November 1, 2011 (Vol. 31, No. 19)

Emerging Countries Are Outperforming U.S., Racking Up Double-Digit Growth

Double-digit growth can’t last forever in any category, and it is likely that vaccines will prove to be no exception. Vaccines will grow and will continue to be a major focus of pharmaceutical concerns, but they will grow at a tamer pace.

Kalorama Information’s previous reporting on vaccines demonstrated a compound annual average of 21% growth in revenue between 2006 and 2010. The increased revenues, especially where compared to other pharmaceutical products, has bolstered pharmaceutical R&D efforts. Growth will be fueled by these new product introductions and rising usage, particularly in South America, Europe, India, and China.

While the United States will see increased vaccine sales, enlarged demand and improving economies in other nations will drive vaccine companies such as Sanofi Pasteur, GlaxoSmithKline, Merck & Co., Pfizer, and Novartis to seek faster revenue growth outside the United States.

Pediatric Vaccines

At least two million children die each year from diseases that could have been prevented by already existing vaccines. This problem is most significant in low income countries, with the health disparity between rich and poor countries resulting in average life spans of 77 and 52 years, respectively. In addition to this high death toll, millions more suffer disability and illness because they have not been immunized.

In the U.S., disease prevention by immunization is a public health priority for both pediatricians and society as a whole. Comprehensive and timely immunization of young children has been a major goal of pediatric healthcare, as evidenced by the first American Academy of Pediatrics (AAP) policy statement on immunization in 1977, which called for universal childhood immunization.

Many of the recommendations in AAP’s policy statement have been achieved, including the improvement of immunization financing through the Vaccines for Children Program, production of parent-friendly vaccine information statements, promotion of the Standards for Child and Adolescent Immunization Practices, and development of safer and combined vaccines.

Wide discrepancies remain from region to region, however. In 2009, almost 30 million infants worldwide had not been vaccinated against DPT3, with 75% of those living in India, China, Nigeria, Indonesia, Pakistan, Ethiopia, Congo, Sudan, Bangladesh, and the Philippines.

Adult Vaccines

Adult immunization is an important but frequently overlooked part of patient care. Vaccination programs typically focus on children, yet adults in industrialized countries are more likely to die as a result of vaccine-preventable diseases than are children. Vaccination protects not only individuals, but also entire communities from diseases spread by person-to-person transmission.

For example, vaccination can prevent about 50% of deaths from pneumococcal disease and 80% of deaths from influenza-related complications in the elderly. Pharmacoeconomic studies have demonstrated the value of influenza and pneumococcal vaccines; however, immunization rates for these diseases continue to be low in the elderly populations.

One particularly important recent development is the introduction of a vaccine to protect against a new strain of H1N1 flu virus known as swine flu. In 2009, the WHO instituted a phase V alert, indicating that the virus had spread into at least two countries and was causing larger outbreaks. This represented the first time the WHO classified a virus as phase V on its six-phase pandemic classification schedule.

Several developers have since introduced vaccines that protect against H1N1, and GlaxoSmithKline launched pandemic and prepandemic vaccine products. This contributed to the strong growth of influenza vaccines during 2009.

World Market

In 2010, the world market for preventive vaccines totaled $25.3 billion, up from $21.7 billion in 2009. The world vaccines market is predicted to increase at a compound annual rate of 9.3% during 2010–2015, reaching $39.5 billion in 2015 as new product introductions continue and usage of current products expands further.

Sales of adult vaccines are expected to continue to increase at a faster rate than pediatric vaccines over the forecast period of this report, at 10.3% and 8.4% per year, respectively. Pediatric vaccines constitute the larger market, accounting for 50.4% of the total vaccines market in 2010 (Figure). As influenza vaccines continue to expand, however, adult vaccines will gain share, increasing their position from 49.6% in 2010 to 51.7% in 2015.

On a regional basis, the United States was the single largest market for pediatric and adult vaccines combined, accounting for 34.6% of the overall market in 2010. From 2006 to 2010, the U.S. slightly underperformed the overall market, expanding by 21.0% per year compared with 21.4% per year. Annual growth through 2015 will lag even more, at 8.2%, while in other markets, such as South America, Europe, India, China, and the rest of world, growth will be in double digits.

Although India is home to more than 17% of the world’s population, it accounted for just 6.4% of global vaccine sales in 2010 due to a high poverty rate and relatively low healthcare spending. However, the country is rapidly modernizing and its gross domestic product is among the highest in the world. As a result, it will continue to experience market-beating growth in vaccine sales as its healthcare infrastructure improves and government continues to work toward eradicating several serious diseases such as polio.

Furthermore, India’s rapidly expanding pharmaceutical and biotechnology industries will supply many of the products used in the future, particularly as foreign investment from leading vaccine producers, such as Sanofi Pasteur, increases. As this occurs, vaccine sales will rise by 11.0% per year, from $1.8 billion in 2010 to $2.7 billion in 2015.

China similarly accounts for just 7.4% of the global vaccine market, although it represents over 19% of the world’s population. Even more so than India, China is committed to expanding its economy and has instituted many important measures and programs to advance this objective.

Most recently, the country hosted the 2010 Summer Olympic Games as well as the 2010 World Expo. These two events contributed to massive infrastructure buildouts across the country and particularly around Shanghai as broad networks of highways, hotels, utility providers, and other key resources were either upgraded or established from scratch. Within the vaccine industry, several leading global manufacturers including GlaxoSmithKline and Novartis are expanding their positions in China.

As in the 2006 to 2010 period, China’s vaccine sales growth will outpace that of the market in 2010 to 2015. Sales of $1.8 billion in 2010 will rise by 10.8% per year to reach $3.1 billion in 2015.

South America currently accounts for 6.7% of the world vaccine market and as in the past, future growth will continue to outpace market growth as relatively low vaccine penetration in many countries continues to rise. Furthermore, many serious illnesses such as yellow fever remain endemic throughout the area. As this occurs, sales will rise by 10.0% per year from $1.7 billion in 2010 to $2.7 billion in 2015.

As these areas grow both in their need and the ability and willingness of the healthcare systems to pay, further growth in vaccine sales is expected. These emerging markets are just one factor in the overall vaccine sales growth expected, but it is a significant one.

Bruce Carlson ([email protected]) is publisher at Kalorama Information.

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