Vaccines get a boost: Global market increases profitability of making vaccine

Although long recognized as a public health boon, vaccines' high development costs and low profit margins were not attractive to manufacturers. That has changed.

By Susan J. Landers — Posted Feb. 4, 2008

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Vaccines are hot. "The global vaccine market is set to double by the year 2016, fueled by unprecedented product innovations and global recognition of the benefits of immunization," said Michael D. Decker, MD, MPH, vice president for scientific and medical affairs at vaccine manufacturer Sanofi Pasteur, USA.

"This is one of the very best times to be involved in immunization because of all the excitement," noted Lance Rodewald, MD, director of the Centers for Disease Control and Prevention's Immunization Services Division.

But just a few years ago, the stalwart tetanus vaccine was in short supply, seasonal influenza vaccine was hard to come by, and manufacturers were leaving the field, citing low profits and high production costs.

Now, new vaccines are hitting the market. Shingles, human papillomavirus and rotavirus vaccines were introduced in 2006. In 2005 two Tdap vaccines were approved to help fight pertussis in teens and young adults. Last month, data were published in the Journal of the American Medical Association showing that a meningococcal vaccine protects infants from four types of the meningitis bacteria, and manufacturer Novartis is expected to seek approval to take it to market.

Flu vaccine is also plentiful this year, and last year's National Influenza Vaccine Summit, an annual event sponsored by the AMA and the CDC, attracted representatives from more than 100 groups interested in ensuring this year's smooth flu season.

Not that it's all a rosy picture. Clinical trials for Merck's promising HIV vaccine were halted last fall when the vaccine was found to be ineffective. Also, a current shortage of haemophilus influenzae vaccine type B, or Hib, resulted when Merck recalled the product after production problems.

Nevertheless, excitement is bubbling in the public health world about the renewed interest in vaccines. Experts cite several reasons for this resurgence, ranging from new science to existing policies and changed attitudes.

An assured market

Dr. Rodewald and others credit the Vaccines for Children Program, which was implemented in 1994, with creating consistent demand. The federal entitlement program provides free vaccines for more than half the children in the nation.

The program provides "a large and rather assured market," said William Schaffner, MD, professor and chair of the Dept. of Preventive Medicine at Vanderbilt University in Nashville, Tenn.

Although the VFC program capped the prices of existing vaccines at 1993 levels, the cap came off for new vaccines. "So that created a favorable environment for the manufacturers to want to go through the very expensive research and development phase," Dr. Rodewald said.

Of course, he noted, the purchase price for vaccines has risen dramatically as a result, placing a strain on budgets.

But profits from vaccines were virtually nonexistent until recent years, and manufacturers were discouraged from investing the time and money in their development. As recently as the late 1970s, tetanus vaccine cost 17 cents per dose, said Paul Offit, MD, chief of infectious diseases at the Children's Hospital of Philadelphia.

The arrival in 2000 of the pneumonia vaccine for young children, Prevnar, brightened the economic picture for manufacturers when it became the first vaccine to earn more than $1 billion, Dr. Offit said. The HPV vaccine, Gardasil, was launched in 2006 as a nearly $2 billion vaccine. "So there is definitely a sense that there is more money in vaccines than there was previously."

Still, they are not nearly as lucrative as medications that people take daily, such as the statin Lipitor, which has sales of $12 billion a year.

But other advantages to vaccine production have become increasingly evident, Dr. Offit noted. "There is a fairly beaten path in how to make them, and there is, to some extent, protection from liability in children's vaccines," he said. "The third thing is that they are patent independent. Once their patent runs out, there aren't all these generics that hop onto the market, because it is expensive to make a vaccine, and the market isn't big enough to support them."

The lows and highs

Vaccines may have hit a low point in the 1990s, Dr. Offit said. Concerns over the use of the preservative thimerosal resulted in its removal from vaccines. In addition, Rotashield was withdrawn from the market when cases of intussusception were reported. Lastly, the anti-vaccine movement was growing stronger.

Today, new technology and knowledge are helping to fuel the resurgence, Dr. Rodewald said. One big advance has been the ability to produce conjugate vaccines. The process was developed in the 1980s but is paying off now with such vaccines as Prevnar and the meningococcal conjugate vaccine, Menactra, which was licensed in 2005.

The HPV vaccine uses virus-like particles made with genetic engineering techniques that were refined since their development in the 1980s, he added. Also, "20 years ago we had no idea that cervical cancer was caused by HPV," said Rick Haupt, MD, MPH, executive medical director for Merck Vaccines and Infectious Diseases, which released Gardasil to fight this cancer.

Dr. Schaffner summed up the scenario on the development side: "As the science was moving along, the manufacturing was suddenly a little less risky, and the market was more assured."

At the same time, the country became more interested in health maintenance and the prevention of illness, he added.

Notice was taken by those in public health that, not only were the immunized children healthier, but so were their families, said Myron Levine, MD, director of the Center for Vaccine Development at the University of Maryland School of Medicine in Baltimore. "What this means for public health is that if you vaccinate infants, you have an important extra public health advantage of great economic importance, because you are actually preventing disease in other ages."

The Bill and Melinda Gates Foundation's investment in vaccine development also sparked interest in supplying vaccines to people in the developing world, Dr. Levine said. Half of the money for the public-private group, the Global Alliance for Vaccine and Immunization, was provided by the Gates foundation.

The alliance has brought vaccines to some of the poorest countries in the world and prompted even more support from the Gates foundation. "When the richest guy in the world says this was the best investment he ever made, he provides the antidote to the anti-vaccine lobby in the country," Dr. Levine said.

And new vaccines are showing up in the pipeline. Sanofi Pasteur's dengue vaccine is entering clinical trials this year, just as reports of the mosquito-borne virus's spread along the United States border with Mexico were announced. Meanwhile, work on an HIV/AIDS vaccine continues. But Dr. Rodewald doesn't expect to see any reach market for several years. "For now, I think there will be a little bit of a slowdown in the newly vaccine-preventable diseases, and we are hoping that it will pick up a little later. We have a chance now to catch our breath."

But while doing so, promoters of immunizations can't relax about the need for widespread vaccination to make sure vanquished diseases remain defeated. "We are so successful at using vaccines that many parents aren't aware of these illnesses," Dr. Schaffner said. He related that one mother was confused about why he was talking about polo shirts. He was actually talking about polio, but she had never heard of the disease.

Additional societal issues to resolve include how to successfully integrate the administration of all the new vaccines into the health care schedules of children and, increasingly, teens and adults, and how to pay for them, he said.

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Time to vaccinate

Vaccines' disease-defeating powers have long been regarded as a public health bonanza. The following is a list of some notable events of the last century:

1921: Diphtheria vaccine was developed, but it was not widely used until the 1930s.

1924: Tetanus toxoid was produced and first used to prevent this disease among members of the military.

1930s: The first whole-cell pertussis vaccine was developed.

Mid-1940s: The tetanus, diphtheria and pertussis vaccines were combined to make DTP vaccine for routine childhood immunization.

1940s: Anthrax vaccine in its modern form was developed.

1945: Influenza vaccine was first used. Each year the vaccine is reformulated with three virus strains that are expected to affect the U.S. in the coming winter.

1955: Polio vaccine with inactive virus was developed by Jonas Salk, MD.

1961: Polio vaccine using live attenuated virus was developed by Albert Sabin, MD.

1963: Measles vaccine became available.

1971: Combination measles, mumps and rubella vaccine was available.

1980: Smallpox was declared eradicated by the World Health Organization.

1988: The National Vaccine Injury Compensation Program was developed to compensate those found to have been injured by a vaccine.

1985: Haemophilus influenzae type B (Hib) vaccine was licensed.

1994: The Vaccines for Children Program was developed to provide free vaccines for uninsured and underinsured children.

1995: Varicella vaccine was recommended for routine use in the U.S.

1998: A vaccine to prevent rotavirus was licensed but withdrawn in 1999 because of its association with intestinal blockage.

2005: Boostrix and Adacel were licensed to fight the re-emergence of pertussis among teens and young adults.

2005: Menactra, a new meningococcal conjugate vaccine, was licensed.

2006: RotaTeq, a new rotavirus vaccine, was approved by the Food and Drug Administration.

2006: Human papillomavirus vaccine became available to protect females from four HPV types.

2006: The first shingles vaccine was licensed.

Sources: Immunization Action Coalition; the National Network for Immunization Information; Johns Hopkins University Bloomberg School of Public Health

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Next up?

The following vaccines are in the pipeline:

  • Dengue fever
  • Shigellosis
  • Severe acute respiratory syndrome, or SARS
  • West Nile virus

Source: "New Vaccines against Infectious Diseases: Research and Development Status," The World Health Organization, 2006

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External links

The National Influenza Vaccine Summit, an initiative sponsored by the American Medical Association and the Centers for Disease Control and Prevention (link)

Centers for Disease Control and Prevention on vaccines (link)

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