Annual global sales for all vaccines are a mere $8 billion, less than that of one single blockbuster drug, Lipitor. Another big problem: Making vaccines is complex work, with lots of investment in manufacturing needed, along with special expertise. Yet weak pricing has left profitability low. That combination has scared many companies away from the market.
Yet the benefits of vaccines are clear: Immunizations save the U.S. alone roughly $40 billion each year in medical costs and lost productivity. Better and more available vaccines would bring dramatic benefits worldwide. Says Victor Zonana, co-founder of Global Health Strategies: "It's scandalous how society simply does not put a high enough value on vaccines."
The good news is that the seeds of the solution are already being sown -- though more government support would help. "All the forces are at work to correct this," says industry consultant David L. Webster. Demand for vaccines, like prices, has been rising and the science is advancing. Companies are responding by developing a host of new vaccines and new manufacturing methods. The changing economics prompted MedImmune Inc. (MEDI
) to jump in with a new nasally administered flu vaccine last year. On Oct. 14, scientists reported promising results with an experimental GlaxoSmithKline PLC (GSK
) malaria vaccine. And new techniques could lower the risk of a global flu pandemic.
The current shortage, resulting from British regulators shutting down Chiron Corp.'s (CHIR
) flu vaccine plant in Liverpool on Oct. 5, is just the latest example of the larger problem. Six years ago, the average price per dose of flu vaccine was about $1.60. Total annual sales in the U.S. were about $120 million, split among four suppliers. Small wonder that two dropped out of the U.S. market, leaving just Chiron and Aventis Pasteur Inc. "The big problem has been the price: It's been very low for years," says Dr. R. Gordon Douglas Jr., a global health and vaccine consultant .
That's why flu vaccines are still made by a half-century-old method using millions of sterile fertilized chicken eggs. "The technology is cumbersome and not easy to scale up," says Piers C. Whitehead, vice-president of VaxGen Inc., a vaccine startup. Bacteria in one egg can contaminate an entire batch. Plus, not all viral strains grow in eggs. The strain responsible for most flu illness last year didn't, so the vaccine wasn't fully effective. And a deadly avian strain capable of jumping to humans -- a prospect many public health officials fear -- would be lethal to eggs, making it impossible to produce a vaccine.
There's a better way: growing the virus in cells. A single room-sized vat could quickly make enough virus for 10 million doses of vaccine, enough to cope with shortages or the sudden emergence of a deadly new virus. A number of companies, including Chiron, Netherlands-based Crucell (CRXL
), and Canada's ID Biomedical Corp. (IDBE
), are developing the technology, spurred by growing demand. The average U.S. price has jumped to more than $8 per dose, and the global market is now about $1.5 billion. That's expected to grow to $3 billion per year by 2008. Says Dr. Ronald Brus, chief executive of Crucell, which is working with Aventis Pasteur: "That means the old-fashioned flu vaccine becomes a blockbuster."
Still, the Invisible Hand of the marketplace could use a little help in the form of boosted government research funding. Switching to new manufacturing technology isn't just a matter of modernizing plants. Companies also have to prove that a vaccine produced in cell culture is safe, and do clinical trials to show that it works. It will take several years to do all this, but the result will be a steady supply of reliable vaccines -- and a much healthier vaccine industry. By John Carey