The Vaccines Market Outlook

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H E A LT H C A R E

The Vaccines Market Outlook Market analysis of future growth and future players by sector

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Gayle Hamilton Gayle Hamilton is an analyst within the healthcare function of Business Insights. Gayle also has extensive R&D experience in the pharmaceutical and biotech industries, holding positions at Celltech (now part of UCB), Genzyme Corporation in the US, and Procter & Gamble. Previous to this Gayle graduated with a Masters degree in Biochemical Engineering from University College London.

Copyright © 2005 Business Insights Ltd This Management Report is published by Business Insights Ltd. All rights reserved. Reproduction or redistribution of this Management Report in any form for any purpose is expressly prohibited without the prior consent of Business Insights Ltd. The views expressed in this Management Report are those of the publisher, not of Business Insights. Business Insights Ltd accepts no liability for the accuracy or completeness of the information, advice or comment contained in this Management Report nor for any actions taken in reliance thereon. While information, advice or comment is believed to be correct at the time of publication, no responsibility can be accepted by Business Insights Ltd for its completeness or accuracy.

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Table of Contents The Vaccines Market Outlook: Growth opportunities, market analysis and forecasts

Executive summary

10

Introduction to vaccines & vaccine-preventable diseases

10

Vaccines market analysis

11

Pediatric vaccines

12

Adult vaccines

13

Key players in the vaccines market

14

Sources and limitations of vaccine sales data

Chapter 1

Introduction to vaccines & vaccine-preventable diseases

16

20

Summary

20

Introduction

21

History of vaccines

21

Vaccines and the immune system The immune system Immunity by vaccination

22 22 23

Types of vaccines

23

Problems with vaccine development DNA vaccines

24 25

Vaccine-preventable diseases Measles Mumps Rubella Diphtheria Tetanus

26 26 27 27 28 28

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Pertussis Meningitis (pneumococcus, meningococcus and Hib) Varicella Hepatitis B Influenza Typhoid Rabies

Chapter 2

Vaccines market analysis

29 29 30 31 31 32 33

36

Summary

36

Introduction

37

Vaccines as part of the infectious diseases market

37

Vaccine market segments

38

Leading vaccine brands

40

Key players in the vaccines market

41

Future growth drivers

42

Chapter 3

Pediatric vaccines

44

Summary

44

Introduction

45

Pediatric immunization schedule Government recommendations Immunization funding US Europe

45 48 49 49 50

Measles/Mumps/Rubella (MMR) vaccines Brand market share and sales Brand analysis MMR II Priorix

50 51 52 52 54

Diphtheria/Tetanus/Pertussis (DTP) vaccines Brand market share and sales Brand analysis Infanrix & Infanrix HeXa Pediarix Hexavac & Pentacel

55 56 57 57 58 60

Pneumococcal vaccines Brand market share and sales Brand analysis Prevnar

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Pneumovax 23

64

Meningococcal vaccines Brand market share and sales

66 66

Other pediatric vaccines Brand market share and sales Brand analysis Varivax Comvax

68 68 69 69 71

Chapter 4

Adult vaccines

74

Summary

74

Introduction

75

Adult vaccine population Adolescent vaccination Elderly vaccination Traveler vaccination

75 75 76 78

Hepatitis vaccines Brand market share and sales Brand analysis Engerix-B Recombivax HB Twinrix Havrix

79 80 81 81 83 84 85

Influenza vaccines Brand market share and sales Brand analysis Fluzone Fluvirin FluMist

87 88 89 89 91 92

Other adult vaccines Brand market share and sales

94 95

Chapter 5

Key players in the vaccine market

98

Summary

98

Introduction

99

Merck & Co. Therapeutic focus Marketed vaccines portfolio R&D pipeline ProQuad HPV (human papilloma-virus) vaccine

101 101 102 102 103 103

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Zoster vaccine Rotateq

104 104

Wyeth Therapeutic focus Marketed vaccines portfolio R&D pipeline

105 105 106 106

GSK Therapeutic focus Marketed vaccines portfolio R&D pipeline Boostrix Priorix-Tetra Rotarix Conjugated meningitis A/C vaccine Cervarix Streptorix Simplirix

107 107 108 109 110 110 110 111 111 112 112

Sanofi-Aventis Therapeutic focus Marketed vaccines portfolio R&D pipeline Menactra Adacel

113 113 114 115 116 116

Chiron Therapeutic focus Marketed vaccines portfolio R&D pipeline MeNZB ACYW meningococcal vaccine

117 117 118 119 120 120

Index

121

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List of Figures Figure 1.1: Figure 2.2: Figure 3.3: Figure 3.4: Figure 3.5: Figure 3.6: Figure 3.7: Figure 3.8: Figure 3.9: Figure 3.10: Figure 3.11: Figure 3.12: Figure 3.13: Figure 3.14: Figure 4.15: Figure 4.16: Figure 4.17: Figure 4.18: Figure 4.19: Figure 4.20: Figure 4.21: Figure 4.22: Figure 4.23: Figure 4.24: Figure 5.25: Figure 5.26: Figure 5.27: Figure 5.28: Figure 5.29: Figure 5.30:

Timeline of vaccine development 21 Comparison of US/5EU IMS sales figures and global company-reported sales figures, 2003 41 Pediatric vaccination schedule for the US and 5 major European markets, 2004 46 Percentage of target population vaccinated the US, 5EU and global, 2003 47 Pediatric target population, 2005 49 MMR II SWOT analysis 53 Priorix SWOT analysis 55 Infanrix & Infanrix HeXa SWOT analysis 58 Pediarix SWOT analysis 59 Hexavac & Pentacel SWOT analysis 60 Prevnar SWOT analysis 64 Pneumovax 23 SWOT analysis 65 Varivax SWOT analysis 70 Comvax SWOT analysis 72 Adolescent population in the US and 5 major European markets, 2005 76 Elderly population in the US and 5 major European markets, 2005 77 Number of deaths from influenza and pneumonia in the US, 1995-2002 78 Engerix-B SWOT analysis 82 Recombivax HB SWOT analysis 83 Twinrix SWOT analysis 85 Havrix SWOT analysis 86 Fluzone SWOT analysis 90 Fluvirin SWOT analysis 92 FluMist SWOT analysis 93 Comparison of US/5EU IMS sales figures and global company-reported sales figures, 2003 100 Merck & Co’s global* therapeutic focus, 2003 & 2010 101 Wyeth’s global* therapeutic focus, 2003 & 2010 105 GSK’s global* therapeutic focus, 2003 & 2010 108 Sanofi-Aventis’ global* therapeutic focus, 2003 & 2010 113 Chiron’s global* therapeutic focus, 2003 & 2010 117

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List of Tables Table 2.1: Table 2.2: Table 2.3: Table 3.4: Table 3.5: Table 3.6: Table 3.7: Table 3.8: Table 4.9: Table 4.10: Table 4.11: Table 5.12: Table 5.13: Table 5.14: Table 5.15: Table 5.16: Table 5.17: Table 5.18: Table 5.19: Table 5.20:

Share of vaccines segment in anti-infectives market, US/Europe*, 2002-2003 38 Sales of vaccine products by indication and country ($m), 2002-03 39 Top 10 vaccines in US/Europe* by sales ($m), 2002-03 40 US/European* sales of MMR vaccines ($m), 2002-03 52 US/European* sales of combination vaccines with a tetanus component ($m), 2002-03 56 US/European* sales of pneumococcal vaccines ($m), 2002-03 62 US/European* sales of meningococcal vaccines ($m), 2002-03 67 US/European* sales of other pediatric vaccines ($m), 2002-03 69 US/European* sales of hepatitis vaccines ($m), 2002-03 80 US/European* sales of influenza vaccines ($m), 2002-03 88 US/European* sales of other adult vaccines ($m), 2002-03 95 Merck’s vaccines R&D pipeline and global sales forecasts, 2007 & 2010 102 Global* sales of Wyeth’s marketed vaccines portfolio ($m), 2002-03 106 Wyeth’s vaccines R&D pipeline and global sales forecasts, 2007 & 2010 107 Global* sales of GSK’s marketed vaccines portfolio ($m), 2002-03 108 GSK’s vaccines R&D pipeline and global sales forecasts, 2007 & 2010 109 Global* sales of Sanofi-Aventis’ marketed vaccines portfolio ($m), 2002-03 114 Sanofi-Aventis’ vaccines R&D pipeline and global sales forecasts, 2007 & 2010 115 Sales of Chiron’s marketed vaccines portfolio ($m), 2002-03 118 Chiron’s vaccines R&D pipeline and global sales forecasts, 2007 & 2010 119

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Executive summary

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Executive summary Introduction to vaccines & vaccine-preventable diseases


Edward Jenner carried out the first vaccination in 1796. Nowadays the mass vaccination of individuals against a number of diseases is commonplace in developed countries.




A disease-causing organism causes sickness and also induces an immune response in the infected host, which leads to recovery from the infection. “Memory cells” are also made by the immune system, which is what protects a person against suffering from the same disease again. A vaccine is designed to induce an immune response and make these “memory cells”, without causing any sickness.




There are, in general, six types of vaccines that are currently on the market that differ in the way they are made, but have the same result of eliciting an immune response.




There have been problems in developing conventional vaccines for many viral diseases, such as HIV and malaria, because a cell-mediated immune response is needed, rather than the antibody response produced by most vaccines.




An alternative to conventional vaccines is DNA vaccines – several are in clinical development for viral diseases including HIV. With DNA vaccines the subject is not injected with the viral antigen but instead with DNA encoding the antigen, providing benefits such as a cell-mediated immune response and better targeting.




Vaccines have been developed and are in routine use against a number of diseases, including measles, mumps, rubella, diphtheria, tetanus, pertussis and hepatitis B. Through worldwide vaccine programs, smallpox has been eliminated entirely, and polio has been eliminated in Western countries.

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Vaccines market analysis


Vaccines are a major segment of the anti-infectives market, with sales totaling $3.7bn in 2003, which is 10.4% of the total anti-infectives market (IMS sales US/5EU). However, global company-reported data suggests the vaccines market to be worth $8.9m in 2003 (Business Insights estimate), putting its share of the antiinfectives market closer to 25%.




In the US, the pneumococcal vaccines category recorded the highest sales in 2003, primarily due to the success of Wyeth’s Prevnar. In Europe the diphtheria, tetanus and pertussis vaccines performed the best, due to the launch of pentavalent and hexavalent vaccines, although with the launch of Prevnar in the EU in 2003, the pneumococcal vaccine category is expected to grow.




Wyeth’s Prevnar and Merck’s Varivax were the two highest-selling vaccine brands in 2003. Both are included in the US pediatric immunization schedule, which is essential for strong product sales.




Key companies in the vaccines market are GSK, Sanofi-Aventis, Merck & Co, Wyeth and Chiron.




Whilst the vaccine market is currently dominated by vaccines for the pediatric population, a major growth driver for the future is likely to be increased vaccination amongst the adolescent and adult population. Developmental vaccines for booster or catch-up immunization against diphtheria, tetanus and pertussis (DTP) are one example, as is the development of a zoster (shingles) vaccine by Merck & Co.




Another growth driver is likely to be the launch of vaccines for sexually transmitted diseases (STDs). Examples are GSK’s Cervarix and Merck’s HPV vaccine for HPV (cervical cancer), GSK’s Simplirix for genital herpes, and several early-stage HIV vaccines.

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Pediatric vaccines


Vaccination of the pediatric population against several diseases is commonplace in countries worldwide, and each country has its own pediatric immunization schedule. The US vaccinates against the highest number of diseases.




The combination measles, mumps and rubella (MMR) vaccination is a major component of all the pediatric immunization schedules in the countries analyzed. The market-leading MMR vaccine is Merck/Sanofi-Aventis’ MMR II vaccine with sales of $265m in 2003 (IMS US/5EU). Its nearest rival was GSK’s Priorix with sales of $60m (IMS US/5EU), but this product is not available in the US.




Diphtheria, tetanus and pertussis (DTP) vaccination is the cornerstone of pediatric immunization schedules. Recent launches of pentavalent and hexavalent vaccines have revitalized this stagnant market. GSK’s pentavalent Pediarix, released in the US, is the leading product in the DTP market with sales of $129m in 2003 (IMS).




The launch of Prevnar in the US in 2000 has revolutionized the market for pneumococcal vaccines, by being the first such vaccine to be included in the US infant immunization schedule for routine vaccination of all children. Prevnar was the highest-selling brand in the total vaccines market in 2003 with sales of $756m (IMS in US/5EU) or $946m (global company-reported).




Meningococcal vaccination is not common in the countries analyzed and importantly, vaccination against meningococcal disease is not included in the US pediatric immunization schedule. This market is therefore limited, although a new vaccine with improved efficacy and benefits over antibiotics could transform this market, in much the same way as Prevnar has in the pneumococcal market.




Infants are also routinely vaccinated against Hib, hepatitis B (see chapter 3), varicella (chickenpox), polio and BCG. The most significant products in this category are Varivax for varicella and Comvax for Hib and hepatitis B, which generated sales of $303m and $91m respectively (IMS sales channels in US/5EU).

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Adult vaccines


The three most important adult (non-pediatric) vaccine populations are the adolescent, elderly and travel vaccine groups.




Hepatitis B vaccination forms a major part of the travel vaccines sector, as well as being recommended in pediatric immunization schedules in most Western countries. GSK’s Engerix-B and Merck/Sanofi-Aventis’ Recombivax HB dominate the hepatitis B market, with sales of $228m and $176m respectively (IMS sales channels US/5EU). Competition in the pediatric sector comes from multivalent vaccines containing the HBV antigen.




Hepatitis A vaccine is not a priority for most Western governments because it is most prevalent in developing countries, although vaccination is recommended in regions of the US. GSK’s Twinrix is a vaccine against hepatitis A and B, while Havrix and Vaqta protect only against hepatitis A. Sales of these products are lower than the HBV vaccines.




The market for influenza vaccines has increased significantly in recent years, and the growth from 2002 to 2003 was 55%. Chiron’s Fluvirin and Sanofi-Aventis’ Fluzone were the market leaders in 2003. In many countries influenza vaccination is recommended for the elderly and high-risk groups only, but in the US annual vaccination is recommended for the whole population over 2 years of age.




Sales of Chiron’s Fluvirin for the 2004/05 flu season will suffer severely because the company will not be supplying any influenza vaccine from its main Liverpool plant because of a bacterial contamination. This will also affect the company’s reputation for the future with Sanofi-Aventis already winning a contract with the US government to begin year-round production of Fluzone.




Other common adult vaccines generally belong to the travel vaccines market, and protect against diseases that are not common in the traveler’s own country but are endemic in other regions of the world. Such diseases for which vaccines exist are rabies, typhoid, yellow fever and tick borne encephalitis.

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Key players in the vaccines market


There are five key players that dominate the vaccines market – Merck & Co, Wyeth, Sanofi-Aventis, GSK and Chiron.




Merck & Co’s vaccines franchise is set to grow from 5% of its total sales in 2003 to 11% by 2010. This growth depends mostly on the launch and success of pipeline products for HPV (cervical cancer), zoster (shingles) and MMR-varicella.




Wyeth reported global sales of $1,268m in 2003 (IMS sales audit in US/5EU reported $805m). The majority of these sales were from its pneumococcal vaccine, Prevnar. However, Wyeth has a very thin vaccine pipeline with no products due for launch before 2010.




According to global company-reported data, GSK is the leading company in the vaccines market, with sales of $1,834 in 2003, although sales through channels covered by IMS in US/5EU were much lower ($769m). GSK also has the most extensive pipeline of the five leading players, with no less than seven pipeline vaccines due for launch before 2010. The most promising pipeline candidate is Cervarix for HPV (cervical cancer).




Sanofi-Aventis reported global sales of $1,831m in 2003, putting the company marginally behind GSK, although sales through channels covered by IMS in US/5EU were much lower at $446m. Sanofi-Aventis has two vaccine products in the registration stage, although neither are predicted to show strong sales, and besides this the pipeline is relatively bare with no new vaccines before 2010.




Chiron is the 5th largest vaccines company, and its major product is Fluvirin, an influenza vaccine. However, a bacterial contamination at its Liverpool plant in 2004 has meant that no Fluvirin produced at the plant can be used for the 2004/05 season. Chiron had expected to supply 48m doses of Fluvirin to the US so this is a major blow both financially and in terms of the company’s reputation.

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Sources and limitations of vaccine sales data

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Sources and limitations of vaccine sales data Classic financial segmentation of the vaccine market (i.e. by production, indication or target group) can often be challenging, as often manufacturing companies do not always report sales per specific product. In addition, vaccines are often administered without prescription and reach their ‘end user’ by a variety of complex channels. Pricing within these channels may also vary considerably across regions and according to end purchaser. For example, in the US, according to the CDC, in 2002, childhood vaccines were purchased by:


The private sector: 43%;




The VFC (Vaccines For Children) program: 41%;




Immunization Grant Program (Section 317): 11%;




State/local governments: 5%.

According to IMS Health, vaccine sales across the US and 5 major European markets in 2003 reached $3.8bn. However, from company reported data global vaccine sales are more likely to be closer to $8.9bn, highlighting the clear disparity between individual sources. The causes of these disparities are due mainly to the sales channels through which the IMS sales audits are carried out.

IMS Health vaccine sales audits only cover a selection of retail and hospital channels and are typically estimated (by projection factor) using representative panels of pharmacists and/or wholesalers to determine the volume and value of prescriptions of individual products. Vaccine products are classified by IMS by the following system, which is also used in chapters 2, 3 and 4 of this report:


J7A1 influenza vaccines;




J7A2 tetanus vaccines;

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J7A3 hepatitis vaccines;




J7A4 typhoid and paratyphoid vaccines;




J7A5 rubella vaccines;




J7A6 measles vaccines;




J7A7 pneumonia vaccines;




J7A9 other single component vaccines;




J7B1 combination vaccine with tetanus components;




J7B2 combination vaccine with measles/mumps components;




J7B3 all other combinations;




J7C0 all other vaccines.

Generally, sales of vaccines supplied through the following channels are not tracked to the same extent and may be missing entirely from IMS reported sales in a large number of countries:


Dispensing doctors;




Health workers;




School & military vaccination programs;




Mail order/Internet purchases;




Private clinics.

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Despite the limitations of IMS data, vaccine sales via retail pharmacies can be considered relatively comprehensive, with coverage for some products greater than 80%. A good example is Wyeth’s Prevnar registering $756m for 2003 (US/5EU IMS sales data) versus $946 company reported for the same period (Wyeth, 2004).

For the purposes of this report, Business Insights recognizes the limitations of IMS Health sales data and will use a combination of IMS and published sales data to analyze the vaccine sector. In earlier sections of the report, in Chapters 2, 3 and 4, the IMS sales data will be used, although this will be compared to company-reported data on occasions where there is a large disparity between the figures. In the 5th chapter on key players, company reported information is used as this gives a clearer idea of the leading companies in the vaccines market, where individual product sales data is less important to the analysis.

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CHAPTER 1

Introduction to vaccines & vaccine-preventable diseases

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Chapter 1

Introduction to vaccines & vaccine-preventable diseases

Summary


Edward Jenner carried out the first vaccination in 1796. Nowadays the mass vaccination of individuals against a number of diseases is commonplace in developed countries.




A disease-causing organism causes sickness and also induces an immune response in the infected host, which leads to recovery from the infection. “Memory cells” are also made by the immune system, which is what protects a person against suffering from the same disease again. A vaccine is designed to induce an immune response and make these “memory cells”, without causing any sickness.




There are, in general, six types of vaccines that are currently on the market that differ in the way they are made, but have the same result of eliciting an immune response.




There have been problems in developing conventional vaccines for many viral diseases, such as HIV and malaria, because a cell-mediated immune response is needed, rather than the antibody response produced by most vaccines.




An alternative to conventional vaccines is DNA vaccines – several are in clinical development for viral diseases including HIV. With DNA vaccines the subject is not injected with the viral antigen but instead with DNA encoding the antigen, providing benefits such as a cell-mediated immune response and better targeting.




Vaccines have been developed and are in routine use against a number of diseases, including measles, mumps, rubella, diphtheria, tetanus, pertussis and hepatitis B. Through worldwide vaccine programs, smallpox has been eliminated entirely, and polio has been eliminated in Western countries.

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Introduction This chapter provides an introduction to vaccines, first describing the history of vaccines, and then explaining the mechanism by which a vaccine confers immunity against disease. This is followed by a listing of the different types of vaccines that are used today, and finally descriptions of the most common vaccine-preventable diseases.

History of vaccines Figure 1.1 shows the timeline for vaccine development from the first vaccination against smallpox by Edward Jenner in 1796, to the present day.

Figure 1.1: Timeline of vaccine development

18th century

19th century

20th century

1796: Smallpox

1879: Cholera 1881: Anthrax 1882: Rabies 1890: Tetanus 1890: Diphtheria 1896: Typhoid fever 1897: Plague

1926: Pertussis 1927: Tuberculosis 1932: Yellow Fever 1937: Typhus 1945: Influenza 1952: Polio 1954: Japanese encephalitis 1957: adenovirus-4 and 7 1962: Oral Polio Vaccine 1964: Measles 1967: Mumps 1970: Rubella 1974: Chicken Pox 1977: Pneumonia (S. pneumoniae) 1978: Meningitis (N. meningitidis) 1981: Hepatitis B 1985: Hib 1992: Hepatitis A 1998: Lyme Disease 1998: rotavirus Business Insights Ltd

Source: Wikipedia; Business Insights

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Many diseases such as polio have been largely controlled in developed nations through mass use of vaccines (indeed, smallpox appears to have been completely eliminated in the wild).

As long as the vast majority of people are vaccinated it is difficult for an outbreak of disease to spread. This effect is called herd immunity. Some people, particularly those who practice alternative medicine, refuse to immunize themselves or their children, as they believe vaccines' side effects outweigh their benefits, or that not enough is known of the long-term adverse effects to determine whether the harm is smaller than the benefit. Thus, they reap some of the benefits of vaccines, through herd immunity, without assuming any of the risks. Advocates of routine vaccination argue that side effects of approved vaccines, whilst real, are either far, far less serious than actually catching the disease, or are very rare, and argue that the risk/benefit ratio should be based on benefit to humanity rather than simply on the benefit to the immunized individual. The main risk of rubella, for example, is to the fetuses of pregnant women, but this risk can be effectively reduced by the immunization of children to prevent transmission to pregnant women.

Vaccines and the immune system It is important to first understand the workings of the immune system in disease recovery before the use of vaccination in preventing disease can be explained

The immune system When a person is infected with a disease-causing organism the person will feel sick, exhibiting symptoms such as fever, nausea, vomiting, diarrhea and a rash. The diseasecausing organism also induces an immune response in the infected host, which is what will eventually lead to recovery from the infection.

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The immune system is induced through proteins called antigens, which are present on the surface of disease-causing organisms. These antigens are specific to the disease, and result in the immune system synthesizing antibodies that precisely target the antigens, binding to them and ultimately destroying the disease-causing organisms. In addition, "memory cells" are produced in an immune response. These are cells that remain in the blood stream, sometimes for the life span of the host, ready to mount a quick protective immune response against subsequent infections with the particular disease-causing agent that induced their production. If such an infection were to occur, the memory cells would respond so quickly that the resulting immune response could inactivate the disease causing agents, and symptoms would be prevented. This response is often so rapid that infection doesn't develop - you are immune from infection.

Immunity by vaccination A vaccinating agent is intended to mimic the disease-causing organism, without causing any of its unpleasant side effects. The immune system recognizes the vaccine particles as foreign, destroys them by making specific antibodies for the vaccine antigens, and also produces memory cells. Therefore, when the virulent version of the agent comes along, the immune system is prepared for a fast strike, neutralizing the agent before it can spread and multiply to vast numbers.

Types of vaccines Although all vaccines have the effect to stimulate the immune system to produce specific antibodies against a disease and confer memory to that disease, there are differences in the way different vaccines are developed.


Killed whole organisms: In this relatively crude approach, the vaccine is made from the entire organism, killed to make it harmless. The typhoid vaccine is an example.




Attenuated organisms: Here, the organism has been cultured so as to reduce its pathogenicity, but still retain some of the antigens of the virulent form. The

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Bacillus Calmette-Guérin (BCG) is a weakened version of the bacterium that causes tuberculosis in cows. BCG is used as a vaccine against tuberculosis in many European countries but is rarely used in the US.


Toxoids: In some diseases, for example diphtheria and tetanus, it is not the growth of the bacterium that is dangerous, but the protein toxin that is liberated by it. Treating the toxin with, for example, formaldehyde, denatures the protein so that it is no longer dangerous, but retains some epitopes on the molecule that will elicit protective antibodies.




Surface molecules: Antibodies are most likely to be protective if they bind to the surface of the invading pathogen triggering its destruction. Several vaccines employ purified surface molecules, for example the influenza vaccine, hepatitis B vaccine and pneumococcus vaccine.




Inactivated virus: Like killed bacterial vaccines, these vaccines contain whole virus particles that have been treated (again, often with formaldehyde) so that they cannot infect the host's cells but still retain some unaltered epitopes. The IPV vaccine for polio is an example.




Attenuated virus: In these vaccines, the virus can still infect but has been so weakened that it is no longer dangerous. The measles, mumps, and rubella ("German measles") vaccines are examples. The Sabin oral polio vaccine (OPV) is another example.

Problems with vaccine development Vaccines against many diseases have been developed, as previously highlighted in Figure 1.1. However, there remains many hurdles and problems in vaccine development that have meant common diseases like malaria and HIV do not yet have any vaccines that can prevent their infection.

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One problem is that experimental vaccines often elicit an immune response that does not actually protect against the disease. Most vaccines preferentially induce the formation of antibodies rather than cell-mediated immunity. This is fine for those diseases

caused

by

toxins

(diphtheria,

tetanus),

or

extracellular

bacterial

(pneumococcal), or even viruses that must pass through the blood to reach the tissues where they do their damage (polio, rabies). However viruses are intracellular parasites, out of the reach of antibodies while they reside within their target cells. They must be attacked by the cell-mediated branch of the immune system, such as by cytotoxic T lymphocytes (CTLs). Most vaccines do a poor job of eliciting cell-mediated immunity (CMI).

An example is HIV, where much of the early work on developing a vaccine has focused on the antibody response of the test animal. Antibodies may have a role in preventing infection or minimizing its spread, but cell-mediated responses will probably turn out to be far more important. Certainly there are thousands of patients dying of AIDS despite their high levels of anti-HIV-1 antibodies. (The most widespread test for HIV-1 infection does not detect the presence of the virus but the presence of antibodies against the virus).

DNA vaccines An alternative to conventional vaccines is DNA vaccines, of which there is currently several in development. With DNA vaccines the subject is not injected with the viral antigen but instead with DNA encoding the antigen.

DNA vaccination involves the injection of a DNA plasmid carrying an antigen-coding gene that transfects cells in the target cell and results in an immune response. DNA vaccines have several distinct advantages, which include ease of manipulation, use of a generic technology, simplicity of manufacture, and chemical and biological stability. In addition the target organ can be specifically targeted and the duration of the immune response.

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So far, most of the work on DNA vaccines has been done in mice where researchers have proved able to protect them against tuberculosis, SARS, smallpox, and other intracellular pathogens. In addition, more than a dozen different DNA vaccines against HIV are in clinical trials.

Vaccine-preventable diseases Vaccines have been developed and are in routine use against a number of diseases. The most common diseases against which people are vaccinated against are described below.

Measles Measles is an infection caused by the rubeola virus. It primarily affects children, and although best known for its typical skin rash, it is mostly a respiratory infection. The incubation period of the disease, from exposure to first symptoms, is between 9 and 11 days, and until the appearance of a fever and rash is around 2 weeks. The rash first appears on the forehead, before working its way down the neck and trunk of the child, and eventually to the feet. This rash usually lasts about three days in each site.

Although in most cases children recover from the disease, in some cases complications can occur, such as febrile convulsions, pneumonia and even heart and nerve problems. These conditions are potentially fatal or leave the child with lifelong disability.

There is no specific treatment for measles so the best option is prevention by vaccination. Before immunization was available, measles occurred in springtime epidemics, usually in cycles of 2 or 3 years. Nowadays, infants and older children are usually immunized against measles (via the combined MMR vaccine) according to state and school health regulations. Currently, outbreaks of measles are occurring most often on college campuses, among young persons who have either not been adequately immunized against measles, or whose immunity has decreased since childhood.

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Mumps Mumps is a viral infection caused by the myxo virus, and is transmitted through infected saliva. The saliva is infectious for around six days prior to the onset of symptoms of mumps – swelling of the salivary (parotid) glands in both cheeks.

Children infected with mumps will suffer from a dry mouth, difficulty swallowing and fever, but the symptoms usually subside and cause no lasting effects. However, if this disease is caught after puberty, complications can occur, such as swelling and inflammation of the testicles in males, infection of the ovaries in females, and also the pancreas or central nervous system.

Mumps was common until the mumps vaccine was licensed in 1967. Before the vaccine, more than 200,000 cases occurred each year in the United States. Since then the number of cases has dropped to fewer than 1,000 a year, and epidemics have become fairly rare. As in the pre-vaccine era, most cases of mumps are still in children ages 5 to 14, but the proportion of young adults who become infected has been rising slowly over the last two decades. Mumps infections are uncommon in children younger than 1 year old.

Rubella Rubella is commonly known as German measles and is caused by infection with the rubella virus, which is usually spread by secretions of the nose or throat. It can also pass through a pregnant woman's bloodstream to infect her unborn child. As this is a generally mild disease associated with fever and a rash in children, the primary medical danger of rubella is the infection of pregnant women, which may cause congenital rubella syndrome in developing babies. Such complications as growth retardation, mental retardation, blindness and bone marrow problems can occur in such cases.

Before a vaccine against rubella became available in 1969, rubella epidemics occurred every 6 to 9 years. Children ages 5 to 9 were primarily affected, and many cases of congenital rubella occurred as well. Now, due to immunization of younger children and 27

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teens, there are fewer cases of congenital rubella. Most rubella infections today appear in young, unimmunized adults rather than children. In fact, experts estimate that 10% of young adults are currently susceptible to rubella, which could pose a danger to any children they might have someday.

Diphtheria Diphtheria is caused by a bacterial infection. In its early stages, diphtheria can be mistaken for a bad sore throat. A low-grade fever and swollen neck glands are the other early symptoms. The toxin, or poison, caused by the bacteria can lead to a thick coating in the nose, throat, or airway. This coating is usually fuzzy gray or black and can cause breathing problems and difficulty in swallowing.

In more advanced stages, the patient may have difficulty breathing or swallowing, complain of double vision, have slurred speech, or even show signs of going into shock (pale, cold skin, rapid heartbeat, sweating, and an anxious appearance).

Tetanus Tetanus, also known as lockjaw, is a serious but preventable disease that affects the body's muscles and nerves. It typically arises from a skin wound that becomes contaminated by a bacterium called Clostridium tetani, which is often found in soil.

Once the bacteria are in the body, they produce a neurotoxin (a protein that acts as a poison to the body's nervous system) known as tetanospasmin that causes muscle spasms. The toxin first affects nerves controlling the muscles near the wound. It can also travel to other parts of the body through the bloodstream and lymph system. As it circulates more widely, the toxin interferes with the normal activity of nerves throughout the body, leading to generalized muscle spasms. Without treatment, tetanus can be fatal.

In fact, tetanus in general is rare in the United States and other nations with tetanus vaccination programs - fewer than 50 cases of tetanus have been reported each year in 28

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the United States since 1995. However, many developing countries have no effective prevention and immunization programs against tetanus, so the disease is much more common there.

Pertussis Pertussis, also known as whooping cough, is an infection of the respiratory system caused by the bacterium Bordetella pertussis. It's characterized by severe coughing spells that end in a "whooping" sound when the person breathes in.

Although pertussis can occur at any age, it's most severe in unimmunized children and in infants less than 1 year of age. About 40% of all pertussis infections occur in children less than 1 year old, and only 15% occur in children over 15 years old. Half of all deaths from pertussis occur in infants under age 1, and serious complications are more common in this group. The incidence of pertussis among adolescents and adults has been increasing in the last several years. This is an important fact, because coughing adolescents and adults who may not realize that they have pertussis are currently the major source of infection for infants and children.

Before a vaccine became available, pertussis killed 5,000 to 10,000 people in the US each year. Now, the pertussis vaccine has reduced the annual number of deaths to less than 30.

Meningitis (pneumococcus, meningococcus and Hib) Meningitis is an inflammation of the meninges, the membranes that cover the brain and spinal cord. The inflammation is usually caused by bacteria or viruses (viral meningitis is also called aseptic meningitis). Less common causes include fungi, protozoa, and other parasites. Sometimes certain medications, cancers, or other diseases can inflame the meninges, although such noninfectious cases of meningitis are much more rare.

Bacterial meningitis is less common than viral meningitis but is usually much more serious and can be life threatening if not treated promptly. Many different types of 29

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bacteria can cause meningitis: Group B Streptococcus, Escherichia coli, and Listeria monocytogenes are the most common causes of meningitis in newborns. Streptococcus pneumoniae (pneumococcus) and Neisseria meningitidis (meningococcus) are more frequent in children older than 2 months of age. Before the 1990s, Haemophilus influenzae type b (Hib) was the leading cause of meningitis in children in the United States. However, the widespread use of the Hib vaccine as a routine childhood immunization has dramatically decreased the frequency of meningitis caused by Hib.

Bacterial meningitis occurs in people of all ages but is more common in the very young (infants and young children) and the elderly (people above age 60). Teenagers and college students are also slightly more at risk for the disease because of time spent in close contact with many of their peers. Early symptoms of meningitis are diarrhea, vomiting and fever, and in older children a stiff neck and photophobia. Meningitis can also lead to skin rashes and occasionally seizures.

Varicella Varicella, commonly known as chickenpox, is a common disease caused by the varicella-zoster virus (VZV), which is part of the herpes virus family. Varicella virus spreads in the air through coughs or sneezes or through contact with fluid from inside the chickenpox blisters.

Chickenpox, which occurs most often in the late winter and early spring, is very contagious - if exposed to an infected family member, about 80% to 90% of those in a household who haven't had chickenpox will get it. However, immunization of children with the chickenpox (varicella) vaccine that is now available can be expected to decrease the infection rate of the disease.

Although chickenpox is more common in kids under the age of 15, anyone can be infected with the disease. A person usually has only one episode of chickenpox in his or her lifetime, but the virus that causes chickenpox can lie dormant within the body

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and can cause a different type of skin eruption later in life called shingles, also referred to as herpes-zoster.

Hepatitis B Hepatitis is inflammation of the liver, most often characterized in the early stages by flu-like symptoms. As the disease progresses the symptoms begin to point to the liver as the source of illness – jaundice, foul breath, darkening of the urine, white-colored stools and abdominal pain. There are many types of hepatitis, the most common being caused by the hepatitis A virus, hepatitis B virus and hepatitis C virus. Vaccines exist for hepatitis A and hepatitis B, of which immunization against hepatitis B is more common.

Hepatitis A is a mild infection, most commonly affecting in children. It lives in the stools of infected individuals, and is also spread through contaminated water, milk and foods. Therefore, hepatitis A is most easily spread in overcrowded and unsanitary conditions in the developing world.

Hepatitis B is spread through infected body fluids, such as blood, semen, vaginal fluid, saliva, tears, urine and breast milk. Common routes of infection are through blood transfusions, shared syringes for injecting drugs, and sexual activity. The virus can also be passed from mother to unborn child.

Influenza Influenza, commonly known as "the flu," is a highly contagious viral infection of the respiratory tract. Although the flu affects both sexes and all age groups, children tend to be more susceptible than adults. Influenza is a seasonal illness, with most cases occurring from November to April. Influenza is a highly contagious illness, with the virus being spread by coughing or sneezing infectious droplets into the air.

Influenza is often confused with the common cold, but flu symptoms tend to be more severe than the typical sneezing and stuffiness of a cold. Fever, headaches, tiredness 31

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and vomiting are some of the symptoms characteristic of the flu, which usually appear between one and five days after infection. Most symptoms will disappear after around five days although in vulnerable populations, such as infants and the elderly, complications such as pneumonia may develop.

The flu usually occurs in small outbreaks, but epidemics tend to occur every few years, when a large number of people in an area are affected within a short space of time. Pandemics are even more serious, when an influenza strain causes an outbreak worldwide, although they occur less often. Probably the most notable example of a pandemic is the 1918 Spanish flu that killed 20 million people worldwide.

The flu is usually offered each year to high-risk populations such as the elderly, although in some countries, most notably the US, all individuals have access to the vaccine. The flu vaccine does not guarantee against development of the illness, as only certain strains of the virus are included in the vaccine. The virus mutates readily so the vaccine only provides up to 80% protection throughout the flu season.

Typhoid Typhoid fever is a life-threatening illness caused by the bacterium Salmonella Typhi, which lives only in humans. Persons with typhoid fever carry the bacteria in their bloodstream and intestinal tract. In addition, a small number of persons, called carriers, recover from typhoid fever but continue to carry the bacteria. Both ill persons and carriers shed S. Typhi in their stool. You can get typhoid fever if you eat food or drink beverages that have been handled by a person who is shedding S. Typhi or if sewage contaminated with S. Typhi bacteria gets into the water you use for drinking or washing food. Therefore, typhoid fever is more common in areas of the world where hand washing is less frequent and water is likely to be contaminated with sewage. Once S. Typhi bacteria are eaten or drunk, they multiply and spread into the bloodstream. The body reacts with fever and other signs and symptoms.

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In the US about 400 cases occur each year, and 70% of these are acquired while traveling internationally. Typhoid fever is still common in the developing world, where it affects about 12.5m persons each year.

Rabies Rabies is a very serious viral infection of the nervous system. Rabies is usually transmitted by a bite from an infected animal, and humans who develop a rabies infection often have a history of being bitten by an animal about a month before rabies symptoms began.

The first symptoms of rabies usually last for 1 to 4 days, and include fever, headache, muscle aches, loss of appetite, nausea, vomiting, sore throat, cough, and fatigue. There may also be a tingling or twitching sensation around the area of the animal bite. This is the one most specific symptom of rabies at this stage of the rabies infection.

The second stage of rabies symptoms may include a fever as high as 105ºF (40.6ºC) with any of the following symptoms: irritability; excessive movements or agitation; confusion; hallucinations; aggressiveness; bizarre or abnormal thoughts; muscle spasms; abnormal postures; seizure (convulsions); weakness or paralysis (person cannot move some part of the body); extreme sensitivity to bright lights, sounds, or touch; increased production of saliva or tears. Also, there may be inability to speak as the vocal cords become paralyzed.

The last stages of rabies produce symptoms that reflect the infection's destruction of many important areas of the nervous system. There may be double vision, problems in moving facial muscles, abnormal movements of the diaphragm and muscles that control breathing, and difficulty swallowing. It is the difficulty in swallowing combined with increased production of saliva - which leads to the "foaming at the mouth" usually associated with a rabies infection.

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Finally, the person with a rabies infection can slip into a coma and stop breathing. Without life support measures, death usually follows within 4 to 20 days after symptoms of rabies begin. Most people infected with rabies die regardless of medical care, and those who survive usually have severe neurological disability.

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CHAPTER 2

Vaccines market analysis

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Chapter 2

Vaccines market analysis

Summary


Vaccines are a major segment of the anti-infectives market, with sales totaling $3.7bn in 2003, which is 10.4% of the total anti-infectives market (IMS sales US/5EU). However, global company-reported data suggests the vaccines market to be worth $8.9m in 2003 (Business Insights estimate), putting its share of the anti-infectives market closer to 25%.




In the US, the pneumococcal vaccines category recorded the highest sales in 2003, primarily due to the success of Wyeth’s Prevnar. In Europe the diphtheria, tetanus and pertussis vaccines performed the best, due to the launch of pentavalent and hexavalent vaccines, although with the launch of Prevnar in the EU in 2003, the pneumococcal vaccine category is expected to grow.




Wyeth’s Prevnar and Merck’s Varivax were the two highest-selling vaccine brands in 2003. Both are included in the US pediatric immunization schedule, which is essential for strong product sales.




Key companies in the vaccines market are GSK, Sanofi-Aventis, Merck & Co, Wyeth and Chiron.




Whilst the vaccine market is currently dominated by vaccines for the pediatric population, a major growth driver for the future is likely to be increased vaccination amongst the adolescent and adult population. Developmental vaccines for booster or catch-up immunization against diphtheria, tetanus and pertussis (DTP) are one example, as is the development of a zoster (shingles) vaccine by Merck & Co.




Another growth driver is likely to be the launch of vaccines for sexually transmitted diseases (STDs). Examples are GSK’s Cervarix and Merck’s HPV vaccine for HPV (cervical cancer), GSK’s Simplirix for genital herpes, and several early-stage HIV vaccines.

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Introduction This chapter will provide an overview of the vaccines market in the US and 5 major European countries: France, Germany, Italy, Spain and the UK. Firstly the vaccines market will be analyzed in the context of the anti-infectives market as a whole, then the vaccines market will be broken down in terms of geographical area, disease area, leading brands and key players.

Vaccines as part of the infectious diseases market The vaccine drugs market in the US and five major European markets was valued at around $3.7bn in 2003, representing 10.4% of the total anti-infectives market, according to the IMS sales audit. The anti-infectives segment accounted for around 12% of the US/European pharmaceutical market (valued at $300bn) in 2003, with sales of $36.3bn (Table 2.1). Over the years, the vaccine segment has increased its share in the anti-infectives market, by a steady rate of around 6% from 1999, with the rising with rising rates of vaccination against pneumococcal disease and influenza in particular.

(From global company reported sales, the value of the vaccines market appears to be much larger at approximately $8.9m (Business Insights estimate), as the IMS sales audit does not cover all vaccine sales channels. This makes the market for vaccines almost 25% of the total anti-infectives market).

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Table 2.1: Share of vaccines segment in anti-infectives market, US/Europe*, 2002-2003 Year

2002

2003

% growth 2002-03

CAGR (%) 1999-2003

Antiviral sales ($m) Antiviral share (%)

3,118 9.9

3,793 10.4

21.6 5.6

16.3 6.1

31,528

36,314

15.2

9.7

Total anti-infectives sales ($m) * France, Germany, Italy, Spain, UK

Source: IMS Health, Copyright ©, reprinted with permission; Business Insights

Business Insight Ltd

Vaccine market segments Table 2.2 shows the vaccine market broken down by disease area. Pneumococcal vaccines were the highest-selling vaccines in the US during 2003, due to success of Wyeth’s Prevnar. The other single component vaccines category also proved extremely successful in the US marketplace, mostly because of varicella vaccine, Varivax. Hepatitis, influenza, DTP and MMR vaccines also generate significant sales in the US. What is evident from this data is that for a vaccine brand or category to perform well in the US market, it is essential that is included in the US immunization schedule.

In the European market, DTP vaccines were the highest selling in 2003, followed by influenza, hepatitis and pneumococcal. In the pneumococcal market, Prevnar was only released in 2003, so it is likely that sales of this product will grow in the coming years.

Overall, the vaccines market in Europe is growing at a faster rate than in the US. This is most likely because the US traditionally vaccinates against the largest number of diseases, so there is less opportunity for market entry of a vaccine into a disease area where there will be a large catch-up pool of unvaccinated individuals. As many European countries vaccinate against fewer diseases than the US then there is the opportunity for a new vaccine against a new disease target to make large gains.

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Table 2.2: Sales of vaccine products by indication and country ($m), 2002-03 2002

2003

Growth (%) 2002-03

CAGR (%) 1999-2003

US Pneumonia vaccines 562.3 Other single component vaccines 432.4 Hepatitis vaccines 499.6 Influenza vaccines 199.3 Combinations with tetanus component 154.4 Combinations with measles/mumps comp. 243.3 All other combinations 115.7 Typhoid + paratyphoid vaccines 18.5 Rubella vaccines 3.1 Meningococcal vaccines 1.6 Tetanus vaccines 0.5 Measles vaccines 0.0 All other vaccines 0.0 Total US 2,230.9

733.4 481.1 468.1 328.5 263.6 243.5 91.2 20.5 3.2 2.1 0.9 0.2 0.0 2,636.2

30.4 11.2 -6.3 64.8 70.7 0.1 -21.2 10.5 3.3 35.2 88.4 621.1 0.0 18.2

103.7 4.3 10.4 45.6 26.7 13.7 27.7 37.8 0.7 -23.1 -45.4 -34.9 0.0 23.2

Europe* Combinations with tetanus component Influenza vaccines Hepatitis vaccines Pneumonia vaccines Other single component vaccines Combinations with measles/mumps comp. All other vaccines Meningococcal vaccines Tetanus vaccines Typhoid + paratyphoid vaccines All other combinations Rubella vaccines Measles vaccines Total Europe*

244.6 141.7 166.2 58.8 72.3 85.0 67.4 28.0 7.8 8.1 5.3 1.3 0.3 887.0

301.9 200.4 176.4 139.1 118.0 91.5 80.1 25.3 8.4 8.3 5.2 1.4 0.4 1,156.4

23.5 41.4 6.1 136.4 63.1 7.7 18.8 -9.9 7.3 3.0 -2.5 5.5 30.0 30.4

13.4 13.6 -13.0 57.2 7.2 5.8 -1.7 15.3 -7.3 -10.3 31.3 -2.5 11.4 5.8

US/Europe* Pneumonia vaccines 621.2 Hepatitis vaccines 665.8 Other single component vaccines 504.8 Combinations with tetanus component 399.0 Influenza vaccines 341.0 Combinations with measles/mumps comp. 328.3 All other combinations 121.1 All other vaccines 67.4 Typhoid + paratyphoid vaccines 26.6 Meningococcal vaccines 29.6 Tetanus vaccines 8.3 Rubella vaccines 4.5 Measles vaccines 0.3 Total US/Europe* 3,117.8

872.5 644.5 599.0 565.5 528.9 335.1 96.3 80.1 28.8 27.4 9.3 4.6 0.6 3,792.6

40.5 -3.2 18.7 41.7 55.1 2.1 -20.4 18.8 8.2 -7.5 11.9 3.9 90.4 21.6

91.2 0.8 4.9 18.7 28.6 11.2 27.8 -1.7 11.6 7.7 -18.8 -0.3 -20.9 16.3

* France, Germany, Italy, Spain, UK Source: IMS Health, Copyright ©, reprinted with permission; Business Insights

Business Insights Ltd

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Leading vaccine brands Table 2.3 details the sales of the leading vaccines in the US and 5 major European markets in 2003. Wyeth’s Prevnar, a pneumococcal vaccine launched in the US in 2000 and the EU in 2003, it currently the highest-selling vaccine brand, in the sales channels covered by the IMS sales audit. Prevnar has shown strong growth in the 2002-03 period, primarily due to its 2003 European launch.

The second highest selling brand, in the sales channels covered by IMS, is Varivax, a vaccine to protect against varicella (chickenpox). This brand has shown steady growth of around 11% over the past five years.

Each of the top 10 brands is profiled in more detail in later sections of the report.

Table 2.3: Top 10 vaccines in US/Europe* by sales ($m), 2002-03 Brand name

Marketing company

Prevnar Varivax

Wyeth Merck & Co/ Sanofi-Aventis MMR II Merck & Co/ Sanofi-Aventis Fluvirin Chiron Engerix-B GSK Recombivax HB Merck & Co/ Sanofi-Aventis Pediarix GSK Pneumovax 23 Merck & Co/ Sanofi-Aventis Twinrix GSK Comvax Merck & Co Others

Antigen

2002

2003 Growth (%) CAGR (%) 2002-03 1999-2003

Pneumococcal Varicella

535.5 272.0

755.7 303.3

41.1 11.5

--10.9

MMR

262.6

264.8

0.9

10.2

Influenza HBV HBV

103.8 270.7 168.9

250.5 227.6 176.3

141.3 -15.9 4.4

156.2 -1.1 -3.8

DTP/HBV/polio 0.0 Pneumococcal 73.3

128.6 103.6

--41.4

--32.1

77.2 93.8 115.7 91.2 1,677.7 1,361.5

21.4 -21.2 -18.8

4.9 27.7 n/a

3,117.8 3,792.6

21.6

16.3

HAV/HBV HBV/Hib

Total * France, Germany, Italy, Spain, UK n/a - not available

Source: IMS Health, Copyright ©, reprinted with permission; Business Insights

Business Insights Ltd

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Key players in the vaccines market Figure 2.2 provides a comparison of the sales figures provided by the IMS sales audit in the US and 5 major European markets, and global sales figures reported by the pharmaceutical companies themselves. While some of the discrepancies can be attributed to the different geographical areas covered by either data set, i.e. US/5EU versus global, this is not the whole story. Not all vaccine sales channels are covered completely by the IMS audit, and may be missing entirely from IMS reported sales in a large number of countries.

Merck & Co’s sales figures recorded by IMS appear to be reasonably accurate ($1126m vs. $1056m), while for the other top 5 companies, most notably GSK and Sanofi-Aventis, the IMS sales figures drop far below that of company reported data.

Figure 2.2: Comparison of US/5EU IMS sales figures and global companyreported sales figures, 2003

Chiron $678m

Chiron $395m

Merck $1056m

Merck $1126m

SanofiAventis $446m

SanofiAventis $1831m

IMS

Companyreported

Wyeth $1268m

GSK $769m Wyeth $805m

GSK $1834m

Source: IMS Health, Copyright ©, reprinted with permission; Company reported data; Business Insights Business Insights Ltd

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Future growth drivers Low value pediatric products have traditionally dominated the vaccine field with commercial success largely dependent on official product recommendation and an ability to match supply with demand. For example, the leading vaccine brand, Prevnar, was included in the US government’s Vaccine for Children (VFC) program in June of its launch year, as well as being recommended by the American Academy of Pediatrics (AAP). This ensured strong commercial success for Prevnar, however the product has also had problems regarding its distribution: Merck has had difficulties in meeting demand for Prevnar, due to a lack of adequate supply and manufacturing capabilities, which has stopped Prevnar achieving its full commercial potential.

The dependence of the vaccine market on the pediatric population for revenue is likely to lessen in the coming years. In the future new vaccines for the adult and adolescent population will drive growth in the vaccines market. A large proportion of this growth will be for new disease targets, particularly sexually transmitted diseases (STDs). Examples of STD developmental vaccines are GSK’s Cervarix, a vaccine for human papilloma virus (HPV), a rival Merck HPV vaccine, GSK’s Simplirix for genital herpes and several HIV early-stage developmental vaccines. The large commercial potential and significant unmet need in the HIV market is indicated by the fact that all five of the major vaccines players – Merck, Wyeth, GSK, Sanofi-Aventis and Chiron – have at least one HIV vaccine in development.

Booster or catch-up vaccines for the adolescent and adult disease market for existing disease targets are also likely to be a growth driver in the future. Examples of this are Merck’s Zoster vaccine for shingles which has strong commercial potential, and two DTP vaccines: GSK’s Boostrix and Sanofi-Aventis’ Adacel.

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CHAPTER 3

Pediatric vaccines

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Chapter 3

Pediatric vaccines

Summary


Vaccination of the pediatric population against several diseases is commonplace in countries worldwide, and each country has its own pediatric immunization schedule. The US vaccinates against the highest number of diseases.




The combination measles, mumps and rubella (MMR) vaccination is a major component of all the pediatric immunization schedules in the countries analyzed. The market-leading MMR vaccine is Merck/Sanofi-Aventis’ MMR II vaccine with sales of $265m in 2003 (IMS US/5EU). Its nearest rival was GSK’s Priorix with sales of $60m (IMS US/5EU), but this product is not available in the US.




Diphtheria, tetanus and pertussis (DTP) vaccination is the cornerstone of pediatric immunization schedules. Recent launches of pentavalent and hexavalent vaccines have revitalized this stagnant market. GSK’s pentavalent Pediarix, released in the US, is the leading product in the DTP market with sales of $129m in 2003 (IMS).




The launch of Prevnar in the US in 2000 has revolutionized the market for pneumococcal vaccines, by being the first such vaccine to be included in the US infant immunization schedule for routine vaccination of all children. Prevnar was the highest-selling brand in the total vaccines market in 2003 with sales of $756m (IMS in US/5EU) or $946m (global company-reported).




Meningococcal vaccination is not common in the countries analyzed and importantly, vaccination against meningococcal disease is not included in the US pediatric immunization schedule. This market is therefore limited, although a new vaccine with improved efficacy and benefits over antibiotics could transform this market, in much the same way as Prevnar has in the pneumococcal market.




Infants are also routinely vaccinated against Hib, hepatitis B (see chapter 3), varicella (chickenpox), polio and BCG. The most significant products in this category are Varivax for varicella and Comvax for Hib and hepatitis B, which generated sales of $303m and $91m respectively (IMS sales channels in US/5EU).

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Introduction This chapter begins by explaining the pediatric immunization schedule in the six countries covered in this report (US, France, Germany, Italy, Spain and UK): what vaccinations are mandatory or recommended, the size of the pediatric target population and what percentage of this population was vaccinated in 2003. The second part of the chapter reviews the competing brands in the major pediatric vaccine markets – measles, mumps and rubella (MMR); diphtheria, tetanus and pertussis (DTP); pneumococcal; and meningococcal.

Pediatric immunization schedule Vaccination of the pediatric population against a number of diseases is commonplace in countries worldwide. In the US and each of the five major European markets there exist national immunization schedules that specify the vaccines that are either mandatory or recommended for children. In some countries children are required to have a vaccination before they are granted entry to school, for example in France children must be vaccinated against BCG in kindergarten or in school registration.

Figure 3.3 highlights the vaccines included on the pediatric immunization schedules in the countries analyzed in this report, although not all are mandatory vaccinations. What is noticeable from this table is that the basis for pediatric immunization in all these countries is the measles, mumps and rubella (MMR) vaccine, and vaccinations (singular or in combination) for diphtheria, tetanus and pertussis.

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Figure 3.3: Pediatric vaccination schedule for the US and 5 major European markets, 2004 US

France Germany

Italy

Spain

UK

Hepatitis A Hepatitis B HiB Oral polio (OPV) IPV Measles MMR Varicella Pneumococcal Bacille Calmette-Guérin (B CG) DTaP DTaP/Hepatitis B/IPV DTaP/Hepatitis B DTaP/HiB DTaP/HiB/IPV DTaP/HiB/Hepatitis B DTaP/Hib/Hepatitis B/IPV Tetanus/diphtheria (DT) DTwP/ HiB/Hepatitis B DTwP/ HiB/IPV DTwP/ HiB DTwP Meningococcal C mandatory

Recommended/only part of count ry/ high-risk group/option

Hib – Haemophillus influenzae; DTaP – diphtheria/tetanus/acellular pertussis; DTwP – diphtheria/tetanus/whole-cell pertussis;

MMR – measles/mumps/rubella; DTP – diphtheria/tetanus/pertussis; IPV – inactivated polio vaccine

Source: WHO vaccines immunization and biologicals, 2004

Business Insights Ltd

The vaccination of this group has proved to be extremely successful for a number of reasons, including:


Many vaccine-preventable diseases are most common or most severe in the first years of life, meaning that delayed vaccination would be less effective;

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Commencing programs early in life means that, with booster shots, patients can gain life-long immunity;




Parental concern, effective public advertising programs and school entry criteria ensure a high compliance rate in this population.

This final point is worth stressing, as high compliance results in “herd immunity” for the target population, also ensuring that the disease is not passed onto siblings, parents and members of the general population.

Figure 3.4: Percentage of target population vaccinated the US, 5EU and global, 2003 98

100

96

97

98 97

96

89

93

94

92

91

86 83

83

% of target population vaccinated

95 89 86

97 94

91

91

91

80 77

81 78

80

97

98

97 92

79

60 42 39

40 29

20

0 DTP

HBV

MCV

Hib *

Pol3

Vaccination US

France

Germany

Italy

Spain

UK

Global

%’s are WHO-UNICEF estimates, except * Hib which are official country estimates MCV – meningococcal C vaccination; Pol3 – polio Source: WHO vaccines immunization and biologicals, 2004

Business Insights Ltd

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Of the immunizations monitored by the WHO, polio has the highest compliance rate for its target population at an average of 94.7% in the US and 5 major European markets, and 79% globally. This is closely followed by DTP immunization at an average of 94.5% in the six countries analyzed, and 78% globally.

However, the vaccination of pediatrics is not without its problems, with the immunization schedules being overcrowded, requiring children to have numerous vaccinations in the first year of life. Additionally, recent controversy over the safety of the MMR vaccine has damaged the compliance rates of pediatric vaccines, which in turn could lead to an increase in incidence of childhood diseases.

Government recommendations The pediatric market, with its large population and high compliance rates, traditionally represents the key target group for vaccine manufacturers, guaranteeing consistent, high-volume sales. Consequently, gaining recommendations from governments to be included on national pediatric immunization schedules is often a priority for pharmaceutical companies, as it ensures access to this most significant patient pool.

Furthermore, being first-to-market with a new pediatric vaccine allows access to the large immunization catch-up pool (young children for whom no vaccine was available when they were at the recommended immunization age, and so are vaccinated later in life).

Figure 3.5 shows the projected size of the pediatric target group across the seven major markets in 2005, where the annual pediatric population is based on birth rates and the catch-up pool represents the difference in number of births in 2005 and the population aged 0-4.

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Figure 3.5: Pediatric target population, 2005

Target population (millions)

25

20

15

10

5

0 US

France

Germany

Annual pediatric immunization population

Italy

Spain

UK

Catch-up pool (children 0-4years) Business Insights Ltd

Source: WHO population database

Immunization funding The funding of the pediatric immunization schedules varies from region to region, and is discussed in more detail below:

US In the US pediatric immunizations are funded by a combination of public and private sources. Where a child is covered by private medical insurance then the cost of the immunizations is usually included. In other cases there are a number of initiatives in place to fund the vaccination of uninsured children. The most notable of these is the Vaccines for Children (VFC) program, through which public-purchased vaccines are available at no charge to enrolled public and private healthcare providers for eligible children.

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Europe In the European countries covered in this report – France, Germany, Italy, Spain and UK – pediatric vaccinations are fully reimbursed by state-funded immunization programs.

However, in some countries, notably Germany, the funding structure determines that physicians are reimbursed on a per shot basis. This has implications in terms of the administration of combination products, which are favored by patients for requiring fewer shots, but are expensive to buy and therefore not cost-efficient for physicians to administer.

Measles/Mumps/Rubella (MMR) vaccines MMR vaccination is a major component of the immunization schedules in the six major markets analyzed. Although individual vaccines for measles, mumps and rubella exist and the WHO in fact recommends administration of the vaccines separately, now no country recommends single monovalent vaccines. The first dose of the MMR combination vaccine is in most cases administered at 12-15 months, with the second dose at 3-5 years.

Measles, mumps and rubella are viral diseases. Measles is a highly infectious viral illness spread by small droplets from the nose, throat or mouth of an infected person. Despite widespread vaccination, the disease still contributes a significant health burden worldwide with 30 million cases and 875,000 deaths (WHO/UNICEF, Measles Strategic Plan, 2001). The disease is especially problematic in developing regions (approximately 98% of deaths). The WHO also estimates that the disease may be responsible for the largest proportion of child deaths due to other complications, such as malnutrition, pneumonia, diarrhea and malnutrition.

50

TLFeBOOK

Mumps, or parotis epidemica, is a self-limiting viral infection primarily affecting the salivary glands. Although the case fatality rate is low, permanent sequelae such as deafness can occur in 25% of cases. Peak incidence of mumps tends to occur among children between the ages of five and nine years and most countries record incidence between 100–1,000 per 100,000 population, which tends to be higher in countries with hotter climates. Mumps can also affect adults with complications and can involve meningitis and encephalitis. Importantly, insufficient childhood vaccination coverage of the live-attenuated mumps vaccine can shift the incidence of the disease to older age groups where healthcare burden can be higher. WHO recommends making mumps a notifiable disease.

A single-stranded RNA virus of the genus rubivirus, known as togavirus causes rubella. It is transmitted only to humans (mainly children) via the respiratory route and replicates in the local lymph nodes causing viremia five to seven days after initial exposure. Importantly, in pregnant women (first eight to 10 weeks), the virus can terminate or affect the developing fetus via infection of the placenta (congenital rubella syndrome, CRS). It is estimated that 100,000 cases of CRS occur each year causing multiple defects, hearing and visual impairment. The virus also has a seasonal pattern with epidemics every five to nine years. Rubella vaccines in the past decade have concentrated on childhood immunization so that CRS has become practically eliminated in Western regions and inter-epidemic interval has been lengthened.

Brand market share and sales Globally, major MMR products are GSK’s Priorix and Aventis Pasteur/MSD’s MMR II. Table 3.4 lists key marketed MMR vaccines and sales for 2002 and 2003, according the IMS sales audit in the US and 5 major European markets. Within this channel, the data highlights the dominance of Aventis Pasteur MSD’s MMR II, which contributed almost 80% of total MMR sales. While GSK is a key player within the vaccine market, its MMR sales fall far behind those of Aventis Pasteur MSD (a 50/50 joint venture between Merck and Sanofi-Aventis), primarily because Priorix is currently not available in the US market. Chiron markets a range of MMR vaccines including

51

TLFeBOOK

Morupar, which is not licensed in the US and sold in regions such as Italy, Asia and Latin America.

Table 3.4: US/European* sales of MMR vaccines ($m), 2002-03 Brand name

Marketing company

2002

2003

Growth (%) 2002-03

CAGR (%) 1999-2003

MMR II

Merck & Co/ Sanofi-Aventis GSK Chiron Chiron

262.6

264.8

0.9

10.2

56.2 8.0 1.0 0.5

60.2 7.9 1.9 0.3

7.2 -0.8 85.0 -59.8

31.1 -14.5 19.0 -48.3

328.3

335.1

2.1

1.21

Priorix MMR vax Morupar Others Total

* France, Germany, Italy, Spain, UK Source: IMS Health, Copyright ©, reprinted with permission; Business Insights

Business Insights Ltd

Brand analysis The top MMR products in the US and Europe: MMR II and Priorix respectively, will be profiled in this report, highlighting their comparative strengths and weaknesses, and prospects for the future.

MMR II Merck’s original MMR I vaccine, combining three separate vaccines – Menuvax, Mumpsvax and Attenuvax – was launched in the US in 1971. Seven years later, in 1978, the measles vaccine component was further attenuated, and MMR II was launched. MMR II is indicated for simultaneous vaccination against measles, mumps, and rubella in infants over 12 months of age. The US Advisory Committee Immunization Practices recommends administration of a second dose of MMR II at 4–6 years of age, to achieve seroconversion in those not responding to the first immunization. MMR II has proven to be well tolerated and highly immunogenic, with approximately 430 million doses of the product distributed so far.

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TLFeBOOK

Both the measles and mumps parts of the combined product are live vaccines produced in chick embryo cell culture, meaning that MMR II is contraindicated for those with severe allergies to egg, as well as those individuals allergic to the antibiotic, neomycin. Another consequence of the live nature of the MMR II vaccine is the potential for adverse reactions. Importantly, MMR II does not contain the Urabe AM9 strain of the mumps vaccine, which has been linked to neurological reactions such as meningitis and encephalitis, instead having the US produced Jeryl Lynn strain. This gives MMR II a distinct advantage over Morupar, Chiron’s MMR vaccine that contains Urabe, and this is reflected in the vastly superior sales of MMR II over Morupar.

A SWOT analysis for MMR II is shown in Figure 3.6.

Figure 3.6: MMR II SWOT analysis

Strengths

Weaknesses

• Backed by marketing strength of Merck & Co, and Sanofi-Aventis

• Not indicated for those with severe allergies to egg or neomycin

• Vaccine has an established reputation and has proven to be highly effecti ve

• Local reactions are more common than with Priorix • MMRII is a live vaccine

• Dominates market in US/Europe

Opportunities

Threats

• Possibility to de velop wider combination products involving MMR as a base

• Competition from increasing use of Priorix • Concerns regarding safety of MMR vaccines – link to autism – meaning increasing demand for monovalent vaccines

• Geographic expansion into emerging markets • Reformulate MMRII to e xclude egg and neomycin

Business Insights Ltd

Source: Business Insights

53

TLFeBOOK

MMR II dominates the US/European market for MMR vaccines, with sales of $265m in 2003, representing 79% of the total MMR market (of the sales channels covered by IMS). However, this product has shown relatively flat growth in recent years and is likely to be challenged by the projected 2005 launches of MMR-varicella vaccines from GSK (Priorix-Tetra) and Merck/Sanofi-Aventis’ own Proquad.

Priorix Priorix is a measles, mumps and rubella combination vaccine, and was launched by GSK in Germany in March 1998. The vaccine is now available in all of the five major European markets, as well as other markets across the world, although importantly this excludes the US. Priorix was launched as a replacement to Pluserix, withdrawn by SmithKline Beecham in 1992 because of reports of mild transient meningitis linked to the Urabe mumps strain. GSK’s Priorix now contains the RIT438 mumps strain, although this historical association of GSK’s MMR vaccine franchise with product withdrawal is a weakness of the new Priorix product.

Priorix has a number of advantages over MMR II, most notably fewer local symptoms following injection and no pig gelatin in manufacturing precursors. Additionally, clinical trial data has shown Priorix to be equivalent to MMR II in terms of immunogenicity and side-effect profile. However, the MMR II, Priorix is produced in chick embryo tissue cultures meaning that it may not be used in individuals with a severe egg allergy, and the vaccine also contains neomycin, again precluding its use in individuals allergic to this antibiotic.

Priorix is not available in the US, and its sales in the five major European markets in 2003 totaled $60.2m (of the sales channels covered by IMS). Priorix was the leading MMR drug in France, Germany and Italy during 2003, but is likely to suffer from the launch of the new MMR-varicella vaccines in 2005 in much the same way as MMR II.

As SWOT analysis for Priorix is shown in Figure 3.7.

54

TLFeBOOK

Figure 3.7: Priorix SWOT analysis

Strengths

Weaknesses

• Backed by marketing strength of GSK

• Not indicated for those with severe allergies to egg or neomycin

• Has high immunogenicity

• Historical association with the withdrawal of Pluserix Priorix is a live vaccine

• Has fewer local symptoms following injection than MMRII

• Sales are much lower than rival product MMRII

• Contains no pig gelatin which is also an advantage over MMRII

Opportunities

Threats

• Possibility to de velop wider combination products involving MMR as a base

• Competition from MMRII, which currently dominates the market • Concerns regarding safety of MMR vaccines – link to autism – meaning increasing demand for monovalent vaccines

• Geographic expansion into emerging markets • Reformulate MMRII to e xclude egg and neomycin

Business Insights Ltd

Source: Business Insights

Diphtheria/Tetanus/Pertussis (DTP) vaccines DTP immunization is a key component of the immunization schedules in the six countries covered in this report. In addition to the trivalent DTP vaccine, companies such as GSK and Aventis Pasteur MSD (Merck/Sanofi-Aventis) have introduced tetravalent, pentavalent and hexavalent vaccines, for example Pediarix and Hexavac.

DTP remains an essential component of immunization schedules because of the seriousness of each of the diseases, and the fact that none has yet been eradicated in Western countries. Tetanus continues to manifest itself in persons not vaccinated and those not having completed their vaccine schedule. Furthermore, there is no natural

55

TLFeBOOK

immunity to the pathogen. Pertussis (B.pertussis) or whooping cough, which at times can have an attack rate of 100%, was reported to have the highest number of cases in 2000, since 1967. From 1997–2000, infants younger than one-year old had the highest annual incidence rate of 55.5 cases per 100,000 outlining the importance of vaccination. Pertussis is also increasing among adolescents and adults, a dynamic that GSK and Aventis are responding to with Boostrix and Adacel products. Lastly, Diphtheria (C.diphtheriae), an acute toxin-mediated infection, although largely reduced by vaccination programs, maintains the same case fatality rate of about 10%.

Brand market share and sales Table 3.5 shows sales of the leading tetanus containing vaccine combinations, through retail channels covered by the IMS sales audit in US/EU in 2002 and 2003. Growth in this particular sector has been rapid, with annual growth from 2002–03 of 41.7%. This has been driven primarily by the introduction of combination vaccines with greater valency, such as GSK’s Pediarix in the US and Infanrix-HeXa in the EU. (GSK reports global sales of its Infanrix range at approximately $549m in 2003, while sales of Merck/Sanofi-Aventis are also believed to be greater than those reported by IMS).

Table 3.5: US/European* sales of combination vaccines with a tetanus component ($m), 2002-03 Brand name

Marketing company

2002

2003

Growth (%) 2002-03

CAGR (%) 1999-2003

Pediarix Infanrix Hexavac

GSK GSK Merck & Co/ Sanofi-Aventis GSK Merck & Co/ Sanofi-Aventis Sanofi-Aventis GSK

0.0 123.6 51.2

128.6 72.3 67.1

---41.5 30.9

--56.0 ---

50.2 26.2

65.3 36.2

30.2 38.5

--18.2

23.3 18.0 0.0

32.9 23.1 0.0

41.3 28.4 ---

57.9 -----

399.0

565.5

41.7

18.7

Infanrix Hexa Pentacel Revaxis Infanrix Quinta Others Total

* France, Germany, Italy, Spain, UK Source: IMS Health, Copyright ©, reprinted with permission; Business Insights

Business Insights Ltd

56

TLFeBOOK

These new GSK DTP multivalent vaccines have led to considerable cannibalization of the original trivalent Infanrix brand (DTP), as reflected by the decline in Infanrix sales of 41.5% over the 2002-03 period.

Brand analysis The two most important and highest-selling brand ranges in the DTP market are marketed by GSK and Merck/Sanofi-Aventis. The GSK range includes Infanrix, Infanrix HeXa and Infanrix Quinta, and the Merck/Sanofi-Aventis range includes Pentacel and Hexavac. These brands are profiled in detail below.

Infanrix & Infanrix HeXa Infanrix is one of a number of vaccines by GSK that confer immunity against the core diphtheria, tetanus and pertussis antigens. In addition to these diseases, more recent product launches by GSK in this market also provide protection against infectious agents such as Hib, hepatitis B and polio within products such as Infanrix HeXa and Pediarix (see profile below).

The basic Infanrix was first launched in Germany in 1997 and is now licensed for use in 80 countries. With the recent launch of the pentavalent Pediarix product in the US, Infanrix (DTP) is losing uptake within the 12–18 months market. However, GSK is redirecting its focus on Infanrix to the 4-6 year age group having recently secured FDA approval for the fifth DTP dose in children.

In the EU, GSK markets a hexavalent vaccine called Infanrix HeXa, which extends the disease-coverage of earlier Infanrix vaccines to three additional indications, namely Hib, polio and hepatitis B. When compared with the US Pediarix product the key difference is the presence of the Hib antigen. Presently, the Infanrix HeXa product matches the German and Italian pediatric immunization schedules.

A SWOT analysis for Infanrix and Infanrix HeXa is shown in Figure 3.8.

57

TLFeBOOK

Figure 3.8: Infanrix & Infanrix HeXa SWOT analysis

Strengths

Weaknesses

• Backed by marketing strength of GSK

• Combination products create confusion when patients change physician

• Available in pre-filled Tip-Lok device • Does not contain thiomersal

• Infanrix losing ground in the 12-18 month market in the US to Pediarix

• FDA approval for 5 th dose in children • Also available as Infanrix Hexa, which additionally protects against hepatitis B, Hib and polio

Opportunities

Threats

• Geographic expansion into emerging markets

• Competition from other DTP combinations, particularly Hexa vac and Pentavac

• Promote the convenience of the prefilled Tip-Lok syringes

• Complex reimbursement for combination products in some EU regions

• Launch of Infanrix-Hexa in the US, on the back of the success of Pediarix

Business Insights Ltd

Source: Business Insights

Pediarix Pediarix is a pentavalent vaccine, which protects against DTP, polio and hepatitis B. Pediarix was approved by the FDA in December 2002 and launched in the US in January 2003. Importantly GSK has left off the Hib component that is present in Infanrix HeXa, because in the US DTP-Hib conjugates cannot be used for the primary immunization doses at ages two, four and six months. Pediarix therefore integrates fully with the US immunization schedule, and has the advantage over Aventis’ Pentavac/Pentacel, which contains DTP-Hib-polio, but has not yet been approved in the US. A further boost to the profile of GSK within the US and the Pediarix product was also the announcement that the combination vaccine would be included in the Vaccines for Children (VFC) program (February 2003).

58

TLFeBOOK

However, Pediarix has suffered from safety concerns because the clinical trials of the product were focused mainly on proving comparative immunogenicity and convenience, but not necessarily safety of the combination vaccine itself. Pediarix should be considered a ‘new’ vaccine product and subjected to ‘safety and efficacy’ clinical trials even though familiar vaccines within the product have been tested previously. GSK should therefore conduct further studies to drive uptake and confidence in their product.

A SWOT analysis for Pediarix is shown in Figure 3.9.

Figure 3.9: Pediarix SWOT analysis

Strengths

Weaknesses

• Backed by marketing strength of GSK

• Concerns regarding clinical validity of product efficacy data

• Available in pre-filled Tip-Lok device

• Combination products create confusion when patients change physician

• Does not contain thiomersal • Does not contain the Hib antigen • Has had a successful launch in the US • 5-in-1 vaccine reduces discomfort associated with multiple injections

Opportunities

Threats

• Geographic expansion into emerging markets

• Competition from other DTP combinations, particularly Hexa vac and Pentavac

• Promote the convenience of the prefilled Tip-Lok syringes

• Complex reimbursement for combination products in some EU regions

• Launch of Pediarix in Europe following initial success in the US

Business Insights Ltd

Source: Business Insights

59

TLFeBOOK

Hexavac & Pentacel Like GSK, Aventis Pasteur MSD (a Merck/Sanofi-Aventis joint venture) markets a number of vaccines based on the core DTP antigens. Hexavac and Pentacel (Pentavac) were the company’s highest-selling vaccines in 2003. Pentacel provides immunity against DTP, polio and Hib, while Hexavac additionally includes a vaccination for hepatitis B. A SWOT analysis for Pentacel and Hexavac is shown in Figure 3.10.

Figure 3.10: Hexavac & Pentacel SWOT analysis

/ Strengths

Weaknesses

• Backed by marketing strength of Merck & Sanofi-Aventis

• Pentacel contains the Hib antigen, which cannot be used in primary DTP vaccination in the US

• Pentacel provides immunity to 5 diseases in one vaccine, while Hexavac provide 6-in-1 immunity

• Hexavac not a vailable in the large US market • Pentacel not yet launched in the US, where Pediarix has first mover advantage

Opportunities

Threats

• Geographic expansion into developing markets

• Competition from GSK DTP vaccines – Pediarix, Infanrix and Infanrix HeXa

• Launch of Pentacel in the US

• Complex reimbursement for combination products in some EU regions

Business Insights Ltd

Source: Business Insights

Pentacel was launched in Canada in 1997, and submission for US approval was expected in 2004, although no announcement has yet been made by the company. In the US market, Pentacel will be disadvantaged as it contains the Hib antigen, which is not indicated for use in the primary doses of DTP at two, four and six months. Therefore, Pentacel’s potential position is at the fourth dose of DTP, which can be

60

TLFeBOOK

administered as early as age 12 months. It is also positioned within the ‘catch-up’ phase of the immunization schedule for these five antigens at 15 months. Presently, GSK’s Pediarix has first mover advantage within this part of the schedule.

Hexavac provides immunity to six diseases. The product was submitted for registration in Europe in early July 1999, and was launched in Germany in November 2000. Hexavac is now launched in numerous European countries. Hexavac competes directly with GSK’s Infanrix HeXa, and both have performed equally in the market.

Pneumococcal vaccines The launch of Prevnar in 2000 has revolutionized the market for pneumococcal vaccines, by being the first such vaccine to be included in the US infant immunization schedule for routine vaccination of all children. Prevnar is given to all pediatrics in the US aged 2-23 months, and is also indicated for catch-up vaccination of those aged 2-5 years. Older pneumococcal polysaccharide vaccines such as those manufactured by both Merck & Co. (Pneumovax 23) and Wyeth (Pnu-Immune 23) have been licensed in the US since 1983 replacing an earlier 14-valent formulation previously licensed in 1977. These vaccines have low rates of efficacy compared to Prevnar and provide inconsistent responses, so were not included in infant immunization schedules.

Pneumococcal disease refers to a variety of infections caused by the bacterium Streptococcus pneumoniae, including otitis media, pneumonia, bacteremia and meningitis. Over seven million pneumococcal infections and 40,000 related deaths occur in the US annually, double the mortality of influenza (20,000 deaths) (www.cdc.gov). Worldwide the WHO states that at least one million children die of pneumococcal disease every year, most of these being young children in developing countries. Pneumonia is by far the most common cause of pneumococcal death worldwide.

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TLFeBOOK

Major risk groups for pneumococcal disease are the elderly, children under two years of age, and immunodeficient individuals. Importantly, strains of penicillin-resistant and macrolide-resistant Streptococcus pneumoniae are becoming increasingly prevalent across all regions, necessitating the need for alternative disease management techniques to antibiotics such as vaccination. Presently, newer ketolide antibiotics, such as Aventis’ telithromycin (Ketek), recently approved in the US, are also being positioned as new chemotherapeutics for drug resistant Streptococcus pneumoniae.

Brand market share and sales Wyeth’s Prevnar is the clear market leader for pneumococcal vaccines (Table 3.6). According to IMS sales data, Prevnar had sales of $756m in the US and 5EU in 2003. The product had exhibited strong growth 2002-03 of 41.1%, most likely because of its launch in the EU in 2003, as the product had only previously been available in the US. (Wyeth company reported data recorded 2003 global Prevnar sales at $945m).

Older pneumococcal vaccine brands, notably Pneumovax 23, also experienced strong sales growth 2002-03, most likely due to increased awareness and concern about pneumococcal disease following the Prevnar launch and its subsequent inclusion in the US pediatric immunization schedule.

Table 3.6: US/European* sales of pneumococcal vaccines ($m), 2002-03 Brand name

Marketing company

2002

2003

Growth (%) 2002-03

CAGR (%) 1999-2003

Prevnar Pneumovax 23

Wyeth Merck & Co/ Sanofi-Aventis Chiron Merck & Co/ Sanofi-Aventis

535.5 73.3

755.7 103.6

41.1 41.4

--32.1

7.3 3.0

8.6 4.5

17.7 48.1

12.0 19.3

1.9

0.1

-62.3

-16.9

621.2

872.5

40.5

91.2

Pneumopur Pneumo 23 Others Total

* France, Germany, Italy, Spain, UK Source: IMS Health, Copyright ©, reprinted with permission; Business Insights

Business Insights Ltd

62

TLFeBOOK

Brand analysis The two leading pneumococcal vaccines, Prevnar and Pneumovax 23, will be profiled in this report. Together these two vaccines represent more than 98% of the US/5EU market for pneumococcal vaccines (in the sales channels covered by IMS).

Prevnar Prevnar is a vaccine to protect against seven serotypes of Streptococcus pneumoniae in children. Wyeth launched this vaccine in February 2000 in the US, and it has been subsequently launched in numerous other markets, including France, Germany, Italy and the UK.

Prevnar has been extremely successful and revolutionized the pneumococcal vaccines market. In fact, in both 2002 and 2003, Prevnar was the leading product in the vaccines market overall. In June of its launch year, the American Academy of Pediatrics (AAP) recommended the use of Prevnar to vaccinate all children under 2 years of age, and Prevnar was included in the US government’s Vaccine for Children (VFC) program the same month for vaccination of children up to the age of five.

Prevnar was recommended to the VFC because in clinical trials it had proven to be 97% effective in preventing invasive pneumococcal disease caused by seven pneumococcal serotypes and 89% effective in preventing invasive disease caused by all strains. This compares to older pneumococcal vaccines – Merck’s Pneumovax 23, and Wyeth’s Pnu-imune 23 – which are only effective in 57-75% of cases, and have inconsistent results in children. In fact, Wyeth reports that 12 million children (67 million doses) have been vaccinated with Prevnar since launch where the product has virtually eliminated pneumococcal disease in children with ‘herd’ immunity extending to adults (Wyeth presentation).

However, Prevnar is not without weaknesses. Merck has had difficulties in meeting demand for Prevnar, due to a lack of adequate supply and manufacturing capabilities.

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TLFeBOOK

A SWOT analysis for Prevnar is shown in Figure 3.11.

Figure 3.11: Prevnar SWOT analysis

Strengths

Weaknesses

• Backed by marketing strength of Wyeth

• Expensive compared to other pediatric vaccines

• Proven to reduce middle ear infections and invasive pneumococcal infection

• Prevnar has had manufacturing and supply issues • Limited penetration of EU markets to date

• Dominates market for pneumococcal vaccines

Opportunities

Threats

• Geographical expansion into more EU regions

• Competition from rival pneumococcal vaccines

• Geographical expansion into emerging markets

• Competition from new vaccines, most notably GSK’s Streptorix, which has additional strain coverage

• Expand manufacturing capabilities

Business Insights Ltd

Source: Business Insights

Pneumovax 23 Merck’s Pneumovax 23 is an older pneumococcal polysaccharide vaccine like Wyeth’s Pnu-imune 23, which has been licensed in the US since 1983, replacing an earlier 14valent formulation previously licensed in 1977. The 23 capsular types of the vaccine represent at least 85–90% of the serotypes that cause invasive pneumococcal infections among children and adults in the US.

A major weakness of this vaccine is that it induces antibodies primarily by T cell independent mechanisms, which are generally poor or inconsistent in children under

64

TLFeBOOK

two years old. Furthermore, age-dependent serotype responses are often observed in children between two and five years old. Pneumovax 23 has proven to be effective at preventing pneumococcal disease within a range of 57% to 75% where protection lasts between three and five years. In contrast, a full series of the Prevnar PC7 vaccine is 97% effective in preventing invasive pneumococcal disease (due to seven serotypes) and 89% effective in preventing invasive disease caused by all strains.

Pneumovax 23 has lost major market share since the launch of Prevnar in 2000, and this is expected to worsen with the anticipated launch of GSK’s developmental pneumococcal vaccine, Streptorix, in 2008. Pneumovax 23 did however experience a growth in sales between 2002 and 2003, in line with the pneumococcal vaccines market as a whole, as a result of the increased number of people being vaccinated against this disease. A SWOT analysis for Pneumovax 23 is shown in Figure 3.12.

Figure 3.12: Pneumovax 23 SWOT analysis

Strengths

Weaknesses

• Backed by marketing strength of Merck & Sanofi-Aventis

• Only 57-75% effective in preventing pneumococcal disease

• Is a well-known brand amongst physicians as it has been available for over 20 years

• Induces inconsistent response in children

• Low cost in comparison to Prevnar

• Sales of Pneumovax 23 are dwarfed by those of market leader, Prevnar

Opportunities

Threats

• Capitalize on the supply and manufacturing difficulties of Prevnar

• Competition from Prevnar and other marketed pneumococcal vaccines

• Target the more cost-constrained European markets

• Competition from developmental vaccines, such as GSK Streptorix

• Target the elderly population

Business Insights Ltd

Source: Business Insights

65

TLFeBOOK

Meningococcal vaccines Meningococcal C vaccination is routinely carried for all children aged 2-6 months in the UK and Spain, and is recommended for high-risk groups in Germany. Importantly, however, no meningococcal vaccine is included in the US pediatric immunization schedule, and so market potential for currently marketed brands is limited.

Meningococcal disease refers to a variety of serious infections caused by the bacterium Neisseria

meningitides,

including meningitis, meningococcal septicemia and

pneumonia. Transmission of the bacteria typically occurs through direct contact with respiratory secretions from a nasopharyngeal carrier. Risk groups include infants and young children, and those living in close quarters such as refugees, military recruits and college students. Alarmingly, the infection commonly has an overall case fatality rate of around 10%, even with antibiotic treatment, and around 10 to 20% of those who do survive will suffer conditions such as deafness and limb amputation.

Although meningitis can be caused by a number of pathogens including some viral species, N. meningitidis is the most important, especially since widespread Hib vaccination was introduced across the major markets.

Brand market share and sales The meningococcal vaccine market is similar to the pneumococcal market in that meningococcal polysaccharide vaccines have been available for many years, and in recent years newer monovalent conjugated vaccines have been launched. These include Chiron’s Menjugate, Baxter’s Neis-Vac C and Wyeth’s Meningitec, which have been launched primarily in Europe. In contrast to their polysaccharide counterparts, conjugated vaccines provide immunological response and memory in all age groups with a good tolerability and safety profile.

Market potential for these vaccines is limited because meningococcal vaccination is not included in the US pediatric immunization schedule. It does however present an

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TLFeBOOK

opportunity for a new, more efficacious vaccine to differentiate itself from the competition and show clear benefits over antibiotic treatment, in much the same way as Prevnar has done in the pneumococcal vaccine market, which was relatively stagnant until the launch of this drug. The four-valent conjugated developmental products – such as Aventis Pasteur’s Menactra and Chiron’s developmental Men ACWY – have this potential.

Wyeth’s Meningitec is the market leader in the meningococcal vaccines market (Table 3.7), although it has suffered a decline in growth of 23.7% from 2002 to 2003. Its 2003 sales totaled $10.8m in the US and 5 major European markets, according to the IMS sales audit. (Wyeth’s company reported data shows a similar drop in sales over this period, although global sales are reported as being much higher, at $64m in 2003).

Chiron’s Menjugate offers relatively little differentiation from Meningitec, but Baxter’s Neisvac C utilizes the GCMP-TT carrier molecule in place of the CRM197 used by both Meningitec and Menjugate.

Table 3.7: US/European* sales of meningococcal vaccines ($m), 2002-03 Brand name

Marketing Company

2002

2003

Growth (%) 2002-03

CAGR (%) 1999-2003

Meningitec Menjugate Neisvac C Menomune

Wyeth Chiron Baxter Merck & Co/ Sanofi-Aventis

14.1 3.8 0.4 1.7

10.8 7.6 4.1 2.3

-23.7 101.0 823.0 36.1

0.8 -----21.4

Others

9.6

2.6

-72.6

-9.0

Total

29.6

27.4

-7.5

7.7

* France, Germany, Italy, Spain, UK Source: IMS Health, Copyright ©, reprinted with permission; Business Insights

Business Insights Ltd

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TLFeBOOK

Other pediatric vaccines Other childhood diseases against which infants are regularly immunized in certain countries include varicella (chickenpox), Hib, polio and BCG. For example, in the US all children aged 12 to 18 months are immunized against varicella, whilst routine vaccination against this disease does not occur in the EU (except high-risk groups in Germany). BCG is contrast is only included in the pediatric immunization schedule in the UK and France.

Brand market share and sales The US market is the most important market because of its size and sales potential, so it is not surprising that Varivax is the leading product in the category of ‘other’ pediatric vaccines, since it is a vaccine against varicella, which is routinely vaccinated against in the US. This product had sales of $303m in 2003, an increase of 11.5% from 2002 sales, according to the IMS sales audit in the US and 5 major European markets. However, from 2005 Varivax will face competition from Merck’s own combination MMR-varicella vaccine (ProQuad), and a rival MMR-varicella product (Priorix-Tetra) from GSK.

Comvax is a combination vaccination against hepatitis B and Hib. As these two diseases are included in immunization schedules across the six markets analyzed, then it is not surprising that Comvax has shown strong sales, with a CAGR (1999-2003) of 27.7%. However, Comvax sales declined in the 2002-03 period by 21.2% to $91m from $116m, according to the IMS sales audit in US/5EU. This is most likely because of the introduction of hexavalent vaccines including these two antigens – InfanrixHeXa and Hexavac.

Other vaccines that show strong sales are Ipol for polio, ActHib and Pedvax HIB for Hib, and TICE BCG for protection against BCG (Table 3.8).

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TLFeBOOK

Table 3.8: US/European* sales of other pediatric vaccines ($m), 2002-03 Brand name Marketing company

Indication

2002

2003

Varivax Comvax Ipol ActHib Pedvax HIB TICE BCG IPV

Chickenpox HBV/Hib polio Hib Hib BCG polio

272.0 115.7 86.0 15.3 13.5 2.0 5.9

303.3 91.2 79.8 35.2 29.3 9.2 6.8

11.5 -21.2 -7.2 130.4 116.5 351.3 15.2

10.9 27.7 35.8 56.9 53.6 67.4 -7.2

510.4

554.8

8.7

---

Merck & Co. Merck & Co. Sanofi-Aventis Sanofi-Aventis Merck & Co.

Total

Growth (%) CAGR (%) 2002-03 1999-2003

* France, Germany, Italy, Spain, UK Source: IMS Health, Copyright ©, reprinted with permission; Business Insights

Business Insights Ltd

Brand analysis The two most significant vaccine brands used in the pediatric population in the US and Europe, that have not been covered elsewhere in this report, are Varivax for varicella (chickenpox), and Comvax for combined protection against Hib and hepatitis B. Both products are profiled below.

Varivax Varivax, from Merck, is indicated for vaccination against varicella (chickenpox) in individuals aged over 12 months. Varivax is a preparation of the Oka live attenuated varicella virus, licensed from Osaka University in Japan, which was originally obtained from a child with natural varicella. It was originally launched in 1995 in the US in a frozen formulation, but a second-generation version was launched in 2000 that was refrigerator-stable.

In clinical trials Varivax has shown to be 97% effective in moderate to severe chickenpox (>50 lesions), and 85% effective against all forms of varicella (www.merckvaccines.com). Varicella vaccination is recommended for children aged

69

TLFeBOOK

12-18 months, and also recommended for catch-up vaccination for children aged up to 18 years who have not already suffered the disease.

In children, adolescents, and adults the adverse events most frequently reported were fever, injection-site complaints, and varicella-like rash. Varivax is contraindicated for those individuals with any immunodeficient condition or receiving immunosuppressive therapy, or those with hypersensitivity to any component of the vaccine. There is also insufficient data to assess the rate of protection of Varivax against the serious complications

of

chickenpox

(e.g.,

encephalitis,

hepatitis,

pneumonia)

and

complications during pregnancy (e.g., congenital varicella syndrome).

A SWOT analysis for Varivax is shown in Figure 3.13.

Figure 3.13: Varivax SWOT analysis

Strengths

Weaknesses

• Supported by the marketing strength of Merck

• Insufficient data on protection against the serious complications of varicella

• Has proven to be highly effecti ve at preventing chickenpox

• Varicella is not a priority for many Western governments

• Few adverse events reported

• Common side-effects are injection, site soreness, a varicella-like rash and fever

• Vari vax is the only varicella vaccine licensed for use

Opportunities

Threats

• Line-extension to herpes zorster virus vaccine (planned FDA filing 2005)

• Competition from developmental MMR-varicella vaccines from Merck and GSK

• Campaign for routine varicella vaccination in European countries, like in the US

Business Insights Ltd

Source: Business Insights

70

TLFeBOOK

Comvax Comvax is a combined vaccine protecting against hepatitis B and Haemophilus influenzae type B (Hib). Merck & Co. developed and launched Comvax in the US in 1997, and in several European countries by June 2002. Comvax contains the immunogenic components of Merck’s PedvaxHib for protection against Hib, and Recombivax HB to protect against hepatitis B. Comvax is targeted at infants aged between six weeks and 15 months, born to HbsAg-negative mothers and three 0.5ml doses of the vaccine are required in total.

The main advantage of Comvax is that it protects against two childhood diseases in one vaccine, and in clinical trials Comvax was shown to elicit immune responses comparable to those induced by the monovalent products. Similarly to Recombivax HB, Comvax is contraindicated for those allergic to yeast, since this fungus was used to produce the recombinant hepatitis antigen.

The introduction of multiple combination products in recent years has, to a great extent, minimized the potential of Comvax, which only offers protection against two diseases. However, Merck could potentially benefit from continued reimbursement problems that physicians suffer with regard to such combination products. For example, in Germany, physicians are reimbursed on a per shot basis, with a standard fee per immunization. As a result, the use of multiple combination products, which are more expensive per dose, has led to some physicians losing out. Merck could potentially capitalize on this by promoting the use of Comvax with DTP, in place of pentavalent products.

A SWOT analysis of Comvax is shown in Figure 3.14.

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TLFeBOOK

Figure 3.14: Comvax SWOT analysis

Strengths

Weaknesses

• Supported by the marketing strength of Merck & Co

• Cannot be used in those with yeast allergies

• Can be administered along with other vaccines

• Inferior immunogenicity

• Combines HiB and HBV vaccines

• HiB is not a top priority with WHO/UNICEF

Opportunities

Threats

• Geographical expansion into developing regions

• Competition from multiple combination products, such as GSK’s Infanrix-Hexa

• Reduce price to that of monovalent HBV vaccines

• Competition from HBV vaccines, where HiB vaccination is not a priority

• Target children who have already received DPT, rather than the 4,5 or 6-drug combination vaccines

Business Insights Ltd

Source: Business Insights

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TLFeBOOK

CHAPTER 4

Adult vaccines

73

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Chapter 4

Adult vaccines

Summary


The three most important adult (non-pediatric) vaccine populations are the adolescent, elderly and travel vaccine groups.




Hepatitis B vaccination forms a major part of the travel vaccines sector, as well as being recommended in pediatric immunization schedules in most Western countries. GSK’s Engerix-B and Merck/Sanofi-Aventis’ Recombivax HB dominate the hepatitis B market, with sales of $228m and $176m respectively (IMS sales channels US/5EU). Competition in the pediatric sector comes from multivalent vaccines containing the HBV antigen.




Hepatitis A vaccine is not a priority for most Western governments because it is most prevalent in developing countries, although vaccination is recommended in regions of the US. GSK’s Twinrix is a vaccine against hepatitis A and B, while Havrix and Vaqta protect only against hepatitis A. Sales of these products are lower than the HBV vaccines.




The market for influenza vaccines has increased significantly in recent years, and the growth from 2002 to 2003 was 55%. Chiron’s Fluvirin and Sanofi-Aventis’ Fluzone were the market leaders in 2003. In many countries influenza vaccination is recommended for the elderly and high-risk groups only, but in the US annual vaccination is recommended for the whole population over 2 years of age.




Sales of Chiron’s Fluvirin for the 2004/05 flu season will suffer severely because the company will not be supplying any influenza vaccine from its main Liverpool plant because of a bacterial contamination. This will also affect the company’s reputation for the future with Sanofi-Aventis already winning a contract with the US government to begin year-round production of Fluzone.




Other common adult vaccines generally belong to the travel vaccines market, and protect against diseases that are not common in the traveler’s own country but are endemic in other regions of the world. Such diseases for which vaccines exist are rabies, typhoid, yellow fever and tick borne encephalitis.

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Introduction This chapter begins by sizing the adolescent and elderly target populations in the countries covered in this report (US, France, Germany, Italy, Spain and UK. The second part of the chapter reviews the competing brands in the major adult vaccine markets, namely hepatitis and influenza. Although hepatitis A and B vaccines are also administered to the pediatric population it is covered entirely in this section.

Adult vaccine population As well as the pediatric immunization programs, routine vaccinations also occur in the adult population. For this report the adult population includes all non-pediatric segments, such as the adolescent, elderly and travel populations.

Adolescent vaccination In many countries, older children or adolescents are often vaccinated against certain diseases transmitted by sexual contact or drug use, most commonly hepatitis B, or those that are most problematic during pregnancy. A tetanus booster vaccination should also be given every ten years.

The adolescent patient pool for a vaccine corresponds to one year of children, typically all those aged 12. However, this patient pool can include a catch-up pool should a new vaccine enter the market that the government includes on its immunization schedule. The catch-up pool could be all those aged 13 and 14, or possibly up to age of 17, as illustrated in Figure 4.15.

75

TLFeBOOK

Figure 4.15: Adolescent population in the US and 5 major European markets, 2005 30.0

Target population (milllions)

25.0

20.0

15.0

10.0

5.0

0.0 US

France

Population at 12 years of age

Germany

Italy

Catch-up pool (13-14)

Spain

UK

Catch-up pool (15-17)

Business Insights Ltd

Source: Business Insights

Elderly vaccination Across the US and five major European markets is projected that there will be almost 120m people over the age of 60 in 2005 (Figure 4.16). This figure is expected to rise further in coming years with increasing life expectancies and a rise in the agedemographic.

76

TLFeBOOK

Figure 4.16: Elderly population in the US and 5 major European markets, 2005 60

Target population (millions)

50

40

30

20

10

0 US

France

Germany

65+ population

Italy

Spain

UK

60-65 population Business Insights Ltd

Source: Business Insights

The most common vaccine to be administered to the elderly population is the influenza vaccine. This is because the majority of deaths associated with influenza, and related condition pneumonia, are in the elderly population. In the US, influenza vaccination is recommended for all persons aged over 50 years, whereas in the EU the recommendation is for over 65s only.

The success of the influenza vaccine in the US is shown in Figure 4.17, where the mortality rate for influenza and pneumonia has declined from 31.6 per 100,000 in 1995 to 22.8 per 100,000 in 2002.

77

TLFeBOOK

Figure 4.17: Number of deaths from influenza and pneumonia in the US, 19952002 95000

Number of deaths

90000 85000 80000 75000 70000 65000 60000 55000 50000 1995 1996 1997 1998 1999 2000 2001 2002 Source: National Center for Health Statistics, US; Business Insights

Business Insights Ltd

Traveler vaccination Travel vaccines are administered to individuals traveling to regions of the world where diseases are endemic that are not common in the traveler’s home country. The diseases against which travelers will be vaccinated against thus depend on the country they come from and the country to which they are traveling. For example, for US citizens traveling to regions of Africa, CDC-recommended vaccinations include hepatitis A and B, rabies, yellow fever and typhoid.

The travel vaccine market has increased significantly in recent years due to the increase in international travel.

78

TLFeBOOK

Hepatitis vaccines Vaccines are available to protect against hepatitis A and B, but no vaccination is currently available against hepatitis C. As hepatitis A is most prevalent in developing countries because of its associations with poor hygiene and unclean water, it is not a priority for most Western governments. In the five major European countries, only Germany vaccinates against hepatitis A but only for high-risk groups. However, in parts of the US there is a high prevalence of hepatitis A so vaccination is included in the infant immunization schedule for this part of the country. A major source of hepatitis A vaccine sales is the travel vaccine market, hence its inclusion in this section of the report.

Hepatitis B vaccination also forms a major component of the travel vaccines market. In addition, vaccination against hepatitis B, either by a monovalent vaccine or as one component of a combination vaccine, is integrated into the pediatric immunization schedules in most Western countries. Importantly this includes the US market in addition to Germany, Spain and Italy. However, in France the vaccination is merely recommended for infants, whilst in the UK it is recommended for high-risk individuals only.

Any inflammation of the liver is associated with hepatitis, but the term is most commonly used for the group of infectious diseases caused by viruses that attack the liver. Six different kinds of hepatitis, A, B, C, D, E, and G, have now been discovered, with each of these being caused by a different virus. Five of the types cause disease, while one, hepatitis G, lives in the blood without causing any apparent illness. Symptoms of hepatitis include jaundice (yellowing of the skin), fatigue, nausea, fever, and discolored urine.

79

TLFeBOOK

Of the hepatitis viruses, the most common are:


Hepatitis A virus (HAV): is very common in developing countries, and is acquired from water or food sources. HAV is usually mild and may sometimes be discovered only by blood testing and never leads to chronic liver disease;




Hepatitis B virus (HBV): can cause lifelong infection, cirrhosis of the liver, liver cancer, liver failure, and death. HBV is transmitted by contact with blood or bodily fluids of an infected person;




Hepatitis C (HCV): causes chronic infection in over 70% of cases. Of infected people, 80% have no signs or symptoms. HCV spreads through the blood and body fluids of an infected person.

Brand market share and sales GSK and Merck/Sanofi-Aventis dominate the market for hepatitis vaccines, as shown in Table 4.9.

Table 4.9: US/European* sales of hepatitis vaccines ($m), 2002-03 Brand name

Marketing company

2002

2003

Growth (%) 2002-2003

CAGR (%) 1999-2003

Engerix-B Recombivax HB

GSK Merck & Co/ Sanofi-Aventis GSK GSK Merck & Co/ Sanofi-Aventis Merck & Co/ Sanofi-Aventis

270.7 168.9

227.6 176.3

-15.9 4.4

-1.1 -3.8

77.2 96.9 50.8

93.8 85.1 60.1

21.4 -12.2 18.4

4.9 6.1 15.5

1.2

1.3

7.2

5.8

0.1

0.2

140.8

24.2

665.8

644.5

-3.2

0.8

Twinrix Havrix Vaqta Avaxim Others Total

* France, Germany, Italy, Spain, UK Source: IMS Health, Copyright ©, reprinted with permission; Business Insights

Business Insights Ltd

80

TLFeBOOK

The top three hepatitis vaccines marketed by GSK are Engerix-B (HBV), Twinrix (HAV/HBV) and Havrix (HAV). Of these, the hepatitis vaccine Engerix-B is the market leader. In 2003, Engerix-B sales in the US and 5 major European markets totaled $228m, according to the IMS sales audit. However, this represented a 16% drop in sales from 2002, primarily due to the launch of multivalent vaccines including the HBV antigen and competition from Recombivax HB and Twinrix. The combined hepatitis A and B vaccine, Twinrix, showed a strong sales growth of 21% over the 2002-03 period to record sales of $93.8m in 2003, while hepatitis A vaccine Havrix saw its sales decline over the same period. (GSK global company reported data put sales of its hepatitis vaccines at $681m in 2003).

Merck’s (Aventis Pasteur MSD in Europe) major hepatitis products are Recombivax HB (HBV) and Vaqta (HAV). Sales growth of Recombivax HB has remained relatively flat over the 1999-2003 period, and 2003 sales totaled $176m (IMS US/5EU). Vaqta has had a strong growth rate from 2002 to 2003 of 18.4%, although sales of $60m (IMS US/5EU) still fall short of GSK rival hepatitis A vaccine, Havrix.

Brand analysis The four top-selling hepatitis vaccines are profiled in this report. These are: hepatitis B vaccines, Engerix-B and Recombivax HB; combination hepatitis A and B vaccine, Twinrix; and hepatitis A vaccine, Havrix.

Engerix-B Engerix-B is a hepatitis B vaccine, developed and marketed by GSK. It was first launched in France in 1995 and now available in multiple markets, including the US and five major European markets. Engerix-B is indicated for immunization against all serotypes of hepatitis B and the product label also states that since hepatitis D only occurs in the presence of hepatitis B, Engerix-B can also prevent infection with this virus.

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TLFeBOOK

Engerix-B is a non-infectious recombinant DNA vaccine that contains purified HBV surface antigen, obtained from genetically modified Saccharomyces cerevisiae. The product-purified antigen is formulated as a suspension adsorbed onto aluminum hydroxide, and supplied in vials and prefilled Tip-Lok syringes. The pediatric vaccine is available in a thimerosal-free formulation to counter concerns about the use of this preservative in young children. Figure 4.18 shows a SWOT analysis of Engerix-B.

Figure 4.18: Engerix-B SWOT analysis

Strengths

Weaknesses

• Marketing strength of GSK, with proven success in the vaccines field

• Not suitable for patients allergic to yeast

• Physician familiarity with Engerix-B

• Requires three doses for completion of course

• Available in separate pediatric and adult formulations

• Combination vaccines with a HepB component are used in pediatric vaccines, whereas Engerix-B is a single vaccine

• Available with Tip-Lok delivery device • Dominates the US/Europe HepB vaccine market

Opportunities

Threats

• Increase uptake in adult populations as a result of US READII and VFARH initiatives

• Competition from combination vaccines in the pediatric population

• Increase uptake in some developed regions (e.g. UK) and emerging markets

• Competition from Merck/SanofiAventis’ Recombivax-HB • Threat of competition of next generation hepatitis vaccines in development

• Develop new combination vaccines containing Engerix-B • Reduce number of doses required

Business Insights Ltd

Source: Business Insights

The only reported contraindication of this product is hypersensitivity to yeast or any other component of the vaccine. However, the product does carry a number of warnings, including one linked to multiple sclerosis, although no causal relationship has been established. One disadvantage of Engerix-B is that it is required to be taken in three doses, which has a detrimental effect on course completion by patients.

82

TLFeBOOK

If Engerix-B could be re-formulated into a one or two dose vaccine, then it would have a major advantage over Recombivax HB. Another opportunity for Engerix-B would be increasing levels of adult vaccination as driven by the US READII and VFARH initiatives where GSK would be advised to gain preferred supplier status. However, pediatric combination vaccines containing a hep B component are a major threat to Engerix-B, as is Twinrix in the travel vaccines market.

Recombivax HB Recombivax HB was originally developed by Chiron, and licensed for marketing to Merck in the US, and Sanofi-Aventis in the EU (as H-B-Vax Pro). Recombivax HB was first launched in 1991 and is the major competitor to Engerix-B in the hepatitis B vaccine market. A SWOT analysis for Recombivax HB is shown in Figure 4.19.

Figure 4.19: Recombivax HB SWOT analysis

Strengths

Weaknesses

• Marketing strength of Merck & Co, and Sanofi-Aventis

• Not suitable for patients allergic to yeast

• Can be administered with other vaccines

• Requires three doses for completion of course

• Formulations for pediatrics, adults and niche groups

• Lags behind GSK’s Engerix-B in terms of US/Europe sales

• Highly immunogenic • Physician familiarity with Recombivax

Opportunities

Threats

• Immunocompromised patients

• Competition from combination vaccines in the pediatric population

• International and national hepatitis vaccine initiatives such as US READII and VFARD in adult populations

• Competition from the leading HepB vaccine, Engerix-B from GSK • Threat of competition from nextgeneration hepatitis vaccines in development

Business Insights Ltd

Source: Business Insights

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TLFeBOOK

The vaccine is produced from purified hepatitis B surface antigens (HbsAg) cultured from recombinant yeast strains. The vaccine is free from detectable yeast DNA and human blood or blood products. However, the yeast-based production process means that the vaccine is contraindicated for patients demonstrating hypersensitivity to yeast.

This product is recommended for all high-risk groups and is available in formulations specifically for adults and pediatrics. The pediatric formulation of Recombivax is thimerosal-free, due to concerns about the use of this preservative in young children. Recombivax HB’s indication for the niche markets of predialysis and dialysis patients who require a greater antigen load is an added advantage.

Twinrix SmithKline Beecham (now GlaxoSmithKline) developed Twinrix, the first combined vaccine for protection against hepatitis A and B infections. Twinrix was launched in its first market, the UK, in January 1997 for use in adults. By the end of 1999 Twinrix had been launched in over 30 countries worldwide in both adult and pediatric formulations that differ in antigen and adjuvant concentration. The vaccine was launched in the US in 2001.

Twinrix is a combined vaccine, formulated by pooling bulk preparations of the purified, inactivated hepatitis A virus (HAV) and purified hepatitis B surface antigen (HBsAg), separately adsorbed onto aluminum hydroxide and aluminum phosphate. The HA virus is propagated in MRC5 human diploid cells, whereas HBsAg is produced in cultures of genetically engineered yeast cells. The HBV component of the vaccine shares the same manufacturing process as Engerix-B, thereby precluding use in patients demonstrating serious yeast sensitivity.

Hepatitis A is not a key priority for the majority of Western governments, as the infection is associated with poor hygiene and unclean water supplies and thus more prevalent in the developing world. As a result, the scope of Twinrix is predominantly limited to a small section of the travel vaccine market. However, in certain regions of

84

TLFeBOOK

the US, hepatitis A is problematic and vaccination is recommended as part of the pediatric schedule. As hepatitis A is not yet included in the multiple combination products, Twinrix has considerable scope to gain market share in these regions. In addition, GSK could aim the product at the adult booster market in these regions as well.

A SWOT analysis for Twinrix is shown in Figure 4.20.

Figure 4.20: Twinrix SWOT analysis

Strengths

Weaknesses

• Supported by the marketing strength of GSK

• Cannot be used in patients with yeast allergies

• Provides protection against both HAV and HBV

• HAV is not a priority for many Western governments

• Available in adult and pediatric formulations

• In the US and Europe Twinrix has not yet achieved the success of single HBV vaccines, Engerix-B and Recombivax HB

Opportunities

Threats

• Geographical expansion into developing markets where HAV and HBV are more problematic

• Competition from multiple combination vaccines in pediatric sector

• Focus on US market, where HAV is is more problematic

• Competition from single HBV vaccines, where HAV is not a priority

• HAV is not yet included in any multiple combination products •Target the travel vaccines market

Business Insights Ltd

Source: Business Insights

Havrix Havrix is another vaccine marketed by GSK. It is a hepatitis A vaccine indicated for individuals over 2 years of age, and provides long-term protection (20 years) after a two-dose course. Havrix was the first hepatitis A vaccine available when it was 85

TLFeBOOK

launched in the US in 1995. It is now licensed in more than 100 countries worldwide, with 61m doses administered to date (www.havrix.com).

Hepatitis A vaccination is not a high priority in most developed countries, although in some regions of the US where the prevalence of hepatitis A is high, children are routinely vaccinated. Thus the US is the major market for Havrix. Havrix is contraindicated for those with hypersensitivity to neomycin, and the most common side effects experienced with the vaccine are soreness at the site of injection and a headache.

A SWOT analysis for Havrix is shown in Figure 4.21.

Figure 4.21: Havrix SWOT analysis

Strengths

Weaknesses

• Supported by the marketing strength of GSK

• Cannot be used in patients with hypersensitivity to neomycin

• Available in pre-filled Tip-Lok syringes

• HAV is not a priority for many Western governments

• Provides 100% sero-conversion after a 2-dose course • In some regions of the important US market, children are routinely immunized against HAV

• Common side-effects are headaches and injection-site soreness

Opportunities

Threats

• HAV is not yet included in any multiple combination products

• Competition from rival HAV vaccine, Vaqta

• Target the travel vaccines market

• Competition from HAV/HBV vaccine, Twinrix

• Increase the profile of hepatitis A in European countries, where HAV is not a priority

Business Insights Ltd

Source: Business Insights

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TLFeBOOK

Influenza vaccines In the US, vaccination is seen as key to control the outbreak of influenza, with all individuals offered vaccination annually over 2 years of age, and particular attention paid to the high-risk population over-50 population. In the UK influenza vaccination is offered annually to the over-65 population and other high-risk groups, while in Germany it is only high-risk groups who are vaccinated.

The commonly circulating influenza virus changes rapidly, hence requiring vaccine composition to be changed annually. The efficacy of the vaccines varies between 30% and 70% depending on the age and environment of the individual.

Influenza, commonly known as flu, is one of the oldest and most common diseases. It is an acute respiratory illness characterized by fever, chills, cough, sore throat, headache, muscle aches and loss of appetite. It is most often a mild viral infection transmitted by respiratory secretions through sneezing or coughing. A more serious complication of influenza is pneumonia due to secondary bacterial infection, which is more common in children and very old people. The rate of incidence influenza has not varied substantially over the past 60 years, although mortality rates have declined. In the US every year it is estimated that 5-20% of the population suffer from flu.

Annual influenza epidemics occur following slight mutations in the viral genome, termed antigenic drift, and few people will have antibodies against the new virus. Every 20-30 years, a highly virulent strain emerges, causing global pandemics with high mortality rates. This is driven by a much bigger genomic mutation, termed antigenic shift.

The last flu pandemic was in 1968. According to the WHO, the world is overdue for a pandemic that could kill millions and the WHO has stated that the H5N1 virus (avian flu), now killing tens of millions of birds in Asia, will be the most likely source. Avian

87

TLFeBOOK

flu is currently circulating in Vietnam and Thailand, and in 2003 a different strain of avian flu (H7N7) infected around 1,000 people in the Netherlands.

Brand market share and sales Chiron’s Fluvirin and Sanofi-Aventis’ Fluzone are the market-leading influenza vaccines. Although the US/5EU IMS data presented in Table 4.10 shows Fluvirin with sales 5-times that of Fluzone, global company reported data from Chiron and SanofiAventis suggests the split of sales to be more equal. (Chiron reported total vaccine sales globally of $678m in 2003, with Fluvirin as its dominant product, while SanofiAventis reported global sales of $635m for its influenza vaccine range, for which Fluzone is the dominant product).

Sales of Chiron’s Fluvirin will suffer a large drop in 2003 because the company was not able to sell influenza vaccines produced at its Liverpool plant due to bacterial contamination. This is also likely to damage the reputation of Chiron in the future, with Sanofi-Aventis’ Fluzone taking a clear lead in this market.

Table 4.10: US/European* sales of influenza vaccines ($m), 2002-03 Brand name

Marketing company

2002

2003

Growth (%) 2002-03

CAGR (%) 1999-2003

Fluvirin Fluzone Begrivac FluMist Influvac Fluarix Mutagrip/ Vaxigrip Fluad Agrippal Inflexal Others

Chiron Sanofi-Aventis Chiron MedImmune Solvay GSK Merck & Co/ Sanofi-Aventis Chiron Chiron Berna Biotech AG

103.8 32.9 26.4 0.0 23.2 19.5 34.4

250.5 52.1 36.6 30.5 29.7 25.1 45.9

141.3 58.3 38.5 --27.9 28.6 33.4

156.2 31.3 7.8 --15.9 13.2 7.4

10.0 3.5 3.7 83.6

15.9 5.8 4.2 32.4

59.4 66.9 15.4 -61.2

42.8 9.3 19.1 -16.5

341.0

528.9

55.1

28.6

Total * France, Germany, Italy, Spain, UK

Source: IMS Health, Copyright ©, reprinted with permission; Business Insights

Business Insights Ltd

88

TLFeBOOK

First-year sales of MedImmune’s FluMist, according to the US/5EU IMS sales audit, were $30m in 2003, which matches global company reported data.

Brand analysis The two leading influenza vaccines, Fluvirin from Chiron, and Sanofi-Aventis’ Fluzone, are both profiled in this report. Additionally, 4th placed FluMist is profiled, because it is a significant product in terms of differentiation from the other products in this market as it has a nasal delivery mechanism.

Fluzone Fluzone is a leading influenza vaccine marketed by Sanofi-Aventis. This product was originally developed and marketed by Connaught Laboratories, acquired by Pasteur Mérieux Serums & Vaccines in 1989, and now part of Sanofi-Aventis’ influenza vaccine portfolio, also including Vaxigrip/Mutagrip.

Fluzone has the major advantage of being indicated for all individuals over the age of six months, unlike Chiron’s Fluvirin, which can only be used in children over four years of age. Another strength of the product is its dominant US position where it is has proven efficacy and is well known amongst physicians. Additionally, Fluzone has been shown in clinical studies to be acceptable for concurrent use with pneumococcal vaccine using separate syringes at different sites.

Fluzone’s main weakness is that it suffers from poor differentiation when compared to other comparable vaccines which all share common negative aspects such as vaccine mismatch with circulating strain and needle injection delivery. The poor uptake of intranasal vaccine, FluMist, was therefore surprising, although this could be more to do with its high price point and restriction to healthy individuals. Another disadvantage of Fluzone is that this vaccine is contraindicated for individuals allergic to eggs, due its manufacture using chicken eggs, although Sanofi-Aventis is already pre-empting the potential shift away from egg-based flu production systems by entering into an agreement with Crucell who possess the PER.C6 cell line system. This strain can be 89

TLFeBOOK

used to develop pandemic and epidemic strains of the flu virus possibly rendering large-scale scale-up more cost effective.

Of the approximate 87m doses supplied to the US in the 2003/04 season, Fluzone accounted for 43m doses. For the 2004/05 season Sanofi-Aventis will be the major supplier of influenza vaccines to the US (58m doses) following the suspension of production of Chiron’s Fluvirin for GMP violations. In November 2004, SanofiAventis also secured a US Department of Health and Human Services (HHS) contract to begin year-round production of Fluzone, in preparation for an influenza pandemic. This contract could grow to $41m by 2008. This follows a previous agreement with the US NIH to produce 8,000 doses of the ‘avian’ strain ready to be tested under an Investigational New Drug Application.

Figure 4.22: Fluzone SWOT analysis

Strengths

Weaknesses

• Backed by strong marketing presence of Sanofi-Aventis

• Not suitable for patients allergic to eggs

• Indicated for children over 6months as well as adults

• Contains thimerosal, a mercury-based compound used as a preservative

• Fluzone has proven efficacy

• Efficacy in the over-65 age-group is unproven

• Fluzone is the leading supplier of influenza vaccine to US

• Poor differentiation from other influenza vaccines

Opportunities

Threats

• Capitalize on suspension of Chiron production

• Competition from other comparable influenza vaccines

• Reformulate Fluzone without thimerosal, and with an alternative delivery mechanism

• Competition from new products with alternative delivery mechanisms, e.g. FluMist

• Capitalize on use of PER.C6 cell line from Crucell for egg-free production

• Crucell has also licensed PER.C6 technology to GSK and Merck & Co.

Business Insights Ltd

Source: Business Insights

90

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Fluvirin Chiron manufacture and market four brands of influenza vaccine, of which Fluvirin is the leading product. Fluvirin originated from Chiron’s takeover of PowderJect. Fluvirin contains the influenza surface antigens hemagglutinin and neuraminidase, purified from the extraembryonic fluid of embryonated chicken eggs inoculated with this virus. The product is available in multi-dose vials or prefilled syringes.

A key weakness of Fluvirin is that the product is currently not indicated for use in children under the age of four. In light of current US recommendations widening flu vaccinations for children aged six to 23 months, it is clear that without proof of efficacy and safety in this target group, only Aventis Pasteur’s Fluzone can exploit this enlarged pediatric flu segment. The most common side effect of vaccination with Fluvirin is soreness at the injection site. Less common side effects include fever, malaise, myalgia and allergic reactions. Another drawback of Fluvirin is that it needs to be stored refrigerated, at 2–8°C, and should not be administered to anyone with a history of hypersensitivity to any component of the vaccine, including eggs, egg products or thimerosal.

In 2003 Chiron supplied 38m doses of Fluvirin for the US market, and for all four of its flu vaccines around 75m doses were distributed globally. The company stated that in 2003 it had the number one position in the UK, German and Italian markets, but the second position in the large US market.

However, in October 2004 the UK Medicines and Healthcare products Regulatory Agency (MHRA) suspended Chiron’s influenza vaccine production due to GMP violations causing bacterial contamination. The FDA followed suit and declared that none of the 46-48m doses of Fluvirin due to be supplied to the US for the 2004/05 flu season could be used. This suspension is a major blow to Chiron, both in terms of loss of revenue for this flu season, and loss of reputation in gaining future influenza vaccine supply contracts. This is already in evidence with major rival Sanofi-Aventis having

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gained a $10m contract with the US HHS in November 2004 for year-round production of its influenza vaccine, Fluzone.

A SWOT analysis of Fluvirin is shown in Figure 4.23.

Figure 4.23: Fluvirin SWOT analysis

Strengths

Weaknesses

• Prior to its suspension in 2004, Chiron was an established supplier for US immunization programs

• In Oct 2004, Chiron had its production suspended by the MHRA, and will not be supplying the US for the 2004/05 flu season

• Good physician familiarity with the product and proven efficacy

• Cannot be used in individuals with severe egg allergies

• In 2003, Fluvirin was the leading influenza vaccine in the US, Italy and Germany

• Only indicated for children over 4 years of age

Opportunities

Threats

• Global expansion of influenza vaccine programs

• Damage to reputation of 2004 suspension, leading to loss of revenue and future contracts

• Cell-culture derived vaccines in development

• Introduction of next-generation of influenza vaccines with improved efficacy and alternative delivery mechanisms, e.g. FluMist

• Could develop a Fluvirin alternative for pediatric population

Business Insights Ltd

Source: Business Insights

FluMist The cold-adapted influenza vaccine was first discovered in 1967 at the University of Michigan and licensed to Aviron, subsequently acquired by MedImmune. The resulting product, FluMist, was approved by the FDA in June 2003 and launched in the US later that same year as the first nasal influenza vaccine. FluMist contains three strains of live, attenuated, cold adapted and temperature-sensitive influenza virus: two type A

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and one type B. It is produced by growing the viral strains in specific pathogen-free chicken eggs. FluMist is approved for individuals over five, but less than 50 years old.

FluMist’s key strength is its nasal delivery, unlike its competitors which all have injection delivery. However, safety concerns exist over viral shedding and transmission. Additionally, FluMist does not contain thimerosal or other preservatives and thus requires freezer storage throughout distribution. This is commercially significant because many markets do not have distribution channels well suited to the sale of frozen vaccines, thereby limiting use. To overcome this, MedImmune is developing a second-generation, refrigerator-stable formulation of FluMist (CAIV-T). This product is currently in Phase III trials. A SWOT analysis for FluMist is shown in Figure 4.24.

Figure 4.24: FluMist SWOT analysis

Strengths

Weaknesses

• FluMist has a nasal delivery system, which is an advantage over the common injection drug delivery

• Lack of major marketing partner – Wyeth ga ve up marketing rights in 2004

• The price of FluMist has recently been reduced more in line with injectable flu vaccines • FluMist does not contain thimerosal or other preservatives

• Not indicated for children under 5 years of age, or adults over 50 • Requires freezer strorage • Flumist is a live viral vaccine, and there is limited data on viral shedding • Poor sales in first year of launch, 2003

Opportunities

Threats

• Global expansion of influenza vaccine programs in US and EU

• Competition from well established injectable alternatives with proven efficacy

• Expansion of vaccination of the ‘worried well’ and workforce populations

• Lack of established demand for influenza vaccines in the 5-49 agegroup

• Development of 2nd generation vaccine (CAIV-T) which does not require freezer storage

• Wyeth’s withdrawal may damage FluMist’s reputation

• Capitalize on vaccine shortage in US

Business Insights Ltd

Source: Business Insights

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MedImmune were initially confident of their product’s potential, manufacturing about four million doses of FluMist, which they decided to sell at a retail price of $60–70. MedImmune predicted sales of $120m to $140m, however, actual sales for the 2003–04 flu season were around $30m. Initially, Wyeth co-marketed the vaccine with MedImmune, although Wyeth surrendered rights to the product in April 2004 due to the poor first-year sales.

Despite these poor sales, there remains significant market opportunity for FluMist. MedImmune has recently decreased the price of FluMist more in line with injectable flu vaccines, which should see significant gains in market share for MedImmune. Also, the massive shortfall in supply in the US and other major markets and the willingness of MedImmune to help meet demand could establish the drug as a useful alternative to Fluvirin.

Other adult vaccines Other common adult vaccines generally belong to the travel vaccines market, and protect against diseases that are not common in the traveler’s own country but are endemic in other regions of the world. Such diseases for which vaccines exist are rabies, typhoid, yellow fever and tick borne encephalitis.

The US CDC recommends vaccination against Typhoid and Rabies for all travel outside the US with the exception of Western Europe, while Yellow Fever vaccination is recommended for those traveling to parts of Africa, the Caribbean, and Central and South America. Tick borne (Japanese) encephalitis vaccination is recommended for travel to Asia and the Indian Subcontinent.

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Brand market share and sales The two most significant products in this ‘other’ adult vaccines category are Typhim VI from Merck & Co/Sanofi-Aventis, and RabAvert from Chiron. Typhim VI is a vaccine to protect against Typhoid, and it recorded sales of $25m in 2003 in the US and 5 major European markets, according to the IMS sales audit. This was an increase of 12.8% from the previous years’ sales, and a CAGR (1999-2003) of 18.5%. This increase is due in part to the large increase in foreign travel in recent years. Similarly, RabAvert has shown strong growth over the last five years, and 2003 sales totaled $9.1m.

Table 4.11: US/European* sales of other adult vaccines ($m), 2002-03 Brand name

Marketing company

Indication

Typhim VI

Merck & Co/ Typhoid Sanofi-Aventis RabAvert/Rabipur Chiron Rabies

2002

2003

Growth (%) CAGR (%) 2002-03 1999-2003

22.5

25.3

12.8

18.6

7.7

9.1

18.1

22.6

* France, Germany, Italy, Spain, UK Source: IMS Health, Copyright ©, reprinted with permission; Business Insights

Business Insights Ltd

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CHAPTER 5

Key players in the vaccines market

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Chapter 5

Key players in the vaccine market

Summary


There are five key players that dominate the vaccines market – Merck & Co, Wyeth, Sanofi-Aventis, GSK and Chiron.




Merck & Co’s vaccines franchise is set to grow from 5% of its total sales in 2003 to 11% by 2010. This growth depends mostly on the launch and success of pipeline products for HPV (cervical cancer), zoster (shingles) and MMRvaricella.




Wyeth reported global sales of $1,268m in 2003 (IMS sales audit in US/5EU reported $805m). The majority of these sales were from its pneumococcal vaccine, Prevnar. However, Wyeth has a very thin vaccine pipeline with no products due for launch before 2010.




According to global company-reported data, GSK is the leading company in the vaccines market, with sales of $1,834 in 2003, although sales through channels covered by IMS in US/5EU were much lower ($769m). GSK also has the most extensive pipeline of the five leading players, with no less than seven pipeline vaccines due for launch before 2010. The most promising pipeline candidate is Cervarix for HPV (cervical cancer).




Sanofi-Aventis reported global sales of $1,831m in 2003, putting the company marginally behind GSK, although sales through channels covered by IMS in US/5EU were much lower at $446m. Sanofi-Aventis has two vaccine products in the registration stage, although neither are predicted to show strong sales, and besides this the pipeline is relatively bare with no new vaccines before 2010.




Chiron is the 5th largest vaccines company, and its major product is Fluvirin, an influenza vaccine. However, a bacterial contamination at its Liverpool plant in 2004 has meant that no Fluvirin produced at the plant can be used for the 2004/05 season. Chiron had expected to supply 48m doses of Fluvirin to the US so this is a major blow both financially and in terms of the company’s reputation.

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Introduction Chapter 5 will provide an overview of the vaccines portfolios of the leading players in the vaccines market, assessing both those products currently marketed and those in R&D. The analysis will also look at how important each company’s vaccines portfolio is for the company revenue as a whole, and how they are shaping themselves for the future in terms of their R&D pipeline. Forecasts are also given for those pipeline vaccines due for launch before 2010.

The companies that will be profiled in this report are Merck & Co, Wyeth, GSK, Sanofi-Aventis and Chiron. In addition emerging companies in the vaccines field will be discussed briefly.

Figure 5.25 provides a comparison of the sales figures provided by the IMS sales audit in the US and 5 major European markets, and global sales figures reported by the pharmaceutical companies themselves. While some of the discrepancies can be attributed to the different geographical areas covered by either data set, i.e. US/5EU versus global, this is not the whole story. Not all vaccine sales channels are covered completely by the IMS audit, and may be missing entirely from IMS reported sales in a large number of countries:


Dispensing doctors;




Health workers;




School & military vaccination programs;




Mail order/Internet purchases;




Private clinics.

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Figure 5.25: Comparison of US/5EU IMS sales figures and global companyreported sales figures, 2003

Chiron $678m

Chiron $395m

Merck $1056m

Merck $1126m

SanofiAventis $446m

SanofiAventis $1831m

IMS

Companyreported

Wyeth $1268m

GSK $769m Wyeth $805m

GSK $1834m

Source: IMS Health, Copyright ©, reprinted with permission; Company reported data; Business Insights Business Insights Ltd

This chapter of the report, unlike previous chapters, will concentrate on company reported global sales figures. GSK is the leading vaccines company with global sales of $1,834m in 2003, and also has the most extensive pipeline of the five key vaccines companies, with no fewer than seven new products due for launch before 2010.

Wyeth has the thinnest pipeline of the five companies profiled, with no products due for launch before 2010, while the other 3 companies have between two and four mid to late-stage pipeline products each. Thus, by 2010, it is expected that GSK will further increase its share of the global vaccines market.

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Merck & Co. Therapeutic focus In 2003 Merck’s dominant franchise was cardiovascular, with 37% of ethical sales. However, by 2010 this dominance is set to decline to 22% with the patent expiry of several key drugs, and resultant generic erosion. Newer sectors, such as CNS, diabetes, oncology and vaccines are to become the growth drivers of the future for Merck.

The vaccines franchise is set to grow from 5% of total sales in 2003 to 11% by 2010. Much of this growth is expected come from drugs currently in the R&D pipeline, so there is a risk that they could fail.

Figure 5.26: Merck & Co’s global* therapeutic focus, 2003 & 2010 2010 22%

26%

Others

20%

Cardiovascular

2003

37%

5% Infectious diseases

5% 13%

8%

AIID

12% 11% Vaccines

9%

12% 15%

5%

Respiratory

Woman’s health

* Global data taken from company reports Business Insights Ltd

Source: Company reported data; Business Insights

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Marketed vaccines portfolio In 2003 Merck & Co reported global sales of $1,056m for its marketed vaccines portfolio, an increase of 2.7% from 2002 sales of $1,028m. Varivax is Merck’s highest selling vaccine product, along with MMR II and Recombivax HB.

R&D pipeline Merck has a strong late-stage vaccines R&D pipeline, with four candidates expected to reach the market before 2010. The vaccines pipeline is the company’s most extensive of all its therapy areas, and indicates the potential Merck sees in this sector to drive future growth.

Merck’s leading developmental vaccines are for human papilloma-virus (HPV), shingles and rotavirus, as well as a combination MMR-V vaccine, as shown in Table 5.12.

Table 5.12: Merck’s vaccines R&D pipeline and global sales forecasts, 2007 & 2010 Brand/code ProQuad

Indication

Chicken pox, measles, mumps and rubella HPV Human papilloma-virus Zoster vaccine Shingles Rotateq Rotavirus infection Pediatric combination n/a Anti-HIV-1 vaccine HIV

Stage Registration Phase III Phase III Phase III Phase II Phase I

Source: Company reported information; Business Insights

Expected year of launch

Sales ($m) 2007 2010

2005

151

492

2006 2006 2006 >2010 >2010

109 101 84 -----

492 290 223 -----

Business Insights Ltd

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ProQuad ProQuad is being developed by Aventis Pasteur MSD, the joint venture between Merck & Co. and Sanofi-Aventis. ProQuad is a combination vaccine indicated for measles, mumps, rubella and chicken pox (MMR-V), and build upon the success of Merck’s MMR II vaccine and varicella vaccine, Varivax.

A BLA was submitted to the FDA on August 31st 2004 for ProQuad, and Merck expects a decision on the application in July 2005. This would mean a launch of the product in the US in late 2005 as the first vaccine to protect children against these four types of virus in a one-shot vaccine. ProQuad will face competition from GSK’s Priorix-Tetra, also a MMR-V vaccine, and also due to be launched in 2005.

HPV (human papilloma-virus) vaccine Merck is developing a prophylactic vaccine against HPV, a sexually transmitted infection that in many cases is asymptomatic, but can also be responsible for symptoms ranging from genital warts to potentially lethal cancers. In the US around 4,800 women die each year from cancer related to HPV infection. The Merck vaccine is tetravalent against four strains of the disease: 6,11,16 and 18, which cause cervical cancer and genital warts.

This HPV vaccine has great commercial potential as it has a large patient potential, and should command a high price point due to the seriousness of the disease (possible $300 per vaccine course). It is likely an HPV vaccine would be given to adolescents prior to the onset of sexual maturity. Although the most serious manifestations of this disease occur in females, it is likely that an efficacious vaccine would also be given to males in order to prevent the infection of unvaccinated females during sexual contact. Merck’s HPV vaccine is forecast to be the first to market in 2006, beating a similar product from GSK (Cervarix), which protects against cervical cancer but not genital warts.

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Zoster vaccine Merck plans to file for FDA approval of its developmental zoster vaccine to treat shingles in adults in 2005, with its launch expected in 2006. The product is also currently in phase III in Europe, conducted by Aventis Pasteur MSD, the joint venture between Merck and Sanofi-Aventis. This vaccine represents a line extension of Merck’s currently marketed varicella (chicken pox) vaccine, Varivax, for children.

Shingles is an infection caused by the varicella-zoster virus (VZV), which is the virus that causes chickenpox. Shingles occurs in people who have had chickenpox and represents a reactivation of the dormant VZV. The disease generally affects the elderly, although it occasionally occurs in younger and/or immunodeficient individuals.

Merck’s zoster vaccine is likely to be the first to market to prevent shingles, and has great commercial potential. Current therapies for shingles include antiviral treatment, which is only moderately effective in the acute phase of the disease, so there remains a high level of unmet need in this market.

Rotateq Rotateq is a developmental rotavirus vaccine from Merck & Co. Rotavirus infection is very common, with the majority of infants having been infected with one or more strains before three years of age. Symptoms can range from rotavirus diarrhea to gastroenteritis, and leads 500,000 deaths globally each year.

There is currently no rotavirus vaccine on the market, after the withdrawal of Wyeth’s Rotashield in 1999 over safety concerns. GSK also has a rotavirus vaccine in development, Rotarix, which could severely limit sales of Rotateq. Merck’s vaccine has the advantage of being effective against four of the seven strains of rotavirus, while GSK’s Rotarix is only effective against a single strain. However, the Merck vaccine is based on a bovine virus while GSK’s is human based, and additionally GSK’s Rotarix is due for launch in 2005 (although not in the US) while Rotateq launch date is in 2006.

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Wyeth Therapeutic focus Wyeth’s top franchise in 2003 was CNS, contributing 28% of all sales, and driven primarily by the success of Effexor. Woman’s health and gastrointestinal were also high earning therapy areas for Wyeth with 17% and 16% shares of sales respectively in 2003 (Figure 5.27). However, by 2010, sales are forecast to be spread more evenly throughout Wyeth’s therapy areas. While the CNS franchise is expected to decline, growth will be driven by the AIID portfolio, other products, and vaccines.

The vaccines franchise is forecast to increase from 11% of sales in 2003 to 13% in 2010. This projected increase is dependent on the continued success of Prevnar, as no pipeline vaccine products are expected to be launched within the forecast period.

Figure 5.27: Wyeth’s global* therapeutic focus, 2003 & 2010

2010 Others

13%

16% CNS

9% Hematology

5%

6%

28% 2003

8% Infectious diseases

6% 17%

6%

Woman’s health

11% AIID

17%

15% 16%

14%

Gastrointestinal

13% Vaccines

* Global data taken from company reports Business Insights Ltd

Source: Company reported data; Business Insights

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Marketed vaccines portfolio Table 5.13 shows Wyeth’s marketed vaccines portfolio, with global sales figures for 2002 and 2003. This data is company reported and so differs from the IMS data given earlier in the report.

Prevnar is the dominant product in Wyeth’s vaccines portfolio, comprising 75% of global sales in 2003. This product also showed strong sales growth from sales in 2002, with a 46% increase. Other products in Wyeth’s portfolio suffered in this same period with Meningitec declining 28.9%. Wyeth records sales of $15m for FluMist in 2003, which was partnered from MedImmune. However, Wyeth has now surrendered the rights to this product as a result of these poor sales in FluMist’s launch year.

Table 5.13: Global* sales of Wyeth’s marketed vaccines portfolio ($m), 200203 Brand

Indication

Prevnar Meningitec FluMist HibTITER Other Vaccines

Pneumococcal diseases Meningitis Influenza Hib disease n/a

Total

2002

2003

Growth (%) 2002-03

648 90 n/l n/a 320

946 64 15 n/a 243

46.0 -28.9 n/a n/a -24.1

1,058

1,268

19.8

* Global data taken from company reports Business Insights Ltd

Source: Company reported information

R&D pipeline Wyeth’s vaccines R&D pipeline is very bare, both in terms of late-stage products and early-stage products. This was made worse by the suspension of the development of the company’s 9-valent pneumococcal/meningococcal vaccine during 2003/04. Wyeth’s only vaccine in clinical trials is a 13-valent pneumococcal vaccine, which has just started phase I clinical trials. This vaccine has six additional valences to Prevnar, so

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should represent an improvement on this highly successful drug. However, this product is not forecast to launch before 2010.

Table 5.14: Wyeth’s vaccines R&D pipeline and global sales forecasts, 2007 & 2010 Brand/ code

Indication

Stage

13-valent pneumococcal conjugate vaccine HIV vaccines

Pneumococcal diseases HIV

Phase I

>2010

---

---

Pre-clinical

>2010

---

---

Source: Company reported information; Business Insights

Expected launch year

Sales ($m) 2007 2010

Business Insights Ltd

GSK Therapeutic focus GSK has a broad therapeutic focus, with eight major franchises in 2003, as highlighted in Figure 5.28. The largest of these franchises were respiratory and CNS in 2003, both contributing to 24% of total GSK sales. However, while respiratory sales are expected to be maintained up to 2010 at 25%, the CNS franchise will experience a decline to approximately 19% of overall sales.

In 2003 vaccines was one of GSK’s smaller franchises, along with diabetes and cardiovascular. However, by 2010 forecasts predict a significant increase in sales of GSK vaccines to 10%, from 6% in 2003. This is due to the predicted launch of six midlate stage vaccines from GSK’s R&D pipeline.

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Figure 5.28: GSK’s global* therapeutic focus, 2003 & 2010 Other

9% Oncology

2010 5%

Cardiovascular

7%

25%

7%

6% 4%

24% 2003

6% Diabetes & endocrinology

5%

Respiratory

6% 8%

Vaccines

10%

24% 19%

CNS

15% 6% HIV

14% Infectious diseases

* Global data taken from company reports Business Insights Ltd

Source: Company reported data; Business Insights

Marketed vaccines portfolio Table 5.15 shows GSK’s marketed vaccines portfolio.

Table 5.15: Global* sales of GSK’s marketed vaccines portfolio ($m), 2002-03 Brand

Indication

Hepatitis vaccines Infanrix vaccines Other

Hepatitis A and B DTP based

Total

2002

2003

Growth (%) 2002–03

789 415 560

681 549 604

-13.7 32.3 7.9

1,764

1,834

4.0

* Global data taken from company reports Business Insights Ltd

Source: Company reported information

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The global sales figures given are company reported, and so differ from US/5EU IMS sales figures given earlier in the report. Global sales of GSK’s hepatitis vaccines range, including Engerix B, Twinrix and Comvax, have declined in the period 2002-03 by 13.7%. However, sales of GSK Infanrix vaccines have increased in this same period by 32.3%, as a result of the success of hexavalent and pentavalent combinations – Infanrix HeXa and Pediarix.

R&D pipeline GSK has the most extensive vaccine pipeline in the industry, with a large number of vaccines in all stages of development, and in a variety of indications. Six of these pipeline vaccines are predicted to reach the market by 2010. Table 5.16 lists the vaccines currently in development at GSK, along with indication, stage of development and expected year of launch.

Table 5.16: GSK’s vaccines R&D pipeline and global sales forecasts, 2007 & 2010 Brand

Indication

Stage

Boostrix

Diphtheria, tetanus, pertussis Priorix-Tetra MMR/varicella Rotarix Rotavirus Conjugated meningitis Meningitis A & C A/C vaccine Cervarix Human papilloma-virus Streptorix S. pneumoniae (pediatric) Simplirix Genital herpes Staphylococcal Ab Staphylococcal Hepatitis E Hepatitis E EBV Epstein-Barr virus Mosquirix Malaria Dengue fever Dengue fever HIV HIV Varicella zoster Varicella zoster Influenza Influenza S. pneumoniae S. pneumoniae (elderly) Meningitis B Meningitis B (Cuba) Hepatitis B Hepatitis B Source: Company reported information; Business Insights

Expected year of launch

Approved (EU)/ Registration (US) Registration (EU) Phase III Phase II Phase III Phase III Phase III Phase II Phase II Phase II Phase II Phase I Phase I Phase I Phase I Phase I Suspended Suspended

Sales ($m) 2007 2010

2005

39

89

2005 2005 2006

30 51 53

54 118 165

2007 2008 2008 >2010 >2010 >2010 >2010 >2010 >2010 >2010 >2010 >2010 >2010 >2010

22 ---------------------------

345 30 59 -----------------------

Business Insights Ltd

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Boostrix Boostrix is a diphtheria, tetanus and pertussis (DTP) combination vaccine intended to vaccinate adults, as part of catch-up or booster regimens. The adult population is forecast to become an increasingly important source of revenue in the DTP vaccine market, which has traditionally been limited to pediatric vaccinations.

GSK obtained approval for this product in the EU back in October 2000, and has filed for US approval of Boostrix in June 2004, with the company expecting to launch the vaccine in this market in 2005. GSK will face competition from Sanofi-Aventis’ Adacel, also indicated for adult DTP vaccination.

Priorix-Tetra Priorix-Tetra is one of GSK’s most advanced developmental vaccines. It is a measles, mumps, rubella, and varicella (MMR-V) vaccine, based on GSK’s marketed MMR vaccine, Priorix, which has had considerable success in European markets. The MMRV vaccine will additionally protect again varicella (chicken-pox).

Priorix-Tetra had been expected to reach the market in 2003, however, GSK did not file for approval in the EU until April 2004. This drug will face competition from Merck & Co’s own MMR-V vaccine, ProQuad, also due for launch in 2005. Based on the dominance of Merck’s MMR II vaccine in the US, it is expected that ProQuad would have similar success in this market at the expense of Priorix Tetra.

Rotarix Rotarix is a vaccine against rotavirus, which causes childhood gastroenteritis. There are seven distinct antigenic groups of rotavirus (A–G), all of which infect the gastrointestinal tract and lead to symptoms ranging from rotavirus diarrhea (type A) to gastroenteritis (types B and C). The majority of infants have been infected with one or more strains of rotavirus before three years of age but infection is also common in older children and adults. This disease is the most common cause of vomiting and diarrhea in

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children worldwide and leads to more than 500,000 deaths each year, mostly in developing countries.

GSK licensed Rotarix from AVANT Immunotherapeutics, and the product is currently in phase III trials, with an expected launch date in 2005 (this does not include the US). There are no rotavirus vaccines currently on the market, after the withdrawal of Wyeth’s Rotashield in 1999 due to reports of serious side-effects, possibly linked to the vaccine being based on a primate rotavirus. Merck & Co. have a rotavirus vaccine in development effective against four strains, but this is based on bovine rotavirus, and therefore may experience some of the problems of Wyeth’s vaccine. GSK’s Rotarix has the distinct advantage of being based on a human rotavirus strain, although is only effective against a single rotavirus strain.

Conjugated meningitis A/C vaccine GSK has a conjugated meningitis A/C vaccine in phase II clinical trials. This product would protect against meningococcus strains A and C. Competition in this sector in the US and EU would come from marketed meningococcal C vaccines, Wyeth’s Meningitec and Chiron’s Menjugate, as strain A is not common in these regions.

Other potential competitors are Sanofi-Aventis’ Menactra (launch 2005) and Chiron’s developmental ACYW meningococcal vaccine (launch 2008), which have protection for four strains of meningococcus, instead of the two targeted by GSK’s vaccine, due for launch in 2006.

Cervarix GSK’s Cervarix is the second most advanced HPV vaccine in clinical trials. HPV is one of the most common sexually transmitted infections and depending on the strain the infection can be asymptomatic, cause genital warts or cervical cancer. Two particular strains of HPV (HPV16 and HPV18) are responsible for over 70% of cervical cancers.

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Cervarix is a bivalent vaccine, protecting against HPV16 and HPV18. In Phase II studies Cervarix demonstrated 100% effectiveness in preventing persistent infection by HPV16 and HPV18. As a consequence of these results, GSK recently announced that it will file for approval in Europe and countries outside the US in 2006, 2 years ahead of schedule, with a launch expected in 2007. This vaccine will face severe competition from Merck’s HPV vaccine, which has the advantage of being tetravalent, protecting against both cervical cancer and genital wart causing strains of the virus. Merck has also been in clinical trials longer and is expected to file for approval in the important US market as early as the end of 2005. However, the market is expected to be large enough for both vaccines to achieve significant sales.

Streptorix Streptorix is a Streptococcus pneumoniae prophylactic vaccine for the pediatric market. This vaccine would protect against pneumococcal diseases such as pneumonia, meningitis and bacteremia. Streptorix is currently in phase III trials, and launch of the product is expected in 2008 in the US and rest of the world. The pneumococcal vaccine market is currently dominated by Wyeth’s Prevnar, although manufacturing capacity problems have limited its sales growth. GSK’s vaccine would have an advantage over Prevnar in this market because of it uses simpler chemistry and is thus less problematic to manufacture. Additionally, Streptorix protects against 11 serotypes of pneumococcus as opposed to the seven of Prevnar.

Simplirix Simplirix is a prophylactic herpes simplex vaccine. In clinical trials to date the vaccine has proved to be efficacious in reducing transmission of both HSV-1 (the virus causing cold-sores) and HSV-2 (the virus causing genital herpes). The vaccine is currently in phase III trials, and launch of the product is expected in 2008. The product has great commercial potential as there are currently no effective genital herpes vaccines on the market. GSK has also stated that it is aiming for the vaccine to be included in universal adolescent immunization programs in the future, which would considerably boost its sales.

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Sanofi-Aventis Therapeutic focus The Sanofi-Aventis merger was finalized during 2004, so 2003 sales are the combined global sales of both companies in each of the therapeutic areas for that year. The 2010 forecast sales are of the now combined portfolios for the two companies (Figure 5.29).

Figure 5.29: Sanofi-Aventis’ global* therapeutic focus, 2003 & 2010 Infectious diseases

2010

7% Vaccines

7% 6%

27%

7%

26% Diabetes & endocrinology

12%

Cardiovascular

2003

8%

17% Other

16% 15% 9% 5%

11%

CNS

11% 16%

Oncology

Respiratory

* Global data taken from company reports Business Insights Ltd

Source: Company reported data; Business Insights

In 2003, combined Sanofi and Aventis sales meant the largest therapeutic franchise was cardiovascular, which contributed 26% of overall sales, followed by other products (17%), CNS (16%), and oncology (11%). Following the merger in 2004, SanofiAventis is adopting a relatively wide therapeutic focus, covering six main markets: cardiovascular, oncology, diabetes & endocrinology, CNS, internal medicine and

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vaccines. This represents a widening of focus for Sanofi but a narrowing concentration for Aventis. The two non-core franchises from Aventis, respiratory and infectious disease, are unlikely to receive further investment.

Although Sanofi-Aventis intends on continuing focus on its cardiovascular, other (containing Sanofi’s internal medicine products) and vaccines portfolios, there is limited market growth predicted in these areas and limited pipelines coming through. It is likely that Sanofi-Aventis will seek to supplement pipelines in these franchises through in-licensing late-stage development compounds.

Marketed vaccines portfolio Table 5.17 shows sales for Sanofi-Aventis’ vaccines franchise in 2002 and 2003. This data is global company reported information and is not product specific, so differs from the US/5EU IMS data given earlier.

Table 5.17: Global* sales of Sanofi-Aventis’ marketed vaccines portfolio ($m), 2002-03 Brand

Indication

Influenza vaccines Pediatric vaccines Other vaccines

Influenza Pediatric

Total

2002

2003

Growth (%) 2002-03

517 559 709

541 595 695

4.6 6.4 -2.0

1,785

1,831

2.6

* Global data taken from company reports Business Insights Ltd

Source: Company reported information

Between 2002 and 2003 there was slight growth in Sanofi-Aventis’ vaccines franchise as a result of a growth in its influenza vaccines sales and pediatric vaccines sales. In 2004 and 2005, sales of its influenza vaccine, Fluzone, are expected to increase significantly as a result of being the dominant supplier to the US market. This is because of the suspension of manufacturing of Chiron’s Fluvirin vaccine.

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The damage to the reputation of Chiron should help to sustain Fluzone’s sales in the influenza market, and the company has recently secured a contract with the US HHS to begin year-round production of Fluzone.

R&D pipeline Sanofi-Aventis has just two developmental prophylactic vaccines forecast to launch before 2010, Menactra and Adacel. The company’s mid to early-stage prophylactic pipeline consists of three HIV vaccines, one of which is in phase II trials, and an RSV (respiratory syncytial virus) vaccine.

Although the prophylactic vaccine pipeline is thin, Sanofi-Aventis does have six therapeutic vaccines in phase II clinical development, mainly for oncology and infectious diseases. Therapeutic vaccines are an emerging class of drugs that are designed to be used in treatment rather than as a preventative measure. This new class of drugs are not covered in this report.

Table 5.18: Sanofi-Aventis’ vaccines R&D pipeline and global sales forecasts, 2007 & 2010 Brand Menactra Adacel

Indication

Meningitis ACWY Diphtheria, tetanus, pertussis ALVAC-HIV vaccine HIV RSV vaccine Viral infections Dengue vaccine Dengue fever Anti-HIV-1 vaccine HIV Anti-HIV-1 vaccine HIV n/a H. pylori

Stage

Expected launch year

Sales ($m) 2007 2010

Registration Registration

2005 2005

39 35

89 64

Phase II Phase II Phase I Phase I Phase I Suspended

>2010 >2010 >2010 >2010 >2010 >2010

-------------

-------------

Source: Company reported information; Business Insights

Business Insights Ltd

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Menactra Menactra is a conjugated meningococcal vaccine, with prevention against four strains of N. meningitidis: A, C, W and Y. The conjugated technology of the vaccine improves its immunogenicity and strength of action. Aventis Pasteur (now part of SanofiAventis) filed for FDA approval during 2004, and expect to launch the product in 2005.

By targeting four different valences of meningococcus the vaccine offers greater coverage than previous meningococcal vaccines, such as Chiron’s Menjugate, which targets strain C only. However, the additional strain coverage is not particularly beneficial in the pediatric segment, as strain A is only problematic in certain regions of Africa and Asia while strains Y and W are more commonly associated with adult disease and pneumonia. As a result, this vaccine has more appropriate applications in adolescents and adults, particularly those likely to travel overseas. Aventis Pasteur’s commitment to this product reflects the greater emphasis being placed on non-pediatric vaccine sectors and the perceived growth potential that they offer. Chiron has a similar tetravalent vaccine in development, although this is unlikely to be launched before 2008.

Adacel A BLA was submitted to the US FDA on August 11th 2004 for Adacel. This vaccine is indicated for protection against diphtheria, tetanus and pertussis in adolescents and adults between the ages of 11 and 64. It is intended for booster and catch-up vaccinations.

With the launch of this product expected in 2005, it will competed directly with GSK’s Boostrix, available in the EU and awaiting approval in the US.

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Chiron Therapeutic focus Chiron’s key area of focus is vaccines, with 62% of global sales in 2003, and this is expected to increase slightly to 63% by 2010, as illustrated in Figure 5.30. The main driver for growth for Chiron to 2010 will be infectious diseases, which is forecast to show a sales increase from 16% in 2003 to 23% in 2010, as a result of three products in late-stage development. This increase in the infectious diseases franchises will be at the expense of oncology and CNS.

Figure 5.30: Chiron’s global* therapeutic focus, 2003 & 2010 CNS

2010

6%

Oncology

8% 11% 11% Infectious diseases

2003

23% 16%

62% 63%

Vaccines

* Global data taken from company reports Business Insights Ltd

Source: Company reported data; Business Insights

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Marketed vaccines portfolio Table 5.19 shows Chiron’s marketed vaccines portfolio, and global company reported sales. These figures differ from the US/5EU IMS data given earlier as the IMS sales audit does not cover all vaccine distribution channels, as discussed previously.

The vaccine franchise has been boosted in recent years by strong sales of its influenza vaccines, and its influenza range was Chiron’s biggest vaccines earner in 2003 with global company-reported sales of $332m. This included Fluvirin, Begrivac, Fluad and Aggripal. However, recent problems with bacterial contamination at its Liverpool plant have meant that Chiron will not be supplying the large US market with Fluvirin vaccine produced at this plant for the 2004/05 flu season. This will have a major effect on the company’s revenues in 2004, with loss of sales for around 46-48 million doses, and is likely to damage Chiron’s reputation for the future as well as giving an advantage to its competitors in this market.

Chiron’s meningococcal C vaccine, Menjugate, experienced a sales growth of 20% in 2003 over 2002 figures. Its travel vaccines range and pediatric vaccines range also both showed strong sales growth in this period.

Table 5.19: Sales of Chiron’s marketed vaccines portfolio ($m), 2002-03 Brand

Indication

Influenza vaccines Menjugate

2002

2003

Growth (%) 2002-03

90 55

332 66

268.9 20.0

Influenza Meningitis (meningococcal C) Travel vaccines Rabies, tick-borne encephalitis, Cholera, Yellow Fever Pediatric & other vaccines Various

64

88

37.5

148

192

29.7

Total

357

678

89.9

* Global data taken from company reports Business Insights Ltd

Source: Company reported information

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R&D pipeline Chiron’s late-stage vaccines pipeline consists of two meningococcal vaccines, the most advanced being MeNZB, a New Zealand-specific meningococcal B vaccine. This product is forecast to launch in 2004, with the ACYW meningococcal vaccine due for launch in 2008. Other exciting pipeline project is the development of cell culture manufacturing to advance the commercial potential of Chiron’s influenza vaccines, which are currently produced in chicken eggs.

The early stage vaccines pipeline contains a number of new vaccines for influenza, avian influenza, hepatitis C, HIV and another meningococcal vaccine, although none of these are expected to launch before 2010. Chiron is also undertaking early-stage research into nasal and oral administration of vaccines.

Table 5.20: Chiron’s vaccines R&D pipeline and global sales forecasts, 2007 & 2010 Brand/ code

Indication

Stage

MeNZB

New Zealand-specific meningococcal disease ACYW meningococcal Group A,C,Y&W vaccine meningococcal disease Broad coverage Group B meningococcal meningococcal B vaccine disease Influenza vaccines Influenza HIV vaccines AIDS HCV MF-59 vaccines HCV Avian influenza vaccine Avian influenza

Expected year of launch

Sales ($m) 2007 2010

Approved *

2004

2

2

Phase II

2008

---

306

Phase I

>2010

---

---

Phase I Phase I Phase I Pre-clinical

>2010 >2010 >2010 >2010

---------

---------

* Licensed for used in New Zealand Source: Company reported information; Business Insights

Business Insights Ltd

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MeNZB MeNZB is a meningococcal B vaccine, specific to the strain that has been epidemic in New Zealand for over 10 years, affecting more than 5,300 people and resulting in over 200 deaths. This vaccine is being developed in collaboration with the New Zealand government after an agreement was signed in 2001.

This product has recently been licensed for use in New Zealand, and in clinical trials has demonstrated good efficacy and a strong safety profile. MeNZB is expected to be used in a nationwide vaccination program in New Zealand, a country of around 4m people, which will generate significant initial sales for the product. However, following this nationwide vaccination, sales are expected to drop rapidly and this product is not expected to be a major long-term growth driver for the company.

ACYW meningococcal vaccine The second most advance vaccine in the Chiron pipeline is a multivalent (ACYW) meningococcal vaccine. The major serogroups of meningococcus responsible for disease are A, B, C, Y, and W, so this developmental vaccine protects against four out of five of these. However, meningitis B and C are the two most prevalent strains in the developed world, and the vaccine does not protect against the B serotype.

This ACYW meningococcal vaccine is currently in phase II trials, and its launch is forecast in 2008. The product has considerable commercial potential because of its tetravalency, which is also likely to assist Chiron in getting this meningococcal vaccine included in pediatric immunization programs, although it will phase competition from a similar tetravalent vaccine in clinical development by Sanofi-Aventis, and due for launch two years earlier than the Chiron vaccine in 2006.

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Index Hepatitis A, 13, 31, 74, 80, 84, 86, 108

Aventis Pasteur MSD, 51, 55, 60, 81, 103, 104

Hepatitis B, 13, 31, 74, 79, 80, 109 Baxter, 66, 67 Hepatitis C, 80 BCG, 12, 24, 44, 45, 68, 69 Hexavac, 55, 56, 57, 60, 61, 68 Berna Biotech AG, 88 Hib, 12, 29, 30, 40, 44, 46, 47, 57, 58, 60, 66, 68, 69, 71, 106

Boostrix, 42, 56, 109, 110, 116

Infanrix, 56, 57, 58, 61, 68, 108, 109

Cervarix, 11, 14, 36, 42, 98, 103, 109, 111, 112

Infanrix HeXa, 57, 58, 61, 109 Chiron, 11, 13, 14, 36, 40, 42, 51, 52, 53, 62, 66, 67, 74, 83, 88, 89, 90, 91, 95, 98, 99, 111, 114, 115, 116, 117, 118, 119, 120

Influenza, 31, 39, 40, 87, 106, 109, 114, 118, 119

Comvax, 12, 40, 44, 68, 69, 71, 72, 109

Italy, 37, 38, 39, 40, 45, 50, 52, 54, 56, 62, 63, 67, 69, 75, 79, 80, 88, 95

DTP, 11, 12, 28, 29, 36, 38, 39, 40, 42, 44, 45, 46, 48, 55, 57, 58, 60, 71, 108, 109, 110, 115

MedImmune, 88, 89, 92, 93, 94, 106 Menactra, 67, 111, 115, 116

Engerix-B, 13, 40, 74, 80, 81, 82, 83, 84, 109 Meningococcal, 12, 39, 44, 66 Europe, 11, 36, 38, 39, 40, 50, 52, 61, 66, 69, 81, 94, 104, 112

Merck & Co., 11, 12, 13, 14, 36, 40, 41, 42, 44, 51, 52, 54, 55, 56, 57, 60, 61, 62, 63, 64, 67, 68, 69, 71, 74, 80, 81, 83, 88, 95, 98, 99, 101, 102, 103, 104, 110, 111, 112

FluMist, 88, 89, 92, 93, 94, 106 Fluvirin, 13, 14, 40, 74, 88, 89, 90, 91, 92, 94, 98, 114, 118 Fluzone, 13, 74, 88, 89, 90, 91, 92, 114, 115

MMR, 12, 14, 26, 27, 38, 39, 40, 44, 45, 46, 48, 50, 51, 52, 53, 54, 68, 98, 102, 103, 109, 110

France, 37, 38, 39, 40, 45, 50, 52, 54, 56, 62, 63, 67, 68, 69, 75, 79, 80, 81, 88, 95

MMR II, 12, 40, 44, 51, 52, 53, 54, 102, 103, 110

Germany, 37, 38, 39, 40, 45, 50, 52, 54, 56, 57, 61, 62, 63, 66, 67, 68, 69, 71, 75, 79, 80, 87, 88, 95

Oka, 69

GlaxoSmithKline, 11, 12, 13, 14, 36, 40, 41, 42, 44, 51, 52, 54, 55, 56, 57, 58, 59, 60, 61, 65, 68, 74, 80, 81, 83, 84, 85, 88, 98, 99, 100, 103, 104, 107, 108, 109, 110, 111, 112, 116

Pentacel, 56, 57, 58, 60

Global, 101, 105, 106, 108, 109, 113, 114, 117, 118

Prevnar, 11, 12, 14, 18, 36, 38, 40, 42, 44, 61, 62, 63, 64, 65, 67, 98, 105, 106, 112

Pediarix, 12, 40, 44, 55, 56, 57, 58, 59, 61, 109

Pneumococcal, 38, 40, 61, 106, 107 Pneumovax 23, 40, 61, 62, 63, 64, 65

Havrix, 13, 74, 80, 81, 85, 86 121

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Streptorix, 65, 109, 112

Priorix, 12, 44, 51, 52, 54, 55, 68, 103, 109, 110

Twinrix, 13, 40, 74, 80, 81, 83, 84, 85, 109 Priorix-Tetra, 54, 68, 103, 109, 110 Typhoid, 32, 33, 39, 94, 95 ProQuad, 68, 102, 103, 110 UK, 37, 38, 39, 40, 45, 50, 52, 56, 62, 63, 66, 67, 68, 69, 75, 79, 80, 84, 87, 88, 91, 95

Rabies, 33, 94, 95, 118

US, ii, 11, 12, 13, 14, 16, 18, 24, 29, 32, 33, 36, 37, 38, 39, 40, 41, 42, 44, 45, 46, 47, 48, 49, 51, 52, 53, 54, 56, 57, 58, 60, 61, 62, 63, 64, 66, 67, 68, 69, 71, 74, 75, 76, 77, 78, 79, 80, 81, 83, 84, 85, 86, 87, 88, 89, 90, 91, 92, 94, 95, 98, 99, 100, 103, 104, 109, 110, 111, 112, 114, 115, 116, 118

Recombivax HB, 13, 40, 71, 74, 80, 81, 83, 84, 102 Rotarix, 104, 109, 110, 111 Rotateq, 102, 104 Sanofi-Aventis, 11, 12, 13, 14, 36, 40, 41, 42, 44, 51, 52, 54, 55, 56, 57, 60, 62, 67, 69, 74, 80, 83, 88, 89, 90, 91, 95, 98, 99, 103, 104, 110, 111, 113, 114, 115, 116, 120

Varicella, 30, 40, 69, 109 Varivax, 11, 12, 36, 38, 40, 44, 68, 69, 70, 102, 103, 104

Simplirix, 11, 36, 42, 109, 112 Solvay, 88

Wyeth, 11, 14, 18, 36, 38, 40, 42, 61, 62, 63, 64, 66, 67, 94, 98, 99, 100, 104, 105, 106, 107, 111, 112

Spain, 37, 38, 39, 40, 45, 50, 52, 56, 62, 66, 67, 69, 75, 79, 80, 88, 95

Zoster, 42, 102, 104

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