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The Vaccine Industry - An Overview Virtually all licensed vaccines in the United States are produced by a handful of pharmaceutical companies - GlaxoSmithKline, Merck, Novartis, Sanofi Pasteur, and Wyeth - companies which also account for 80 percent of the worldwide vaccine market.1 With a limited number of manufacturers and many recommended vaccines produced by only a single company, vaccines are susceptible to large fluctuations in availability.2 Thirty years ago, the vaccine market looked remarkably different. At the time, 35 companies produced vaccines for the U.S. market. Departures from the international vaccine market in the intervening years have also occurred. Between 1988 and 2001, ten of 14 global vaccine manufactures partially or completely stopped production of traditional childhood vaccines.3 Health policy experts and economists primarily attribute these exits from the market to financial considerations - namely, chronically sparse profits; costly research, development and production; and liability concerns. However, as a result of technological advances, increased scientific knowledge, and, particularly, the 1986 National Childhood Vaccine Injury Act (designed to protect vaccine manufacturers against safety related financial liability), vaccine production gained renewed appeal to pharmaceutical companies in recent years. The vaccine business is currently growing at a double digit rate, but still only represents about 1.5 percent of all pharmaceutical revenues.4-5 Even with industry growth fueled by limited competition and "blockbuster vaccines" such as Prevnar and Gardasil, analysts expect vaccine profits to remain below the margins of branded pharmaceuticals.6 Compared with pharmaceutical "blockbusters" capable of annual sales well over one billion dollars, most vaccines continue to yield more modest profit for manufacturers. Additionally, the current development pipeline suggests that no vaccine having blockbuster potential is expected for at least the next several years.7 Small biotechnology companies may present challenges to multinational vaccine manufacturers by improving aspects of vaccine development, such as improved delivery systems. More often, however, the high cost of vaccine development requires partnerships between these small firms and the major manufacturers, further cementing their central role in the U.S. and international vaccine landscape. Challenges for Vaccine Supply and Availability Between late 2000 and 2003 there were "unprecedented and unanticipated" shortages of eight of 11 vaccines routinely administered to children. Attracting the most attention was the major influenza vaccine shortage in 2004 due to production problems by Chiron Vaccines, a major supplier at the time.8 These periodic shortages force policy-makers and physicians to alter recommended immunization schedules, putting children at risk for potentially fatal infectious diseases. Such shortages are the result of having a handful of companies involved in vaccine production and the presence of a single supplier for many vaccines in the U.S.9 As a result, the system is ill-equipped to respond to unexpected fluctuations in supply or demand. Demand for a pediatric vaccine is typically quite predictable, directly related to the side of the birth cohort in a given year. Such capacity is typically met without difficulty by manufacturers of licensed vaccines. Meanwhile, the largest single purchasers of vaccines are governments. Even in the United States, the federal government purchases 55 percent of childhood vaccines, and individual states also buy vaccines in bulk.10 Both of these factors, coupled with the high cost of research and development, explain why there is little incentive for competition. The lack of additional capacity in vaccine production creates vulnerabilities should large amounts of vaccines be needed on short notice, a scenario receiving considerable attention given global concerns regarding a possible avian influenza pandemic. Differences in production standards and requirements by government regulators in the U.S., Europe, and elsewhere often mean that vaccines often may not be imported to other countries, even if urgently needed. This may even apply to vaccines produced by the same manufacturer of the licensed vaccine in a country. Impacts on vaccine research and development As noted thus far, many factors seem to discourage vaccine research and development (R&D), including limited demand, liability concerns, and price limits as a result of bulk purchasing. Perhaps the largest obstacle to the development of vaccines is the cost and time necessary to shepherd a vaccine through the clinical research process to licensure. Producing a safe and effective vaccine requires about 12-15 years of research and costs estimated between $500 million and $1 billion dollars, typically.11 This financial landscape means that the vaccine industry is unlikely to invest in a product that will not both pay for itself and turn a profit, characteristics which almost require a significant demand in wealthy, developed countries. As a result, many potentially vaccine-preventable diseases - such as those primarily impacting the developing world - are left without large-scale research interest from the multinational vaccine manufacturers. Attempting to fill this void have been networks led by private philanthropies, governments, and public-private partnerships. The costs of vaccines extend beyond research expenses to the development of dedicated, specialized production facilities for large-scale manufacturing. Particularly because vaccines are given to healthy individuals who are often members of vulnerable populations (children and the elderly), regulators are particularly concerned with maintaining production standards so as to reduce the likelihood of safety problems. While these additional requirements increase confidence in the safety of individual vaccine lots, they lead to increased costs. Since it is estimated 60 percent of vaccine production costs are fixed, meaning they are incurred regardless of the amount of product produced, vaccines require a sizable market to be profitable.12 Unless cholesterol or blood pressure medications that are prescribed to patients for years, vaccines are only given a limited number of times, dramatically reducing the potential market and profitability. The role of non-industry-based vaccine research and development Increasingly, non-for-profit institutions such as the Gates Foundation also play a role in funding vaccine production and R&D. Their recent emergence in vaccine research, coupled with the new strategies developed by dozens of small biotechnology companies has the potential to transform a field previously that has long been largely the sole domain of a handful of pharmaceutical companies supplemented by the contributions of academic researchers. While increased funds and manpower has brought considerable energy to vaccine research, challenges of coordination and priority-setting are now faced by the varied players involved. Research funding, be it from a not-for profit or a pharmaceutical company, comes with a specific agenda and expectations, resulting in differences in research priorities, objectives, and measures of success. These potentially-competing concerns may impede research progress without careful coordination among the many groups - public and private - interested in the development of new vaccines.13 -- By Christine Prifti, Princeton University (cprifti@princeton.edu)
1"Shot in the arm." The Economist. 5 (May 2003): 64. |
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