Better access and more predictable pricing: Immunization is attracting more attention on national health agendas; governments, in collaboration with supranational organizations,
have responded by improving or adding vaccine coverage linked to preventive public health interventions. Provisions in the
2010 US Affordable Care Act mandate all health insurance plans to make recommended vaccines available with no out-of-pocket
deductible or co-payment incurred to the patient, a provision that is intended to bring improved prevention coverage for 88
million beneficiaries by 2013.
Other mature markets, including Japan, have increased their emphasis on vaccination as a public health priority. In an effort
to narrow the country's historical "coverage gap," Japan's Ministry of Health, Labor, and Welfare (MHLW) has poured investments
into the vaccines manufacturing and R&D pipelines of Takeda, Astellas, Daiichi Sankyo, and Mitsubishi Tanabe to promote immunizations
against prevalent infectious conditions. The MHLW has provided generous incentives for vaccine manufacturers, funded awareness
programs, and by 2015, aims to include HPV, Hib, pneumococcal, varicella, mumps, and hepatitis B vaccinations as part of the
national immunization program. The Japanese vaccines market has grown at a 28% CAGR from 2006-2011.
Uptake is also heavily driven by improved vaccine coverage and distribution in emerging markets (see chart below). Argentina,
which currently has one of the most comprehensive national immunization programs in Latin America, provides vaccines for free
and has expanded the number of mandatory vaccines from six to 16 over the past ten years. Moreover, Argentina's Ministry of
Health aims to increase the percentage of covered individuals from 80% to 95% and has drafted plans to expand its vaccine
distribution system to ensure universal access. Brazil currently leads Latin American countries in immunization protection,
with 26 products covered under the national immunization program. In China, select provinces and cities have instituted regional
programs for flu and select pediatric vaccines designed to lessen the individual financial burden of vaccines that are not
covered for patients.
Growth is heavily driven by improved coverage and distribution of vaccines in emering markets.
More evidence of the importance of immunization in emerging markets is the increasing activity of local mid-sized manufacturers
and government labs. China's Sinovac, Brazil's Butantan Institute, South Africa's Biovac, Mexico's Birmex, and the Government
of India's Serum Institute are developing newer vaccines, investing in more advanced manufacturing technologies, and experiencing
higher uptake of in-line products. Brazil has made technology transfer a critical part of its overall national vaccine policy
as was seen with Brazil's Ministry of Health agreement to purchase $2.2 billion worth of GSK's Synflorix in return for a gradual
receipt of the technology to independently manufacture the vaccine after the end of the 10-year-long contract. Sanofi has
partnered with Birmex in Mexico and Butantan in Brazil in a tech transfer agreement for its influenza vaccine. Many of the
mid-size institutes have entered into purchasing agreements with supranational organizations such as GAVI, the Bill and Melinda
Gates Foundation, and the Program for Appropriate Technology in Health (PATH).
Strong innovation is reflected in elevated price levels: Part of the sector's growth is derived from the higher prices newer first-in-class products have commanded based on the value
they provide (see chart below). Wyeth launched Prevnar-7 in 2000 at a price that exceeded most other pediatric vaccines combined
while still demonstrating high cost-effectiveness. Merck's Gardasil for human papillomavirus was priced at near $400 upon
launch in 2006. With increased value driven by six additional strains, Pfizer's launched Prevnar-13 at a price of approximately
$513 per course.
Prices for new vaccines are increasing relative to traditionally mandated products.
Even in categories that are crowded with competition, innovation has enabled price differentiation, as evidenced by Sanofi
Pasteur's Fluzone HD, which is targeted at the elderly sub-segment of the overall flu market where unmet need is most pronounced.
While Fluzone HD has not demonstrated greater protection from influenza disease than regular flu vaccines at the time of this
writing, it has demonstrated improved immune response in clinical trials. Significantly, the private list price for Fluzone
HD is more than twice that of multiple standard dose flu products. AstraZeneca's FluMist was recently able to gain a CDC recommendation
at the other end of the age spectrum. The CDC indicated that influenza incidence was markedly lower in the 2- to 8-year-old
age group when vaccinated with a nasally administered vaccine. FluMist also commands a premium price in the market.