June 1, 2008 (Vol. 28, No. 11)
Bruce Carlson Publisher Kalorama Information
Success of Merck’s Gardasil Is Responsible for the Large Increase Seen in this Sector
For much of the 20th century, vaccines were a pharmaceutical success story largely associated with children. Aggressive immunization programs eradicated polio and smallpox in developed nations and nearly eliminated mumps, pertussis, measles, and other diseases. While immunization of the young is still a health priority worldwide and pediatric vaccines an important market, it is now adults who are fueling the growth of vaccine products.
Adults are as likely as children to die from diseases that they can be immunized against. For example, vaccines can prevent about 50% of deaths from pneumococcal disease and 80% of deaths from influenza-related complications in the elderly. Public-policy programs and pharmaceutical industry marketing seem to be finally catching up with this reality.
Kalorama Information estimates that 2007 was the first year that adult vaccine sales overtook pediatric sales, just slightly but significantly nonetheless. Adult vaccines represented 44% of total vaccine sales in 2006. By 2007, sales attributed to adult doses rose to 50.6% of vaccine sales. This surprising development can be attributed to robust sales of a group of influenza vaccines and the success of one product—Merck & Co.’s Gardasil for the HPV virus, which posted sales of $1.5 billion in 2007.
World sales of adult vaccines exceeded $8.2 billion in 2007, increasing 51.0% over 2006 sales of $5.4 billion. Sales of adult vaccines are projected to increase at a compound annual rate of 12.0% from 2008 to 2013 and reach $17.6 billion in 2013.
Last year’s result could be written off as a one-time occurrence explained by the higher cost of adult vaccines (Gardasil carries an estimated price tag of $300–$500), and indeed adult vaccines are not expected to maintain the leadership position as competition and volume reduce adult vaccine prices. Yet the sudden show of strength by the adult segment portends a future where the segments will roughly equal out.
The success of Gardasil and adult influenza vaccines has not only shaken up the market place—vaulting Merck from an estimated fourth place to a leadership role in the vaccine market in two years—but it has also created a tremendous opportunity for vaccine marketing. It is likely that the pharmaceutical industry will look to new adult vaccines for the next blockbuster drug. This may result in products in disease areas that were not treated by vaccines in the past.
In 2007, the world market for preventive vaccines totaled $16.3 billion, up more than 38% from $11.7 billion in 2006. The market is predicted to increase at a compound annual rate of 13.1% during 2008. This growth rate is unheard of in other drug categories, especially since this is expected to be a challenging year for the pharmaceutical industry. Few other drug categories will see as many new product introductions and such public-policy attention.
The world vaccines market is dominated by five companies: Merck & Co., GlaxoSmithKline, Sanofi Pasteur, Wyeth, and Novartis. The four largest firms, whose reported vaccine sales exceeded $2 billion each in 2007, held a combined 91.5% of the market.
In 2007, Merck was the leading competitor with 26.2% market share, followed closely by Sanofi Pasteur with 25.9% and GlaxoSmithKline with 24.2%. Wyeth followed at a distance with 15.2%, while Novartis held at 5.8%. In 2007, Novartis reported strong growth in its new vaccines and diagnostics division, with total sales of almost $1.5 billion on expanded usage of vaccines for tick-borne encephalitis, seasonal influenza, and pediatric immunizations.
While adult vaccine revenues have grown more dramatically, there has been no letdown in sales of pediatric vaccines. Increased vaccination and new products will continue to drive growth in this category.
Global vaccination rates will continue to rise, but wide discrepancies will remain from region to region. In 2007, 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.
In 2007, global sales of pediatric vaccines exceeded $8.0 billion, an increase of 25.2% over 2006 sales of $6.3 billion. This high growth was due in part to continued heavy gains of Wyeth’s pneumococcal vaccine, Prevnar during the year, as well as the introduction of Merck’s, RotaTeq.
From 2007 to 2012, sales of Prevnar are expected to follow a more moderate growth rate, although new pneumococcal vaccines will be introduced that could stimulate further gains. This will result in an overall market expansion of 14.2% per year from 2008 to 2013, with total sales reaching $18.8 billion at the end of the forecast period.