Vaccines only command a 6% revenue share of the entire global pharmaceutical market, and one industry analyst is trying to find out why
It may be surprising to know that vaccines, many of which have contributed to the eradication of infectious disease or at least the significant reduction in incidence rates, only command a 6% revenue share of the entire global pharmaceutical market. Jennifer Cassels, industry analyst at Frost and Sullivan, is trying to find reasons why it is such an important drug class generating such little revenue.
Regulatory and government bodies seem to place less value on these vital products compared with other pharmaceuticals, and thus vaccines command relatively low prices.
Because mass immunisation of a large population is often required, for example for paediatric vaccinations, significant investment is required by national governments to fund programmes.
Keeping prices low is demanded by payers.
Novel vaccines, such as Prevnar, are significantly more costly than older vaccines - however the reimbursed target population is restricted, again to keep overall costs low.
Vaccine manufacture and production can be fraught with difficulties increasing the cost to the company.
Production cycles are generally longer, anything between nine and twenty-two months and companies face the possibility of batch failures and quality delays.
This, in addition to players exiting the market, has contributed to vaccine shortfall.
This has been evident, most notably in the United States in recent years, where at one stage, nine of the eleven paediatric vaccines were in short supply, leaving millions of children under immunised and at risk of spreading disease. Increasing capacity to meet the demand not only requires heavy investment especially if 'going it alone' but is also time consuming.
The decision to build new manufacturing facilities really needs to be decided before a feasible vaccine has been produced, thus running the risk of spending money on a new facility that may ultimately become redundant if the vaccine candidate fails in clinical development.
Tightening regulation, escalating costs.
Further escalating costs is the strict regulation enforced during clinical testing.
Vaccine safety is of utmost importance to the regulators and in most cases this has to be shown conclusively in large-scale clinical trials.
Although safety is of great concern to pharmaceutical development in general, prophylactic vaccines are administered to healthy populations, often children, thus no or minimal risk is a strict requirement.
In fact, 60% of development time is spent on determining safety pre-clinically in animal models, something that was not required in the past.
Because there are currently no ideal animal models, proving safety can be very challenging.
Long term effects rather than acute toxicity is another aspect looked at by regulatory bodies, thus long term follow up of patients may be required.
Because of the low profit margins seen in this market, investment in R and D of prophylactic vaccines is limited.
The market is a highly concentrated one.
Big pharma leads the field, with four companies commanding 81% of the total market.
Looking at this more closely, in certain vaccine segments, for example the combination DTaP segment, only GSK and Aventis have any major presence, others shying away from this low profit area.
Vaccines are considered cost effective because their cost is lower than cumulative costs of treatment, hospitalisation and lost working days.
But is this the most appropriate approach to calculate cost effectiveness.
Intangible costs are not taken into account and should be considered as equally important as direct medical costs.
If taken into account, it is believed that the cost/benefit ratio would increase by a factor of between ten and 100.
Radical alterations in the economic approach to vaccines and preventive medicine is necessary in order for companies to see that it is worth investing in the development of novel vaccines, as well as continuing the production and improvement of marketed vaccines.
Such studies should remove some of the pressure placed on keeping price to a minimum and allow for better margins.
Exciting developments.
National vaccination policies, combined with the emergence of new diseases and the ever increasing risk of antibiotic resistance, has contributed to the growing demand for increased quantities of current vaccines as well as the need for development of novel vaccines.
Thus, this area of medicine still remains an attractive one.
The essential role that vaccines play in today's society needs to be realised.
Economic burden of the disease needs to be clearly established: what would be the social and economic outcome if further shortages arose and the resurgence of disease occurred? Exciting developments are occurring in the vaccine area, for example therapeutic vaccines for cancer and HIV, as well as novel prophylactic vaccines, such as strep A and meningococcal B.
It is essential that such developments continue and companies are encouraged to invest.
Both the technology and expertise exists, what is lacking is incentive.
Working together with and convincing national governments and serum institutes, as well as regulatory bodies of the economic and social value of vaccines is essential in order to increase funding and make this area a more lucrative market for pharma and biotech to be part of.
