Naveen Kumar

VACCINE INDUSTRY : PRESENT AND FUTURE

Flow of PresentationIntroductionVaccine Industry: An OverviewGrowth DriversChallenges and IssuesSWOTCompany watchFuture PerspectiveFurther Developmentsconclusion

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INTRODUCTION

Every year 3 million deaths are prevented and 750,000 children are saved from disability by vaccines(WHO)

Why do we need vaccine?

Common communicable diseases

Geographic variation in disease spread

Every 1$ invested in childhood vaccine save 18$

Increased life expectancy to economic growth

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VACCINES

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“A vaccine is any preparation intended to produce immunity to a disease by stimulating the production of antibodies. Vaccines include, for example, suspensions of killed or attenuated microorganisms, or products or derivatives of microorganisms.”- WHO.

Vaccines vs Pharmaceuticals

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Reg

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Man

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Sal

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Vaccines Pharmaceuticals

Focus on prevention – not patients, but healthy subjectsKey role for the government agencies Very low acceptance of side effects

Focus on treatment – patient is generally sick Key role for healthcare players Acceptance of side effects varies by severity of disease

High manufacturing and supply chain complexity (Cold Chain Management, complex biological processes)

Medium manufacturing and supply chain complexity (Easier to handle chemical synthesis in most cases)

Small Major sales through government Very few generic products (Due to manufacturing complexity)

Massive sales force commitmentSales through physician as prescriberIncreasing generic threat

A Typical Cold Chain

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Problems in supply chain

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Tight price competitionDamage to vaccines during transportation -

Storage problemsDue to less financial incentive from govt. to

manufacturers – insufficient doses Demand uncertaintyManufacturing interruptions - required to

maintain cGMP standards so high product rejection rate - supply can be impacted

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Vaccine MRP, in `, 2008 (A)

Price offered to physicians, in ` (B)

Discount in `(A-B)

Percentage Margin of profit for the physician (A-B)*100/ B

Pentaxim 2066 1446 620 42.9

Imovax Polio 365 280 85 30.4

Tripacel 1211 762 449 58.9

Okavax 1468 986 482 48.9

Avaxim 80 952 665 287 43.2

TetractHib 504 305 199 65.2

ActHib 426 251 175 69.7

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GLOBAL VACCINE INDUSTRY

STAGES OF VACCINE DEVELOPMENT

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Total time of development 12 - 15 years(Total Investment US$ 500mn – 1bn)

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76 US-FDA approved vaccinesThere are now 145 pure vaccines and 11

combination vaccines in clinical developmentFive major players–GlaxoSmithKline, Merck,

Sanofi-Aventis, Pfizer and Novartis Vaccines approved by FDA in 2010 :

Provenge, Prevnar 13, and Menveo

Vaccine segments

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Human vaccines

Pediatrics Adolescents

Adults Elderly

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2007 2008 2009 20100

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Global vaccine sales($ billion)

Major markets

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Country Sales, 2008($ mn)

Market share2008(%)

US 4741 42.7

Germany 1755 15.8

Japan 911 8.2

France 835 7.5

Italy 303 2.7

Spain 198 1.8

UK 176 1.6

Source : Business insights, 2008

Global vaccine leaders(2010)

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Company Sales($ billion)

GSK 6.50

SA 5.14

Pfizer 3.7

Merck 3.5

Novartis 2.9

SP-MSD 1.2

Source : Global Vaccine Market 2010 , Krishan Maggon

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GSK23%

SA18%Pfizer

13%Merck12%

Novartis10%

SP-MSD4%

Others21%

Global vaccine leaders

Top vaccines

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Brand name Company Sales($ billion) 2010

Prevnar(13) Pfizer 3.6

Fluarix GSK 1.85

Fluzone SAP 1.75

Gardasil Merck 1.35

IPOL SAP 1.33

Source : Global Vaccine Market 2010 , Krishan Maggon

Managing the product life cycle

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Factor New Product Launch

Market Penetration

Product Maturity

Number of producers

One Multiple, industrializedcountries

High, industrialized anddeveloping country

Capacity Low High Potential surplus

Market Low High, industrialized

High, all markets

Cost High Medium Low

Prices High uniform Tiered and high average

Tiered and low average

Overview of major vaccine related acquisitions

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Target Company

Acquiring Company

Investment Made

Date Announced

Wyeth Pfizer $68 bn Jan 2009

MedImmune AstraZenecea $15.6 bn April 2007

Chiron Novartis $5.1 bn Oct 2005

Crucell Johnson & Johnson

$2.6 bn Sep 2009

ID Biomedical GSK $1.4 bn Sep 2005

Shantha Biotechnics

Sanofi Aventis $781 mn July 2009

Acambis Sanofi Aventis $549 mn July 2008

Intercell Novartis $363 mn July 2007

Corixa GSK $300 mn May 2005

PowderMed Pfizer $230 mn Oct 2006

Coley Pfizer $214 mn Nov 2007Source: VacZine Analytics

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2010 2015(F)

Sales (millions) $67791 $64532

Research & Development

$9338 $7212

Net Income $17983 $17430

EPS $2.23 $3.00

Top product Lipitor ($10773) Prevnar($5624)

Source: Forbes

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INDIAN SCENARIO

The Indian Market for Vaccines

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Indian market : US$ 524 millionVaccine industry will continue to grow at a CAGR

in the range of 10-13% over the next 10 years to reach a size of between US$1.4 billion and US$1.8 billion by 2020

India produces about 40-70% of the WHO demand for DPT and BCG, and almost 90% of the demand for measles

The largest vaccine producer in India is the Serum Institute of India, it is the world’s largest producer of measles and DPT vaccines

The Indian Market for Vaccines

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Domestic, 238

Export, 179

An-imal vaccines,

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Source: Biospectrum (June 2010)Figures in US$ mn

Increased vaccine sales in 2009-10

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Major players

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MNCs

•GSK•Sanofi Pasteur•Novartis•Wyeth•Merck

Local manufacturers

•Serum institute of India

•Shantha Biotechnics•Bharat Biotech•Panacea Biotech•Bio-Med

Company watch : GSK

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Market share 28%10% of total sales24% growth vs 2009

Vaccine India launch

Rotarix 2008

Cervarix 2009

Infanrix Hexa 2009

Synflorix 2010

Vaccines currently under development by Indian companies

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Vaccine Company Status of development

Rotavirus vaccine Bharat Biotech Phase 3

Rotavirus vaccine Shantha Biotechnics Phase 2

Cadi-05 Cadila Phase 3

Malaria vaccine Bharat Biotech Phase 1

H1N1 influenza (Swine flu) vaccine

Bharat Biotech, Panacea Biotech, SII

Phase 2/3

Conjugated typhoid vaccine

Bharat Biotech Phase 3

Source : Biospectrum, April 2010

Trends in vaccine industry

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Major players looking to develop flu vaccines

Vaccines

Source: PwC

Vaccine Market Drivers

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Breakthroughs with new products to address unmet medical needs

Contingency planning for pandemic infections�Growing income in the developing world marketsThreat from bioterrorismPotential for therapeutic vaccinesContinued interest and investment from major pharma

playersEducation and awareness about disease preventionParticipation by government in terms if improving

PSUs and investment

Challenges for the Indian vaccine market

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Failing realization for mass vaccination(Hepatitis B)FundingHigh maintenanceSlow regulatory approvalDependence on government

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SWOT ANALYSIS

Strengths

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Prevent diseaseVaccines are widely available and programs

have reduced cost as a barrier to vaccination Vaccines Will Not Face Significant Generic

Competition

Weaknesses

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Vaccine Research and Development is Lengthy and Expensive

Less awareness Vaccine Manufacturing : High costHigh maintenance productsRegulatory approvals Funding to new enterprises

Opportunities

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Vaccines for Diseases Currently Without a Vaccine

Improved Vaccines for Partially Vaccine-Preventable Diseases

Global recognition of the benefits of immunization

Combination vaccines – way ahead

Threats

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Only strong players so intense competitionDomestic Indian companies depend on

government procurement to push volumesGestation period is longAgeing of their product basketVaccine Distribution NetworksThe Anti-Vaccine Movement

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FUTURE PERSPECTIVE

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Future vaccines

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Vaccine Estimated annual burden of disease

At risk population

Dengue 10,000-20,000 deaths 500,000 severe cases

2.5 billion people are at risk, with a strong trend upwards

Malaria 1.1 to 2.7 million deaths, 300-500 million cases

2 billion people in endemic regionschildren under 5

Tuberculosis 1.6 million deaths; 8 million cases

Endemic regions including Africa, Asia and S. America.Individuals infected with Multidrug resistant TB

HIV/AIDS Almost 3 million deaths; 38-42 million cases

High risk groups Continent of Africa

And more…

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DiabetesCancerSmoking Obesity AsthmaAllergy HTN

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FURTHER DEVELOPMENTS

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To increase and prolong the immune response to the vaccine antigen

Adjuvant and conjugate vaccines may help to increase vaccine efficacy in the elderly population

• Substances that helps vaccine to produce a stronger immune response

• Faster response

• Broad immunity

• Conjugation of sugar molecules present on bacteria to a strong immunogenic carrier protein

• Can stimulate cell mediated long lasting memory

Adjuvants Conjugate vaccines

DNA vaccine

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Advantages

Technique • Injection of DNA encoding the antigen

• Involves transfection of DNA plasmid containing antigen coded gene into target cells which results in immune response

Ease of manipulation

Simple manufacturing

More stable

Targetting a specific organ

Conclusion

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Vaccine industry has been proved to be one of the fastest growing sectors of the past decade and is forecasted to do so in future also

Driven by novel, high-price vaccines, the 7MM’s paediatric and adolescent vaccines market will almost quadruple in size by 2016

Due to ageing populations, the emergence of new technologies and the increasing awareness for vaccine-preventable diseases, adults and the elderly are coming into focus as an attractive target population for future vaccine development

Advancement in the molecular biology and vaccine delivery systems will be the key for further development of this industry

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