VACCINE INDUSTRY : PRESENT AND FUTURE

Naveen Kumar

Flow of Presentation
Introduction

Vaccine Industry: An Overview

Growth Drivers Challenges and Issues SWOT Company watch Future Perspective Further Developments conclusion

 Every year 3 million deaths are prevented and 750,000 children

are saved from disability by vaccines(WHO)

Why do we need vaccine? Common communicable diseases

Geographic variation in disease spread

Every 1$ invested in childhood vaccine save 18$ Increased life expectancy to economic growth

VACCINES
A vaccine is any preparation intended to

produce immunity to a disease by stimulating the production of antibodies. Vaccines include, for example, suspensions of killed or attenuated microorganisms, or products or derivatives of microorganisms.- WHO.

Vaccines vs Pharmaceuticals
Vaccines Pharmaceuticals

Regulatory

Focus on prevention not patients, but healthy subjects Key role for the government agencies Very low acceptance of side effects

Focus on treatment patient is generally sick Key role for healthcare players Acceptance of side effects varies by severity of disease

Manufacturing

High manufacturing and supply chain complexity (Cold Chain Management, complex biological processes)

Medium manufacturing and supply chain complexity (Easier to handle chemical synthesis in most cases)

Marketing/ Sales

Small Major sales through government Very few generic products (Due to manufacturing complexity)

Massive sales force commitment Sales through physician as prescriber Increasing generic threat

A Typical Cold Chain

Problems in supply chain

Tight price competition

Damage to vaccines during transportation -

Storage problems Due to less financial incentive from govt. to manufacturers insufficient doses Demand uncertainty Manufacturing interruptions - required to maintain cGMP standards so high product rejection rate - supply can be impacted
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Vaccine

MRP, in `, 2008 (A)

Price offered to physicians, in ` (B)

Discount in `(A-B)

Percentage Margin of profit for the physician (AB)*100/ B 42.9 30.4

Pentaxim Imovax Polio

2066 365

1446 280

620 85

Tripacel
Okavax

1211
1468

762
986

449
482

58.9
48.9

Avaxim 80
TetractHib ActHib 10

952
504 426

665
305 251

287
199 175

43.2
65.2 69.7

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STAGES OF VACCINE DEVELOPMENT

Total time of development 12 - 15 years (Total Investment US$ 500mn 1bn)

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 76 US-FDA approved vaccines

There are now 145 pure vaccines and 11

combination vaccines in clinical development Five major playersGlaxoSmithKline, Merck, Sanofi-Aventis, Pfizer and Novartis Vaccines approved by FDA in 2010 : Provenge, Prevnar 13, and Menveo

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Vaccine segments

Human vaccines Pediatrics

Adolescents

Adults

Elderly

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Global vaccine sales($ billion)

30 25

20
15 24 26

28

10
5

18

0
2007
15

2008

2009

2010

Major markets
Country US Sales, 2008 ($ mn) 4741 Market share 2008(%) 42.7

Germany
Japan France Italy Spain UK

1755
911 835 303 198 176

15.8
8.2 7.5 2.7 1.8 1.6

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Source : Business insights, 2008

Global vaccine leaders(2010)

Company GSK SA Pfizer Merck Sales($ billion) 6.50 5.14 3.7 3.5

Novartis
SP-MSD

2.9
1.2

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Source : Global Vaccine Market 2010 , Krishan Maggon

Global vaccine leaders

SP-MSD 4% Novartis 10%

Others 21%

GSK 23%

SA 17% Merck 12% Pfizer 13%

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Top vaccines
Brand name Prevnar(13) Company Pfizer Sales($ billion) 2010 3.6

Fluarix
Fluzone Gardasil IPOL

GSK
SAP Merck SAP

1.85
1.75 1.35 1.33

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Source : Global Vaccine Market 2010 , Krishan Maggon

Managing the product life cycle

Factor Number of producers New Product Launch One Market Penetration Multiple, industrialized countries High High, industrialized Medium Tiered and high average Product Maturity High, industrialized and developing country Potential surplus High, all markets Low Tiered and low average

Capacity Market Cost Prices

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Low Low High High uniform

Overview of major vaccine related acquisitions

Target Company Acquiring Company Wyeth MedImmune Chiron Crucell ID Biomedical Shantha Biotechnics Acambis Intercell Pfizer AstraZenecea Novartis Johnson & Johnson GSK Sanofi Aventis Sanofi Aventis Novartis Investment Made $68 bn $15.6 bn $5.1 bn $2.6 bn $1.4 bn $781 mn $549 mn $363 mn Date Announced Jan 2009 April 2007 Oct 2005 Sep 2009 Sep 2005 July 2009 July 2008 July 2007

Corixa
PowderMed
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GSK
Pfizer

$300 mn
$230 mn $214 mn

May 2005
Oct 2006 Nov 2007

Coley Pfizer Source: VacZine Analytics

2010

2015(F)

Sales (millions)

$67791

$64532

Research & Development Net Income

$9338

$7212

$17983

$17430

EPS

$2.23

$3.00

Top product

Lipitor ($10773)

Prevnar($5624)

22

Source: Forbes

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The Indian Market for Vaccines

Indian market : US$ 524 million Vaccine industry will continue to grow at a CAGR

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in the range of 10-13% over the next 10 years to reach a size of between US$1.4 billion and US$1.8 billion by 2020 India produces about 40-70% of the WHO demand for DPT and BCG, and almost 90% of the demand for measles The largest vaccine producer in India is the Serum Institute of India, it is the worlds largest producer of measles and DPT vaccines

The Indian Market for Vaccines

Animal vaccines, 107
Domestic, 238

Export, 179

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Source: Biospectrum (June 2010) Figures in US$ mn

Increased vaccine sales in 2009-10

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Major players
MNCs
GSK Sanofi Pasteur Novartis Wyeth Merck

Local manufacturers
Serum institute of

India Shantha Biotechnics Bharat Biotech Panacea Biotech Bio-Med

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Company watch : GSK

Market share 28%

10% of total sales

24% growth vs 2009
Vaccine Rotarix Cervarix Infanrix Hexa Synflorix
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India launch 2008 2009 2009 2010

Vaccines currently under development by Indian companies

Vaccine Company Status of development

Rotavirus vaccine
Rotavirus vaccine Cadi-05 Malaria vaccine H1N1 influenza (Swine flu) vaccine Conjugated typhoid vaccine

Bharat Biotech
Shantha Biotechnics Cadila Bharat Biotech Bharat Biotech, Panacea Biotech, SII Bharat Biotech

Phase 3
Phase 2 Phase 3 Phase 1 Phase 2/3 Phase 3

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Source : Biospectrum, April 2010

Trends in vaccine industry

Major players looking to develop flu vaccines

Increase exports

Increase focus on adult vaccines

Increase in conjugation vaccines

Novel methods of vaccine administration

Vaccines

30

Source: PwC

Vaccine Market Drivers

Breakthroughs with new products to address unmet

medical needs Contingency planning for pandemic infections Growing income in the developing world markets Threat from bioterrorism Potential for therapeutic vaccines Continued interest and investment from major pharma players Education and awareness about disease prevention Participation by government in terms if improving PSUs and investment

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Challenges for the Indian vaccine market

Failing realization for mass vaccination(Hepatitis B)

Funding
High maintenance Slow regulatory approval Dependence on government

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Strengths
Prevent disease Vaccines are widely available and programs

have reduced cost as a barrier to vaccination

Vaccines Will Not Face Significant Generic

Competition

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Weaknesses
Vaccine Research and Development is

Lengthy and Expensive Less awareness Vaccine Manufacturing : High cost High maintenance products Regulatory approvals Funding to new enterprises

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Opportunities
Vaccines for Diseases Currently Without a

Vaccine Improved Vaccines for Partially VaccinePreventable Diseases Global recognition of the benefits of immunization Combination vaccines way ahead

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Threats
Only strong players so intense competition

Domestic Indian companies depend on

government procurement to push volumes Gestation period is long Ageing of their product basket Vaccine Distribution Networks The Anti-Vaccine Movement

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Future vaccines
Vaccine Estimated annual burden of disease 10,000-20,000 deaths 500,000 severe cases At risk population

Dengue

2.5 billion people are at risk, with a strong trend upwards 2 billion people in endemic regions children under 5 Endemic regions including Africa, Asia and S. America. Individuals infected with Multidrug resistant TB

Malaria

1.1 to 2.7 million deaths, 300-500 million cases 1.6 million deaths; 8 million cases

Tuberculosis

HIV/AIDS
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Almost 3 million deaths; 38- High risk groups Continent 42 million cases of Africa

And more
Diabetes

Cancer
Smoking Obesity Asthma Allergy HTN

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Adjuvants
Substances that helps vaccine to produce a stronger immune response
Faster response

Conjugate vaccines
Conjugation of sugar molecules present on bacteria to a strong immunogenic carrier protein Can stimulate cell mediated long lasting memory

Broad immunity

To increase and prolong the immune response to the vaccine antigen

Adjuvant and conjugate vaccines may help to increase vaccine efficacy in the elderly population
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DNA vaccine
Advantages Technique
Injection of DNA encoding the antigen Involves transfection of DNA plasmid containing antigen coded gene into target cells which results in immune response
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Ease of manipulation Simple manufacturin g More stable

Targetting a specific organ

Conclusion
Vaccine industry has been proved to be one of the fastest growing

sectors of the past decade and is forecasted to do so in future also

Driven by novel, high-price vaccines, the 7MMs paediatric and

adolescent vaccines market will almost quadruple in size by 2016

Due to ageing populations, the emergence of new technologies and

the increasing awareness for vaccine-preventable diseases, adults and the elderly are coming into focus as an attractive target population for future vaccine development
Advancement in the molecular biology and vaccine delivery systems

will be the key for further development of this industry

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