The Return of Vaccines

Last December, as the flu season approached, Wyeth Pharmaceuticals' influenza vaccine plant in rural Lancaster County, Pa., stood abandoned.

By | November 21, 2005

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Last December, as the flu season approached, Wyeth Pharmaceuticals' influenza vaccine plant in rural Lancaster County, Pa., stood abandoned. The site had produced vaccines since 1882, but after suffering four money-losing years, Wyeth pulled out of the flu business in 2003. Contrast that with this year: The plant has a new owner, rival drug maker GlaxoSmithKline (GSK), which along with other large pharmaceutical firms is increasing its stake in vaccines. By 2010, the British drug maker expects to open a new cutting-edge vaccine plant in Marietta, Pa., using tissue-based technology.

Until recently, liability problems, manufacturing difficulties, and low reimbursement rates had combined to drive dozens of vaccine-makers in the United States and Europe out of the business. In 1967, there were 26 vaccine manufacturers in the US market, but by 2002 there were only 12, according to a study in Health Affairs.1 "Twenty or 25 years ago, there were multiple vaccine producers, and then things started going into a very, very dry spell. By the 1990s you witnessed a lot of producers walking out of vaccines," says Adel A.F. Mahmoud, chief medical advisor for vaccines and infectious diseases at Merck. "In this new century we are getting a lot more interest."

Concern about an avian flu pandemic and flu shot shortages last year, along with the development of new vaccines – including products that attack meningitis and cervical cancer – are drawing big pharmaceutical companies' attention back to vaccines after decades of retrenchment. GSK isn't the only large company after a bigger slice of the vaccine market: Novartis, Merck, and even Wyeth are spending hundreds of millions of dollars on companies and product lines. "Vaccines are hot, that's for sure. There is a huge interest in them now," says Philippe Monteyne, vice president of worldwide operations for GSK's cervical cancer vaccine, Cervarix.

MOVES MAY MEAN MORE JOBS

In addition to buying Wyeth's plant, GSK is beefing up its vaccine business with the acquisition of Corixa, a Seattle-based immunology company, and a $1.4 billion bid for Canadian flu vaccine-maker ID Biomedical. Novartis will enter the growing vaccines market with its recent $5.1 billion takeover offer to California-based Chiron, the second-largest US vaccine maker, which experienced grave production problems with its flu vaccine last year at its British production facility. Sanofi Pasteur, the world's largest vaccine maker, has won a $100 million US government contract to stockpile an investigational avian flu vaccine and is doubling capacity at its vaccine plant in Pennsylvania. And Merck plans to seek Food and Drug Administration approval for a new vaccine to block cervical cancer.

Wyeth is also revving up vaccines. This year the company opened a $2 billion biotech research and manufacturing facility in Ireland, where a third of the production capacity will be dedicated to vaccines. Wyeth and other drug makers are encouraged by the success of its pneumococcal vaccine for children, Prevnar, which commands $50 a dose compared with older vaccines that cost $10 per dose.

While vaccines remain a small part of the overall drug market, just $9 billion in sales compared to global pharmaceutical sales of $550 billion, they make up a fast-growing segment, increasing 26% between 1999 and 2003, according to Datamonitor. New vaccine technology and expanding markets, along with a dearth of drugs coming through the pharmaceutical industry's pipeline, have made the business more attractive to big pharmaceutical companies. "Pipelines are the biggest concern the pharmaceutical companies have and vaccines may be part of that solution," says Wayne Pisano, executive vice president of commercial operations in North America for Sanofi Pasteur. "We can't carry the pharma business," he adds, noting vaccines make up only 8% of Sanofi-Aventis' sales, "but we can help."

Monteyne believes large pharmaceutical makers are attracted to vaccines because they can't be easily replaced by generics and they provide a long-term income stream. The large capital investment needed to manufacture vaccines also makes it difficult for competitors to jump into the market. And vaccine development is more predictable than other drugs, allowing companies to smooth out product development cycles, he says.

New investment in vaccines is expected to generate demand for immunologists and molecular biologists. Scientists with manufacturing expertise also will be needed to scale up production and churn out millions of doses of vaccines to protect entire populations. GSK plans to add 270 jobs to its vaccine plant in Marietta, Ga., during the next few years. And, says Pisano of Sanofi Pasteur, "We have and will continue to add scientists in research and development and industrial operations to keep pace with both our growing production and R&D portfolio."

GOVERNMENT URGES PRODUCTION

Keeping pace with the government's vaccine-stockpile needs will be another important task. As more and more companies pulled out of the vaccine business, shortages began to arise, drawing new attention from health officials. Last year's flu shortage and new concerns about the possibility of a bird flu pandemic have added new urgency to initiatives to finance research and production. President George W. Bush has proposed a $7.1 billion program to combat an avian flu pandemic that would provide $1.2 billion to buy enough doses of the vaccine against the current strain of bird flu to protect 20 million Americans and $1 billion to stockpile antiviral drugs that lessen flu symptoms. The proposal also sets aside $2.8 billion to speed development of vaccines to protect against new flu strains.

Chiron became the second vaccine maker after Sanofi-Aventis to receive federal government contracts for its avian flu vaccine with a $62.5 million agreement to produce its version of an avian flu vaccine, which preliminary US tests indicate give stronger protection and could help stretch lean supplies of vaccine. Meanwhile, GSK has announced it, too, is planning clinical trials of a human vaccine against the H5N1 flu strain.

Sanofi-Aventis has 55% of the world's capacity to manufacture flu vaccine, or about 160 million doses, according to analysts at the French investment firm Natexis Bleichroeder. In addition to paying $100 million to stockpile Sanofi Pasteur's experimental H5N1 vaccine, the US government will pay to maintain flocks of chickens to supply eggs needed for vaccine production and help finance new tissue-based production technology that could make vaccines much easier to manufacture.

New technology that will allow vaccines to be produced in cells, rather than eggs, promises to reduce the amount of time it takes to develop a new vaccine against a particular disease strain, cut production costs, and improve safety. The Chiron avian flu vaccine uses cell-based technology. Solvay Pharmaceuticals in the Netherlands has been developing a cell-culture flu vaccine from canine cells since the early 1990s.

Sanofi Pasteur and GSK also are working on cell-culture technology, which Pisano says could shave two to six weeks off developing vaccines for new flu strains and make production much easier to scale up. "Cell-culture is the future," says Pisano, "but it is probably 10 years before it will be at a meaningful scale. We're going to be dealing with egg-based vaccines for another five to 10 years."

In the developing world, new global initiatives – including $4 billion in European financing for vaccines over the next 10 years – have helped shore up markets, says Merck's Mahmoud. "All of these mechanisms say to the vaccine producers that developing and [manufacturing] vaccines will be rewarded because there is going to be a market."

Beyond childhood immunization and flu shots, pharmaceutical companies are beginning to see some breakthrough therapeutic vaccines that could be used against cancer and other diseases that have no current treatment. Merck has presented data from clinical trials indicating its cervical cancer vaccine is nearly 100% effective in preventing the two types of human papillomavirus that cause most cervical cancer. GSK also has a cervical cancer vaccine in development, which is among 20 new vaccines in the company's pipeline including products to combat strep, meningitis, and rotavirus.

Peter Paradiso, vice president of new business and scientific affairs at Wyeth Vaccines, says new technology is driving the development of innovative products that will bring in a premium price. At Wyeth, he says, the company has focused on conjugate technology to enhance its vaccines. At GSK, adjuvant technology has been the focus.

THE STICKY WICKET OF LIABILITY

Liability remains a problem. In 1986, Congress created the Vaccine Injury Compensation Program (VICP), a no-fault system for resolving claims, but lawsuits continue to plague vaccine makers. "The liability environment has gotten worse," says Paradiso. "There has been a flurry of lawsuits, and the injury compensation program in the U.S. is being circumvented in creative ways."

For example, families of children with autism who believe childhood immunizations led to their children's condition have not filed suits that argue the vaccines themselves caused autism. They argue instead that it is the vaccine additive thimerisol, which is not covered by the VICP. To encourage production of pandemic vaccines, Senators Hillary Rodham Clinton (D-NY) and Pat Roberts (R-Kan.) have introduced legislation, known as the Influenza Vaccine Security Act, that shifts liability from pharmaceutical companies to the federal government for "personal injury or death resulting from the manufacture, administration, or use of qualified pandemic influenza technologies."

The liability obstacle aside, Paradiso says new interest in vaccines may indicate a fundamental shift in healthcare delivery. "The most cost-effective approach is not therapy; it is prevention." For scientists, he says, the work in new cutting-edge vaccines will bring the satisfaction of developing products that eliminate disease rather than alleviate its symptoms. "I have been working in this field for 20 years and I have seen diseases go away. That is pretty cool."

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