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Not too long ago, the mere mention of the word “vaccine” caused most big pharma executives to break out into a cold sweat. Once derided as low margin products and potential market busters—once most populations are immunized the incidence of disease declines and the market begins to falter—vaccines, primarily pediatric ones, have made a huge comeback over the last five years. 

One of the main reasons for the resurgence of the vaccine industry, was passage of US legislation that better-defined the legal obligations of vaccine makers and inclusion in the legislation of provisions that cap the size of awards made to persons claiming injury after vaccination. Another factor that contributed to the growing popularity of vaccines was emergence of the middle class in vast and concomitant improves in the healthcare systems of emerging markets that include South America, Asia and Africa. Unlike the mature vaccine markets in the US, Europe and Japan (because of low birthrates), the Asian, Latin American and African markets are poised for explosive growth over the next two decades.

In a recent article entitled “Vaccines-The Sustainable Blockbuster Business” Frost and Sullivan’s Senior Healthcare Analyst Barath Shankar Subramanian provides some interesting and insightful factoids about the vaccine industry. They are:

Pediatric vaccines are leading adult vaccines and represent the fastest growing segment of the global vaccine market

Europe is the world’s leading vaccine producer with over 90% of total production

The top five vaccine manufacturers (all big pharma companies) produce more than four-fifths of global vaccine revenues while other manufacturers (approximately 40) account for only one-fifth.

The North American market accounts for over 50 percent of the total spend on vaccines

North America and Europe supply only 14 percent of the world’s vaccine demand; the rest is met by suppliers in developing markets

Government investment, not-for-profit spending and industry alliances/ partnerships, in addition to private R&D spending, are helping to drive the current resurgence of the global vaccine industry

At present, there no fewer than 80 new candidates in late stage clinical development. Further, almost 40 per cent of the new vaccine candidates are for indications that currently have no vaccines on the market.  Finally, improvements in vaccine delivery are helping to drive the improved uptake of vaccines. For example, aerosols, transdermal skin patches, oral drops and even pills—all designed to eliminate needles and improve patient compliance and overcome cold chain supply issues are currently being developed.

From a business perspective—as far as sustainable markets go—the pediatric segment of the vaccine market is a clear winner. Currently, the leading global causes of vaccine-preventable, deaths for children under five include: pneumococcal disease, rotavirus, measles, Hemophilus influenzae b (Hib) infections, pertussis and tetanus. To that end, it is likely that governments in emerging markets will continue to add existing and new vaccines to government-mandated immunization programs. This is almost certain to propel the vaccine market to new heights over the next 10 years or more.

Until next time...

Good Luck and Good Job Hunting (think biologics!)

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Pfizer today announced plans to set up a Rare Diseases Research Unit that will target the more-than-6000 global orphan diseases. For those of you who may not know, orphan diseases are classified by the US Food and Drug Administration as those that afflict 200,000 persons or less.

According to a press release, Pfizer’s new division will “pursue treatments across all therapeutic areas and modalities and will serve as the focal point for the company’s existing research on rare diseases”. It also intends to “work closely with patient advocacy groups, like the National Organization for Rare Diseases, as it develops and advances the unit’s research strategy. It will be lead by Edward Mascioli, most recently the head of Dapis Capital, a private equity firm. Previously he was vice president of clinical affairs at Peptimmune and senior medical director at Paraxel.

Pfizer’s decision to enter the orphan drug market signals that no markets are too small for big pharmaceutical companies to consider in an era where blockbuster drugs are few and far between. Nevertheless, it is noteworthy that orphan drugs (which are generally biologics) offer drug maker several perks including: seven years of market exclusivity, tax breaks and credits, reduced clinical trials costs and expedited regulatory review. More importantly, perhaps, orphan drugs are highly priced and can yield impressive returns even though they are used to treat small patient populations. For example, several of Genzyme’s drugs such as Myozyme and Cerezyme—both designated as orphan drugs—have already reached over $1.0 billion in annual sales. 

While sales of orphan drugs may never reach those of Plavix, Lipitor, Epogen and other multibillion dollar blockbusters, garnering US regulatory approval for four or more (which cost much less than $1.5 billion to develop) will likely provide a substantial ROI to companies that develop them. Also, developing drugs that improve the quality of life for patients with no other treatment options will undoubtedly go a long way to improve tarnished reputation of the pharmaceutical industry.

Until next time...

Good Luck and Good Job Hunting!!!!!!!!

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