The outlook for the vaccine market in emerging and developing countries has been improving in recent years. As global threats such as severe acute respiratory syndrome (SARS) and the H1N1 swine-flu continue to grow, global pharmaceutical firms are paying more attention to what was previously considered a low-revenue margin sector.
Multinational firms flock to China and IndiaMarket dynamics have evolved significantly, especially in Asia, says Aparna Krishnan, a senior research analyst at IHS Global Insight, a market research firm based in Lexington, Massachusetts. "The biotechnology industry in Asia has gained its knowledge depth through international alliances and has been the focus of government funding," she says. "The demographics, patient profile, and economic growth have made vaccination programs an integral part of national healthcare policies. While immunization campaigns have tended to mainly include pediatric vaccines such as BCG, Pertussis, Polio, etc., the inclusion of hepatitis B, C, and cervical-cancer vaccines in national programs have signaled [a move] toward higher reimbursement and acceptance in Asia."
Large global pharmaceutical manufacturers such as GlaxoSmithKline (GSK, London) and Millipore (Billerica, MA), which is undergoing acquisition by Merck KGaA (Darmstadt, Germany), wasted no time in stamping their foothold on Asian soil. Last October, GSK extended its presence in China through a joint venture (JV) with Jiangsu Walvax Biotech Company to produce pediatric vaccines for the local market. Millipore completed the acquisition of Millipore India in a move to ensure seamless execution of business strategies and to address the vaccine market's needs.
"The entry of foreign companies into the vaccine segment in [Asia] would provide new markets for their existing vaccine portfolio and enhance revenues given the higher number of immunization campaigns initiated by the Asian governments," adds Krishnan. "Furthermore, global pharmaceutical firms have looked at these markets as a cost-effective manufacturing destination and increasingly for clinical-trial research."
Local firms stand to gain from foreign entry as well. "The entry would increase competition, but at the same time, provide opportunities for alliances with global pharmaceutical majors, wherein the latter will look for marketing strengths and even outsourcing their manufacturing requirements," explains Krishnan. "The former will gain from technology transfer and a wider portfolio."
Factoring in safety and quality
Brian Yau, vice-president for Asia India of Millipore, points out that domestic Asian facilities will primarily supply local needs while being structured to produce vaccines that, in terms of international regulations and good manufacturing practice standards, are equal to those made at other facilities and acceptable to ship worldwide. "The majority of the multinational companies (MNCs) will only realize their brand name and cost benefit in the next couple of years as they have just started to work with local partners to manufacture higher value vaccines for domestic consumption in Asian countries. More importantly, companies who are involved in vaccine manufacturing will be using the same quality and cost standards established by MNCs," he adds.
Asian governments are helping to propel the sector forward, according to George Adams, Asia/India markets and vaccine-program manager at Millipore. "In addition to multinational-driven expansion, most countries have their own investment and expansion plans to ensure that they have the capacity to supply their own populations with necessary vaccines in a time of crisis," he says. In the case of Japan, the country has committed $1 billion over the next few years to expand egg-based influenza vaccine production, develop and implement tissue-culture flu, and explore next-generation flu vaccines to meet future needs. China has graduated to developing vaccines for local and foreign markets. These include hepatitis A and B, measles, mumps, inactivated influenza and split-influenza vaccines. After 2003, the country allowed the entry of private companies into the sector; previously, it had been dominated by 30 provincial-level, government-run disease centers.
Adams reiterates that safe and quality products are necessary for MNCs to maintain and extend their presence in Asia. Perhaps, the ban on Ranbaxy (Haryana, India) for exporting drugs to the United States serves to remind vaccine-makers that they need to meet current standards or be left behind.
The Chinese State Food and Drug Administration (SFDA) is introducing new manufacturing guidance documents to ensure that all drugs—not just vaccines—manufactured in the country are safe. With help from the US FDA, the agency has trained hundreds of inspectors during the past year on these issues. More strict enforcement is also being applied to health officials and companies that fail to act in the best interest of consumers.
Asian-based companies are also playing their part to develop and improve existing vaccine-manufacturing technologies. For example, Vietnamese-based Vabiotech spearheaded the Vaccine Process Development Program to make these technologies available to qualified producers in developing countries with special focus on cholera, typhoid fever, and shigellosis diseases.
Gaining market advantage
Asian companies that collaborate with global suppliers—especially those armed with an array of services and skills—will have a key market advantage, says Adams. For example, Millipore has trained hundreds of operators and process engineers at training facilities in Bangalore, Singapore, and Shanghai. It also has a team of biomanufacturing engineers and scientists deployed in each country to assist in developing vaccines for companies.
Looking forward, an increase in investment into the Asian vaccine market by local and foreign companies is likely. According to Yau, "The market is heading in the consolidation direction as big players acquire small ones in a move to accumulate and leverage volume, and solid double digit growth that will be fueled by demand from the domestic market and exports to overseas markets."
The World Health Organization lists the following as high-priority vaccines for 2010: bioequivalent oral polio vaccine (bOPV), Dengue vaccine, DTP based pentavalent combination vaccine (DTP-Hep B-Hib and DTP-Hep B+Hib), Inactivated polio vaccine (IPV), Influenza seasonal vaccine*, Measles and measles containing combination vaccines, Meningitis A containing conjugate vaccine, Monovalent oral polio vaccines (1,2 and 3), Pneumococcal vaccine, Rotavirus vaccine, Tetanus-diphtheria vaccine for adults (Td), and Yellow fever vaccine.
Jane Wan is a freelance writer based in Singapore.