
ACT2 (P2)
UpstreamSupply Chain
SP1= k * P1; SP2 = k * P2
SP1=SP2
Y1=Y2

9. Modeling Approach Manufacturer A Intermediate supplier 1
Drug A (AM+LF)
Component A1
Component 2
Intrermediate 2
Intermediate 1

10. 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