Therapeutic focus - vaccines set for rapid growth

Analysis

In stark contrast to the regulatory delays increasingly affecting conventional new drug applications, the review and approval of vaccines by the FDA appears less fraught. This week alone the FDA approved two new paediatric vaccines: Sanofi-Aventis’ Pentacel and GlaxoSmithKline’s Kinrix, both combination vaccines against multiple childhood diseases.

For many years not considered a particularly trendy or revenue generating therapeutic area, vaccines is now a hot segment of the industry. According to analyst consensus forecasts from EvaluatePharma, the vaccines market is set to be the fastest growing therapeutic area over the next five years, with an annual growth rate of 14% even superior to oncology’s 11% growth, generating $35.1bn in sales by 2012.
 

  WW Rx & OTC Sales by Therapy Area - top 15 categories WW sales ($m) CAGR (07 - 12) Market Share
    2007 2012   2007 2012
1 Oncology 43,750 73,400 11%   7.4% 9.4%
2 Anti-hypertensives 40,268 39,157 (1%) 6.8% 5.0%
3 Anti-rheumatics 21,781 38,761 12% 3.7% 5.0%
4 Anti-diabetics 22,214 36,675 11% 3.7% 4.7%
5 Vaccines 18,456 35,087 14% 3.1% 4.5%
6 Bronchodilators 26,858 32,812 4% 4.5% 4.2%
7 Anti-virals 19,359 25,725 6% 3.3% 3.3%
8 Anti-hyperlipidaemics  28,780 23,868 (4%) 4.8% 3.1%
9 Anti-bacterials 16,272 16,862 1% 2.7% 2.2%
10  Anti-psychotics 17,865 14,634 (4%) 3.0% 1.9%
11 Antacids and Anti-ulcerants 20,250 14,390 (7%) 3.4% 1.8%
12 Bone calcium regulators 10,863 13,883 5% 1.8% 1.8%
13 Dermatologicals 9,587 13,387 7% 1.6% 1.7%
14 Sensory Organs 10,283 13,326 5% 1.7% 1.7%
15 Platelet aggregation inhibitors 10,908 13,070 4% 1.8% 1.7%
  Sum top 15 categories 317,495 405,036 5% 53.5%  52.0%
  Other 276,009 374,278 7%    
  Total WW Rx & OTC Sales 593,503  779,315  6%    

In terms of total sales, oncology remains easily the largest therapeutic area with global revenues a staggering $73.4bn by 2102. However, perhaps surprisingly given the relative lack of analyst and media exposure the vaccine market gets, vaccines rank a very respectable fifth out of all therapeutic categories.

An important contributor to sales growth for this area is the relative lack of expected generic competition over the next five years and even when patents do expire, erosion rates are significantly lower than all the other main categories.

The world’s biggest-selling vaccine by 2012 is set to be Merck & Co / Sanofi-Aventis’ new cervical cancer vaccine Gardasil. With sales of $4.36bn by 2012, three times the revenues GlaxoSmithKline’s rival Cervarix vaccine is expected to make, shows Gardasil the clear winner from what was at one stage a very close race between the two.
 

        WW sales ($m)
Market Status Product Company Pharmacological Class 2007 2012
Marketed Gardasil Merck & Co + Sanofi Pasteur MSD Human papillomavirus (HPV) vaccine 1,957  4,360 
  Prevnar Wyeth Pneumococcal vaccine 2,439 3,447
  Fluzone/Vaxigrip/Mutagrip  Sanofi-Aventis Influenza vaccine 1,050 1,776
  RotaTeq Merck & Co + Sanofi Pasteur MSD Rotavirus vaccine 553 1,765
  Cervarix GlaxoSmithKline Human papillomavirus (HPV) vaccine 20 1,469
           
R&D          
Phase III 13-Valent Pneumococcal Wyeth Pneumococcal vaccine - 556
Filed Synflorix GlaxoSmithKline Streptococcus pneumoniae & Hib vaccine - 492
Phase II Imvamune Bavarian Nordic Smallpox vaccine - 348
Phase III H5N1 Influenza Vaccine Baxter International Influenza vaccine - 100
Pre-clinical Hepatitis B vaccine Akorn Hepatitis B vaccine - 53

Of the vaccines currently in development, Wyeth's 13-Valent Pneumococcal and GlaxoSmithKline's Synflorix look set to extend the impressive vaccine portfolios of these companies.

The overall vaccines market is dominated by three big pharma companies, Sanofi-Aventis, Merck & Co and GlaxoSmithKline, with a combined 73% share of the sector in 2007 and 2012. Sanofi Pasteur MSD is the European joint venture established to sell Sanofi-Aventis' and Merck's vaccines in the region.

Top 10 Companies - Vaccines sales in 2012 WW sales ($m) CAGR (07 - 12) Market Share
  2007 2012   2007 2012
Sanofi-Aventis + 50% of Sanofi Pasteur MSD 4,528 8,915 15% 24.5% 25.4%
Merck & Co + 50% of Sanofi Pasteur MSD 4,998 8,698 12% 27.1% 24.8%
GlaxoSmithKline  3,990 7,951 15% 21.6% 22.7%
Wyeth 2,439 4,003 10% 13.2% 11.4%
Novartis 1,045 2,350 18% 5.7% 6.7%
Baxter International 359 631 12% 1.9% 1.8%
Crucell 238 386 10% 1.3% 1.1%
Solvay 218 380 12% 1.2% 1.1%
Bavarian Nordic 61 348 42% 0.3% 1.0%
AstraZeneca 53 310 42% 0.3% 0.9%
Sum top 15 companies 17,930 33,971   97.2%  96.8%
  Rest of market    526 1,116      
  Total vaccine market 18,456  35,087  14%    

Given the fact the vaccines market is controlled by just a few companies, the massive deal terms often associated with drugs in the main therapeutic categories are not so prevalent.

The biggest headline deal over the last 18 months occured in July last year when Novartis licensed rights to an influenza vaccine, Agrippal- IC31, from Intercell for up to $494m. Roche was involved in the next biggest deal, licensing a new cervical cancer vaccine, TG 4001/R3484, from Transgene for up to $328m in April 2007.

A relative wave of consolidation within the sector occured during 2005 and 2006, the biggest deal being Novartis' acquisition of the remaining 56% of Chiron it did not already own for $5.4bn, marking the Swiss company's entrance to the vaccine market.
 

Year Company Acquired Company No. of vaccines acquired (marketed and pipeline)  Date of Acquisition   Deal value ($m)
 2008   AVANT Immunotherapeutics   Celldex Therapeutics  2  Mar 2008  75
           
 2007  Pfizer  Coley Pharmaceutical   10  Dec 2007  164
   Schering-Plough  Organon BioSciences  5  Nov 2007  15600
   AstraZeneca  MedImmune  16  Jun 2007  15600
   Intercell  Pelias  3  Jan 2007  8.4
           
 2006  Pfizer  PowderMed  6  Dec 2006  ~ 400
   Crucell  SBL Vaccin  12  Nov 2006  50
   Endo Pharmaceuticals  RxKinetix  2  Oct 2006  115
   Dynavax Technologies  Rhein Biotech GmbH  3  Apr 2006  12
   Novartis  Chiron  43  Apr 2006  5400
   Crucell  Berna Biotech  39  Feb 2006  420
           
 2005  GlaxoSmithKline  ID Biomedical  16  Dec 2005  1400
   Celtic Pharma  Xenova  3  Sep 2005  45
   GlaxoSmithKline  Corixa  9  Jul 2005  300
   Emergent BioSolutions  Microscience  5  Jun 2005  26.6

Of the remaining independent vaccine specialists that have not already struck significant licensing deals with bigger partners which would prove a major barrier to an acquisition, Dutch group Crucell, Danish biotech Bavarian Nordic, US specialist Akorn and UK company Acambis appear the most likely candidates to be snapped up if big pharma decides it needs to gain a foothold in this fast growing area.

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