Vaccines are a proven and cost-effective preventative therapy for numerous disabling and fatal diseases, producing significant
public health gains that generate tens of billions of dollars in health system savings each year. Only recently, however,
have vaccine producers experienced the commercial returns commensurate with this long record of positive public health performance.
Vaccines are now the industry standout in delivering high rates of revenue growth, with double-digit increases of 10% to 15%
annually, which are expected to continue for the next several years, significantly outpacing the 6% to 7% growth rate we see
in traditional pharma.
The sector's improving prospects are driven by a surge of innovation in the underlying science of disease prevention as well
as the increasing importance that national health systems attach to vaccines as their primary tool in the fight against communicable
disease. These factors are driving change across manufacturers and their products as well as with markets and key customers.
In the era of patent cliffs and shrinking pipelines, the high rates of post-Phase III R&D success in vaccines combined with
a long product life cycle—often extending well beyond patent expiry—has forced the broader industry to look at vaccines anew.
Nevertheless, companies seeking to benefit from this growth must adapt to a fast-evolving environment that includes lengthy
clinical development timeframes, large investments in complex manufacturing platforms, and an often politicized price and
reimbursement structure that demands significant attention to building relationships with numerous external stakeholders.
Key growth factors
There is significant untapped potential in the preventive vaccines market. Unmet needs remain since many diseases still have
low immunization rates or no available vaccine. Financial analysts have projected the market to reach $39 billion in 2015.
The World Health Organization (WHO) expects the global market to soar to $100 billion by 2025, with 120 new products flowing
from company pipelines over the next decade.
A range of factors are driving this growth. Our experience in the industry has highlighted three: an increase in awareness
of infectious diseases, changes in the global reimbursement landscape, and higher prices for new vaccines.
Increased awareness of infectious and communicative diseases: National governments are the dominant customer globally and play a substantial role in purchasing, enforcing safety regulations,
and influencing uptake. Over the past decade, governments and supranational organizations have expressed growing concern over
public awareness of infectious disease prevention, dedicating substantial investment in mass immunizations and outreach programs
in efforts that translate into opportunity for manufacturers.
Global outbreaks of vaccine-preventable diseases have driven much of the growth in public awareness. Seasonal influenza outbreaks
like the H1N1 strain have claimed many thousands of lives and taken enormous tolls on national health expenditure. Growing
awareness provides the impetus for governments to invest in programs aimed at preventing onset of future outbreaks. These
programs supply funding for mass immunization programs, which play an instrumental role in elevating uptake. The WHO, for
instance, now supports campaigns that provide not only funding but bottom-up infrastructural support, through numerous public
outreach programs for vaccination, including sponsorship of the annual World Immunization Week.
Recent examples of how outbreaks can impact awareness and government policy are the meningococcal B (MenB) outbreaks, which
led to meningitis cases and at least one death on a handful of US college campuses. In response, the US CDC and FDA made Novartis'
Bexsero vaccine available for use with limited populations despite the product not being broadly licensed for use in the US.
In addition, Bexsero and Pfizer's rLP2086 recently received "breakthrough" designation from the FDA, making these two products
eligible for accelerated review. We anticipate an updated Advisory Committee on Immunization Practices (ACIP) recommendation
for MenB vaccine use. Such a recommendation is expected to compel most payers to cover the product for eligible populations.
Non-profit and non-governmental organizations, such as the Gates Foundation, the Clinton Health Access Initiative, Global
Alliance for Vaccines and Immunization (GAVI), as well as many others are increasingly influential as brokers in the negotiation
of vaccine purchasing for ministries of health for developing nations and/or as advocates for vaccine use. Each of these
groups are receiving more philanthropic support. They also provide access to medications in emerging and developing markets,
prioritize vaccination on public health agendas, and help shape national immunization program strategies on coverage, pricing,