EP Vantage interview – Major vaccines player takes a leaf out of pharma’s book
Jean-Paul Kress, the president of Sanofi Pasteur MSD, insists that vaccines have it far better than pharmaceuticals – at least in Europe. And he should know: until being appointed to head up the venture two years ago Dr Kress had been a lifelong pharma man.
“The beauty is that there are no patent cliffs,” he tells EP Vantage. “So the problem isn’t generics but commoditisation.” Facing such pressure to innovate, it is probably no coincidence that Sanofi Pasteur MSD, a venture between the world’s two biggest vaccines players, looked to pharma for leadership.
Mr Kress does not entirely buy into the suggestion that his appointment reflected the changing face of the vaccines sector, but agrees that the industry has recently become much more entrepreneurial. Not long ago vaccines were a niche, low-margin business largely focused on government tenders, but they now boast big pharma-style blockbuster brands.
Another link with pharma is the industry players that Mr Kress’s company is up against. “Most of our competition is mixed or blended pharma/vaccines,” he says, referring to companies like GlaxoSmithKline, Novartis and Pfizer. “Glaxo is our natural competitor, although it has a very different business model.”
New to vaccines
“I’m still fresh from pharma and biotech,” Mr Kress admits, and the fact is that when he joined he was a newcomer to the world of vaccines, having previously worked at Gilead Sciences, Abbott Laboratories and Eli Lilly. It is also noteworthy that neither of his two key senior management hires is a pure vaccines specialist.
But despite Glaxo gaining fast on Sanofi Pasteur MSD, Mr Kress is quick to point to his company’s key strength. The business is a 50/50 joint venture between Sanofi and Merck & Co – “we’re fully vaccines and fully Europe” – which effectively gives it access to two pipelines that the parent companies funnel through the venture.
At a time when some of the biggest players are facing distracting questions as to whether their vaccines divisions ought to be spun out, “no such pressure exists for Sanofi Pasteur MSD”. On the other hand, any acquisitions have to get the sign-off from the parent companies, which might constrain the venture’s deal-making ability.
And M&A is certainly something Mr Kress wants to do; having first had to fix what he refers to as some internal issues, he has now tasked his head of business development specifically with seeking out opportunities, citing partnerships based on a geographical split as one possibility.
Bidding for a pipeline
Still, thanks to the parent companies’ pipelines the venture is unlikely to run short of products any time soon. Mr Kress explains that what Sanofi Pasteur MSD does is focus on near-term launch opportunities, but its “long-term pipeline” belongs to the parent companies, and is not yet formally held by the venture.
“We bid for the parents’ projects, usually at the end of phase II, and we have to decide whether a product makes sense for the European market.”
Among the projects in this potential pipeline Mr Kress highlights Sanofi’s Clostridium difficile vaccine ACAM-Cdiff, and says this is the subject of an internal discussion over how it might be commercialised by the venture. On the other hand, Sanofi’s HIV vaccine is not considered a European prospect.
As for the joint venture itself Mr Kress highlights Sanofi Pasteur MSD’s two European launches of 2013: the shingles vaccine Zostavax, now available in the UK, and the six-in-one paediatric jab Hexyon launched in Germany in July. Hexyon is the venture’s brand name for Sanofi’s Hexaxim, and in some countries will replace the pentavalent vaccine.
Meanwhile, the Gardasil follow-on V503 is a “great element of the pipeline”. This jab protects girls against nine HPV strains versus Gardasil’s four, and should thus boost protection from 70% to 87% (Event – Merck gears up for Gardasil successor, June 21, 2013).
A 15,000-patient pivotal study against Gardasil to test whether V503 increases protection will provide the first phase III evidence of the new jab’s efficacy. Mr Kress confirmed that this trial’s results would be presented at a scientific meeting this year, but would not specify which one.
Interestingly, ACAM-Cdiff had come to Sanofi through its 2008 acquisition of the tiny UK vaccines specialist Acambis, but such opportunities are fairly uncommon because of the scarcity of small players.
This is largely the result of the complexity of manufacturing, which tends to be the domain of major players. On the other hand, a niche vaccines delivery technology business could provide a promising M&A opportunity, though there have been some notable failures in this field.
“My hope is that we can be the partner of choice in Europe,” says Mr Kress.
In any case it is the parent companies that would be best placed to assess novel technology assets, since it is they that deal with the early-stage R&D. In other words, this is another area in which Sanofi Pasteur MSD could benefit indirectly while focusing on the immediate market opportunity.