Vaccines are a huge success story in healthcare. If we look at where the infectious disease market is going in the future, we can see the additional antibiotic share going down; that’s because many of the conventional antibiotics are becoming generic. The antifungal share is also going down. The one that’s going up, though, is the vaccines group, growing from nine to 20 billion. There’s also some increase in the antibiotic market, which is driven by HIV and the fact that it is now contractible.
The old vaccines are made by multiple manufacturers, which means there is not a huge amount of money to be made in these vaccines on their own. But vaccine economics have changed in recent times, and that’s illustrated by what has happened at Merck with our recent launches. Developing new vaccines offers real growth opportunities, and there are also ways of leveraging and assisting vaccines. There’s a lot of work going on in combination vaccines because there’s a lot of value in it.
Newer vaccines, like the human papillomavirus preventative vaccine Gardasil, for example, command much higher prices. In fact there is a much more attractive return on investment on newer vaccines as they have lower marketing costs. The key thing in vaccines is that if you have a universal vaccine, and if you’ve got the newest combinations, you essentially don’t have to launch a massive marketing campaign. You will need to do an education campaign, so people are aware of what they are dealing with, but, essentially, there’s almost no question that it will be successful.
Vaccines clearly have a higher probability of success relative to small molecules, and they obviously have a much longer product life cycle because it is not just related to the intellectual property. However, on the negative side, it’s a very capital-intensive business. You have to invest your capital quite early in the product development life cycle before you actually know you have a product. Sometimes you don’t have manufacturing processes approved at time of launch. These can be tough challenges.
So, what are the key external trends in the infectious disease area? Well, emergence of pathogen resistance allows you to continue to develop new products in this area. Clearly, life cycle management strategy has been very effective. Second-generation vaccines mean that you can move these vaccines into different markets; you can take a pediatric vaccine and use it in an elderly population, for example.
There has also been a big technological change that has opened up the possibility to promote vaccines for many things that weren’t tractable before, including the ability to do massive sequencing of all sorts of variances and bacteria to, for example, identify common antigens. There has also been a change in the regulatory landscape and value driven pricing that occurs with products like Gardasil.
There are also interesting things going on in the developing world. Large manufacturing capacity is providing vaccines with a guaranteed price. This means that you can at least recoup your investment on manufacturing, although you don’t make a profit.
It is a great time at Merck for all infectious diseases. Last year, we received approval not only for Gardasil but also for RotaTeq, a vaccine against rotavirus and shingles, and ProQuad, a combination vaccine. This has had a big impact and by 2010, I believe 35 percent of Merck’s sales will actually derive from the infectious disease area. That’s a big shift.
Are there a lot of new vaccines to develop? I believe there are. There is a huge list of diseases and different populations that you could potentially make vaccines for – the pediatric population, the adolescent population and specialized populations like regional vaccines or travelers’ vaccines.
Merck used to be a very functionally based organization, but we’ve moved to a different way of operating. We started off in the Research Division, where we moved to a balanced matrix. Here, we balance franchises across functions with both having equal controls. Basically, the franchises decide the ‘what’ and the function decides the ‘how’. It is difficult, however, to obtain a balance unless everyone involved works well together.
As a Franchise Head, I’m responsible for everything through to phase IIb. I contract with the Vaccine Division, who deal with everything from phase III and beyond. In vaccines, you can define what the product is right from the beginning before you even start a project. You can make very rational decisions about which things to invest in, and you also look at medical needs, whether you can rapidly get approval for concept, technical feasibility, etc. You can put all of this together and figure out what you should be working on.
There have been many technologies that have really helped in vaccine discovery and development, such as adjuvants. Adjuvants can increase the protective efficiencies – if you’ve got a vaccine that’s not 100 percent effective, maybe adding an adjuvant will help. It can certainly simplify the dosing regimen. If, for example, you have a three-dose vaccine, and you can get that down a dose or even two by adding adjuvants, that’s a huge commercial advantage.
To summarize, vaccines are a growth area and you can look at the whole infectious diseases area holistically. There are many technologies, which have been exploited by various companies to make new vaccines. With an $11 billion increase in vaccines by 2010, it’s time to get involved.
About the contributor
Anthony Ford-Hutchinson is Executive Vice President for Research Medicine at Merck Research Laboratories. He obtained his BSc in Biochemistry from the University of Birmingham, a MSC in Molecular Enzymology from the University of Warwick and a PhD from the University of London. Ford-Hutchinson joined Merck Frosst Canada in 1981 as Director of Pharmacology. In 2001, he was appointed executive Vice President with responsibility for all of Worldwide Basic Research within Merck Research Laboratories. In 2005, Merck Research Laboratories moved to a matrix structure and Ford-Hutchinson was appointed to his current role.
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