Historians often cite the early 1980s as the dawn of biotechnology but in fact vaccines – arguably medicine’s greatest achievements – existed two hundred years earlier. Vaccines may be undergoing a “golden age,” according to Rino Rappuoli, PhD, who heads research at Novartis Vaccines’ Siena, Italy facility, but they have not always been an exciting business. Liability issues and low margins led to brutal consolidation, which reduced the ranks of vaccine-makers licensed in the United States from twenty-six in 1967 to twelve in 2002. The fallout from manufacturer attrition is still felt as just five companies – Merck, GlaxoSmithKline, Sanofi Pasteur, Wyeth, and Novartis – control 97% of the market.
The current buzz about vaccines arose from the success of blockbuster products like Merck’s Gardasil (introduced in 2006) and Wyeth’s Prevnar (2000). Another boost occurred after the 2001 terrorist attacks, when concerns over bioterrorism prompted the federal government to fund expansion of vaccine production capacity. More recently interest in vaccines for malaria and other diseases endemic to developing countries has attracted funding from the Bill and Melinda Gates Foundation and other philanthropies. And all along advances in biotechnology, particularly in genetics and cell culture, have unlocked vaccine targets and production methods that did not exist a decade ago.
Kalorama Information (New York) estimates global 2009 vaccine revenues at $22 billion, split approximately evenly between pediatric and adult products. The vaccines business is growing at between 12% and 15% per year. Top pediatric vaccines leading market growth are Wyeth’s pneumococcal vaccine Prevnar, and Merck’s RotaTeq vaccine for rotavirus. Leading adult vaccines included Gardasil, for sexually transmitted human papillomavirus (HPV), and Zostavax, for shingles, both from Merck. To put these figures into perspective, pharmaceutical sales were approximately $550 billion and the three top-selling drugs alone – Lipitor (and generics), Advair, and Plavix – enjoyed combined sales of $26 billion in 2006. The double-digit growth rate of vaccine products, though, puts them in an attractive opportunity path.
While influenza vaccines are and probably always will be volume leaders, they accounted for just $2.8 billion in revenues in 2007, according to Kalorama, and sales are divided among six manufacturers: GSK, ID Biomedical, CSL Biotherapies, MedImmune, Novartis Vaccines (formerly Chiron), and Sanofi. Kalorama expects 14% growth in this market segment through 2013.
In its analysis Kalorama notes the “Gardasil effect,” referring to the phenomenal rise of Merck’s Gardasil vaccine against HPV, a family of viruses that cause cervical cancer. Gardasil’s 2006 debut is partly responsible for this decade’s resurgence of vaccine revenues. Sales of the vaccine quickly reached $1 billion but have recently flattened.
Yet opportunities for considerable growth still exist in this market. Gardasil protects against four of the most common (out of several dozen) strains of HPV. Merck is planning an improved version that confers immunity against nine strains. A competitor, GSK’s Ceravix (approved in Europe but not the US), guards against two strains but claims more robust protection. Both products, and future HPV vaccines, could also be approved for young men, the principal vectors for HPV transmission, which would essentially double demand.
The Gardasil effect reaches well beyond HPV, which some have described as a niche market. Of the eight most significant cancer-causing microorganisms, vaccines exist for just two (HPV and hepatitis B). Helicobacter pylori, a bacterium that infects half the world’s population, causes gastric cancers and 95% of all stomach ulcers. A vaccine against this agent would be an instant blockbuster, as would immunizations against most of the microorganisms listed in Table 1. All cause mild to serious primary infections and, years later, deadly cancers.
But can it last?
Not everyone subscribes to the Gardasil model or the idea that vaccines are undergoing profound scientific and economic transformations. Alex Kanarek, PhD, senior consultant at BioProcess Technology Consultants (Acton, MA) believes that commodity pricing for at least half of all administered vaccines will swamp out blockbuster effects. “Half of this business is high-volume low-markup,” he observes.
Panic over pandemic influenza is another factor which has been partly responsible for the renewed excitement in vaccines, but Kanarek calls this a “distortion” of the marketplace rather than a permanent trend. During the mid-2000s the U.S. and other governments paid vaccine-makers to ramp up manufacturing capacities, which gave a false impression of prosperity. None of these facilities, Kanarek says, would have been ready had a pandemic actually hit. Our unpreparedness for the current swine flu outbreaks supports Kanarek’s contention.
Nevertheless, Kanarek admits that Gardasil could become a model for future vaccine development which, at least on a value level, could be dominated by high-priced, relatively low-volume products.
Another problem with the Gardasil model is that governments, the principal payers in most developed countries, will likely reject expensive vaccines with undemonstrated efficacy, particularly for diseases that might be viewed as avoidable. Gardasil costs about $350 for the recommended course of three injections but the immunity it confers is of uncertain duration, and determining the extent to which it prevents cervical cancer will take years.
A vaccine’s effectiveness depends, in large part, on “herd immunity,” a term that refers to the percentage of the transmitting population that is vaccinated. Where full vaccination compliance covers a multitude of shortcomings by reducing exposure, spotty vaccination magnifies them. In other words, vaccines like Gardasil lose cost-effectiveness when coverage is less than complete.
“Even for inexpensive vaccines, convincing prescribers and consumers that it’s in their best interests to be vaccinated is becoming difficult,” notes Claude Allary, president of consulting firm Bionest Partners (Paris). The value proposition is further clouded, Allary says, when individuals pay their own way. “I don’t think we’ll see too many more of these types of vaccines succeeding for avoidable risks. They are great scientific achievements but I’m not so sure that in the coming years government payers will accept these products.”
Science opportunity and roadblocks
Pandemic influenza, bioterrorism, and emerging infectious diseases have raised the ante for vaccine-makers and created a “more commercially interesting” environment as well, notes Nigel Darby, PhD, GM for biotechnology at GE Healthcare (Uppsala, Sweden). So have technologies like virus-like particles, DNA vaccines, therapeutic cancer vaccines, and novel delivery methods. Consequently, vaccine development pipelines are as healthy as they ever were: Approximately 300 new vaccines are in various stages of development.
But if you thought drugs suffered long, convoluted development timelines, pity the vaccine developer.
Vaccine clinical trials tend to be large, and establishing a clinically relevant endpoint is nowhere nearly as straightforward as with pharmaceuticals. “With drugs, you’re trying to balance effectiveness and safety with the risk associated with the disease,” observes George Kemble, PhD, GM for vaccines at Medimmune (Gaithersburg, MD). Late-stage drug study subjects are already sick, while vaccine trial participants are healthy and may not, for obvious reasons, be challenged with the infectious agent under study. “This imposes a much higher safety burden than for drugs, and adds a huge amount of time to vaccine development.” As a consequence, most vaccines carry FDA-mandated postmarketing surveillance requirements.
As with drugs, vaccines undergo three-phase clinical testing before FDA considers them for approval. Unlike pharmaceuticals, where efficacy endpoints are generally straightforward and quantifiable (Does the patient’s condition improve? Is her cholesterol lowered?), a vaccine’s effectiveness is harder to demonstrate as it involves dealing in negatives (The subject did not contract polio – so what?). Studies have only rarely included a pathogen challenge to healthy human subjects. Sponsors must therefore rely on surrogate indicators of immunity such as generation of antibodies whose protection may be incomplete or not a function of their concentration in the blood. The other common endpoint, protection from infection, takes many patient-years to establish statistically.
FDA’s “two-animal rule,” promulgated in 2002, provides an alternative route for establishing Phase III-worthy efficacy. The rule permits sponsors to petition for approval after safety and dose-ranging (Phases I and II) studies based on a vaccine’s effectiveness in two animal models. The rule is applied only for diseases that human subjects are not likely to encounter such as anthrax and plague. In any event testing is “complex, difficult, expensive, heavily regulated, and unique for each vaccine,” according to Rangappa Ramachandra, PhD, of Covance Immunology Services (Denver, PA).
What about seasonal flu vaccine, whose composition changes annually without sufficient time for human testing? No drug analogy exists for such vaccines, even among generics. The secret lies in regulatory-legal custom which dictates that for biologicals the “process is the product.” Manufacturers are thereby permitted to swap virus strains into and out of their vaccines provided their manufacturing process remains identical.
The manufacture of medicines has a well-deserved reputation for fustiness, which carries through to vaccines as well. Consider that the egg-based method for producing influenza vaccine has chugged away for sixty years with only modest tweaks. Such legacy processes persist because they work, and profit margins do not justify changing them. But they lack the versatility and flexibility that the current healthcare and investment environments demand.
Vaccines are clearly a case where the basic science “is developing much faster than the manufacturing technology,” according to Dr. Darby. “Pandemic influenza preparedness, for example, will require up to three billion doses of vaccine, which is five times the world capacity.” Threats of bioterrorism and emerging diseases like SARS create a related need, for flexibility.
Working through a grant to develop rapid manufacturing for pandemic influenza vaccine, Novavax (Rockville, MD) saw an opportunity to promote virus-like particles, a novel production platform that eliminates the use of infectious agents in vaccines altogether. Merck’s blockbuster vaccine Gardasil employs virus-like particles. Novavax teamed with GE Healthcare on a fully disposable process that provides up to ten times the yield, per production volume, as either cell culture or the more common egg-based flu vaccine manufacture. GE and several other vendors have begun to investigate a vaccine “factory in a box,” based on cell culture technology, that can be more or less drop-shipped to a region in need of such a facility.
Novavax claims a 1000-liter process, housed in a $6-million facility, could produce one million doses of patient-ready vaccine per week, just three months after identifying the pandemic strain. The egg method takes twice as long, at a capital cost of between $200 million and $400 million. Flexible, low-cost facilities would be invaluable during a pandemic since they can be constructed almost anywhere and distribute vaccine locally. Novavax shares rose as much as 360% during the first few days after the swine flu outbreak was announced, but have since fallen by half.
Value-added activities not uniformly successful
Novel vaccine delivery, “adjuvanting,” and combining two or more antigens in a single product are recognized strategies for enhancing a vaccine’s medical and economic value, but results have been mixed.
Compliance and single administration are factors behind the success of combination vaccines like the DPT (diphtheria-pertussis-tetanus) vaccines that have been available for many years. Sanofi-Pasteur’s Pentacel pediatric vaccine, approved in 2008 in the United States, protects against five agents: DPT plus polio and Haemophilus influenza type b.
Vaccine delivery has provided some interesting benefits as well. MedImmune’s FluMist intranasal influenza vaccine quells patients’ fears of injections and serendipitously reduces the incidence of flu from about 10% to 5% in children, compared with injected vaccine. George Kemble, PhD, GM for vaccines for Medimmune, attributes this benefit to the unique activity of live, attenuated viruses in flu-naïve patients.
Medimmune, since 2007 the biologics unit of AstraZeneca, has worked hard to improve Flumist. The only flu vaccine not administered by injection, Flumist was approximately thirty years in development, two-thirds of that time in an academic setting. Last year Medimmune obtained approval for a “high temperature” version which can be stored in a refrigerator (vs. a freezer), which greatly reduces storage and handling burdens.
Yet FluMist has failed to penetrate the market to the degree it should have. Similarly patches, microneedles, pulmonary delivery, and needle-free injection are exciting developments but none have gained significant traction. To succeed, developers will need to demonstrate unique benefits (compared with injection) that overcome prescriber resistance and suspicions, even from needle-wary consumers.
Adjuvants – immune-stimulating substances added to vaccine formulations or chemically attached to the antigen, are another strategy for adding value to vaccines. Despite the fact that alum – a simple compound of aluminum – is the only adjuvant approved in the United States, adjuvants continue to enthrall vaccine developers. Dr. Rappuoli of Novartis claims his company has an adjuvant in development which, when combined with a vaccine against “H1” influenza, will confer permanent immunity to all similar strains of flu. H1 strains predominated in 2003 and 2004. Both the 1918 global pandemic strain, and the swine flu outbreak of 2009 involve H1-type virus. As exciting as this adjuvant may appear in laboratory studies U.S. regulators examine immune stimulants very closely.
A work-around to improve immune-stimulation without inventing or adding anything to the vaccine cocktail is to make the antigens themselves more immunogenic. Companies like GlycoVaxyn (Geneva, Switzerland) build in immunostimulation by inducing bacteria to incorporate specific types of sugars on their antigens. This strategy is unlikely to reassure regulators, however, since the wrong type of glycosylation, as the sugar-adding process is called, can cause severe immune responses and represents a major controversy in establishing a legal-regulatory framework for biosimilars (biological “generics”).
Despite technologic and regulatory hurdles vaccines will remain at the cutting edge of medicine for many years. Vaccines stand out as arguably the greatest benefactors of breakthroughs in genetics and protein research that have revolutionized biology, a fact not unnoticed by drug companies. “All of big pharma want to be in vaccines,” notes Rino Rappuoli of Novartis.
Yet with pharmaceutical sales dwarfing those of vaccines it is easy to overlook the adage about “an ounce of prevention” which is, after all, what vaccines provide. “Vaccines have become a growth area because patients and payers see prevention as more cost-effective than treatment,” observes Michel DeWilde, PhD, SVP for R&D at Sanofi Pasteur (Swiftwater, PA). Dr. DeWilde cited the emergence of antibiotic-resistant bacteria, which cause tends of thousands of deaths per year in the United States. “However, the difficulty of the targets that remain in vaccines is underestimated. The low hanging fruit is gone.” PC
Although the current number of actual vaccine manufacturers in the United States is small, the recent acceleration of R&D efforts for new vaccines suggests that in the coming decade we may witness the launch not only of new companies, but of many new vaccines. Whether these new products will succumb to the same market, regulatory, and public-sector forces that heretofore have contributed to the pattern of
dominance in many fragile vaccine markets, eventually resulting in only or two suppliers, or whether we have now finally reached and gone beyond a turning point, remains to be seen.
– From “U.S. Markets for Vaccines,” E.R. Berendt, R.N. Denoncourt, A.C. Warner,
published by AEI Press, Washington, DC, 2009.