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Manufacturing and Access in Public Health, Government, and Developing World Markets
Growing public health initiatives, coupled with perpetual threats of pandemics and emerging infectious diseases, highlight the gaps in biopharmaceutical development capabilities, as well as access to medicines within the developing world (1, 2). The recent H1N1 pandemic also revealed the access inequity of the pandemic influenza vaccine between developed and developing nations.
To help fill this gap, developing nations have nurtured their local biotechnology industries to help grow existing and new biotechnology capacity. Just in the past 10 years, multinational (MNC) pharmaceutical companies have established a strong presence in BRICM (Brazil, Russia, India, China, and Mexico) countries through initiatives ranging from joint ventures with local manufacturers, to the building of captive research and development (R&D) centers, to the acquisition of local companies.
Even with the biopharmaceutical industry’s increasing footprint, low- and middle- income countries (LICs and MICs) still face challenges in accessing medicines. For instance, BRICM countries represent 43% of the world population, but collectively account for only 1.8% of the global vaccine market (3, 4). Whereas US health expenditures per capita exceeds $7000 (as defined by purchasing power parity, PPP, international dollars), none of the BRICM countries’ expenditure exceeds $1000 (PPP) (5). This differential explains, in part, why many licensed vaccines are still unaffordable in developing and emerging countries, thus inhibiting access to essential treatment.
Aside from economic challenges, there are unique unmet medical needs typical for MICs and LICs that render biopharmaceuticals licensed in the Western world inadequate for the developing market. For some diseases, such as rotavirus and pneumococcal diseases, the distribution of disease serotypes in the developing world can differ from those in developed nations. There also are few effective medicines for prevention and sometimes only moderately effective existing therapies for neglected tropical diseases that are endemic to LICs (6).
Donations from MNCs.This approach involves free donation of medicines by MNCs through partnerships. One example is Merck & Co.’s Mectizan Donation Program (MDP) for the treatment of river blindness. MDP is still one of the largest ongoing medical donation programs in history, reaching more than 60 million people each year. The MDP is a partnership between public, private, and nongovernmental development organizations (7).
Transforming the marketplace from a low-volume, high-cost enterprise to a high-volume, low-cost business. The Clinton Foundation HIV AIDS Initiative (CHAI) has improved the demand side of the market through prevention and treatment programs and has provided technical assistance to develop procurement and supply-chain management practices. The initiative resulted in cumulative price reductions of 30% for second-line antiretrovirals and 60% for pediatric antiretrovirals to 70 countries and an increase of market size to more than two million people since 2002 (8).
Emergence of state-owned and private manufacturers in developing countries. In the last decade, a few prominent players in the developing countries’ biopharmaceutical sector have emerged (see Table II). Different business models were employed by these organizations. Some enterprises initially began as a manufacturing hub, growing through technology in-licensing, infrastructure development, or collaborations with MNCs into integrated R&D and manufacturing organizations. The Serum Institute of India is one of the most prominent vaccine manufacturers on this list: it is the fifth largest vaccine manufacturer by volume (after GlaxoSmithKline, sanofi-aventis, Merck & Co., and Novartis) and is one of the world's lowest-cost vaccine producers (7).
Even though there is currently an impressive list of biopharmaceutical manufacturers in developing nations, many are still challenged with obtaining prequalification from the World Health Organization (WHO) and securing contracts from large purchasers, such as UNICEF and the Pan American Health Organization. Less stringent local regulatory and quality assurance standards, coupled with bioprocessing challenges, such as the inability to gain access to best-in-class technology and development know-how are some of the factors contributing to these difficulties.
Public–private partnerships. One prominent example of a MNC–public sector partnership undertaking an R&D effort tailored to the needs of developing world is the Hilleman Laboratories, a $147-million investment by Merck & Co. and Wellcome Trust, which was launched in India in 2009. The Hilleman Laboratories focuses on the development of affordable vaccines for low-income countries. Recently, Hilleman Laboratories announced a £90-million ($145-million) commitment to develop a new heat-resistant, affordable rotavirus vaccine using components of Merck’s existing rotavirus vaccines and formulation technology from Boston-based Medicine in Need (9).
The public–private partnership model offers unique access to best-in-class commercial know-how for developing countries’ scientists and engineers and fills a need to translate discoveries into commercial products by establishing linkages among discovery, development, and delivery experts. This business model relies on the public–private partnership undertaking the product development from discovery through proof of concept, then having other public sponsors fund the rest of product development. The challenges are obvious: availability of sufficient public funding to enable development post-proof of concept and, most importantly, an interest from capable local manufacturers to complete technology development. For MNCs, such as Merck, this approach is an opportunity to contribute to the development of new medicines for underserved populations while advancing discovery and early development of dual-use platforms and new leads that could be further developed for commercial, high-profit indications.
Creating biomanufacturing infrastructure
Need for capital investment to build and sustain a biomanufacturing base. There are several examples of how public financing can be used to build and sustain successful biomanufacturing capacity in developing countries. The state-owned Oswaldo Cruz Foundation (known as Fiocruz) in Brazil has leveraged state buying power to develop products through the in-licensing of technologies. Fiocruz also has forged some 20 public–private partnerships in recent years, both with domestic producers, such as Ache, and with MNCs, such as Novartis and sanofi-aventis, as well as with GlaxoSmithKline (GSK), with whom Fiocruz signed an agreement in 2009 to produce a 10-valent pneumococcal vaccine and develop vaccines against dengue, malaria and yellow fever (10). Another example is the PATH Malaria Vaccine Initiative strategic investment to create a cGMP-compliant dedicated malaria vaccine-manufacturing facility at Gennova Biopharmaceutical (India) to produce recombinant protein-based malaria vaccine candidates (11).
New manufacturing capacity built through joint ventures (JVs). The JV model presents an opportunity for both parties to have a tangible interest in the successful implementation and long-term sustainment of a new facility. One example of such a model is the long-term JV agreement between GSK and Jiangsu Walvax Biotech, resulting in a total investment of £41.2 million ($66.4 million) to develop and manufacture pediatric vaccines for use in China. The JV will build a new manufacturing facility for GSK’s pediatric vaccine Priorix in China, with both partners making investments and having an equity stake.
Another example is the 2009 deal between Novavax, based in Rockville, Maryland, and Cadila Pharmaceuticals, based in India, to develop and commercialize the seasonal influenza and H1N1 pandemic vaccine in India. Through equity investment and service contracts with Novavax, Cadila gained access to a novel vaccine production platform and flexible biomanufacturing facility design. The construction of Cadilla’s new vaccine facility was completed in 2010.
Access to bioprocessing technologies, expertise and know-how. Greater access to bioprocessing technologies will expedite the entry of new manufacturers into the market, which will ultimately drive product prices down and make drugs and vaccines more affordable for the developing and emerging world. Creating an environment where general bioprocessing platforms, standards, and quality controls can be openly discussed will be invaluable to address growing biopharmaceutical production needs. This task could be considered by the largest infectious-disease portfolio funders, such as the Bill and Melinda Gates Foundation, the the National Institute of Allergy and Infectious Diseases, National Institutes of Health, the Global Alliance for Vaccines and Immunization, and state governments. Through a structured analysis of a holistic infectious disease portfolio, focusing on technology platforms, expression vectors, and product-delivery strategies, critical questions can be asked about building and maintaining capabilities (i.e., assay development and animal-model development) and infrastructure (process development and GMP manufacturing). This approach will enable an open dialogue and knowledge sharing about lessons learned from a diverse group of biopharmaceutical developers and manufacturers.
The Developing Countries Vaccine Manufacturers Network is one example of a biopharmaceutical manufacturers’ forum with a mission to facilitate such an exchange of ideas and expertise. Another similar forum is the influenza vaccine hub established by WHO and the Netherlands Vaccine Institute to provide access to new manufacturing bioprocesses, technology platforms, and expression systems. The hub also provides guidance on alternative approaches to quality compliance for developing and emerging countries’ biopharmaceutical manufacturers (12).
Innovative business models, such as JVs and public–private partnerships, are becoming the models of choice for growing the local biotechnology sector in developing nations. The management of technology transfer issues among discovery, early-development, and advanced-development stakeholders, including realistic assessments of funding and human capital needs, as well as timely planning, is becoming increasingly important.
Public-sector funders and public–private partnerships will continue to play a pivotal role in advancing R&D and building new product development and manufacturing capabilities to address the unmet medical needs of the developing world. The well-considered and timely alignment of stakeholders along the healthcare value chain will ensure optimal market sizing/demand assessment, adequate financial planning, alignment of product development and commercialization capabilities, and finally, structured and agreed-upon procurement and distribution strategies, all of which are critical for the successful delivery of new medicines to developing and emerging countries.
Chan Harjivan (firstname.lastname@example.org) is a partner and Diana Elkis (email@example.com) is a principal, both in the Global Public Health practice at the global management consulting firm PRTM.
This article is Part II of a three-part series on biopharmaceutical issues in public health, government, and developing-world markets. Part I , which focused on drug development, appeared in the March 2011 issue of Sourcing and Management. Part III, which focused on distribution and administration, appeared in the May 2011 issue of Sourcing and Management.