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Immunization Focus - the GAVI quarterly

UPDATE - June 2001

En Français

Global market – global vaccines?

Vaccines for developing and industrialized regions have been diverging, but today’s global market is changing rapidly. Phyllida Brown asks manufacturers and others what the future holds

IT hasn’t happened overnight, but gradually over a decade. Vaccines for certain diseases now come in different versions: those bought mostly by the industrialized countries, and those bought mostly for use in developing countries.

Figure 1: Availability of three "traditional" vaccines supplied to UNICEF - Source:

There are several reasons for the split, including different patterns of disease and judgments of need. But one key factor is the industrialized countries’ increasing desire to avoid any adverse effects – however small or uncommon – from vaccines against diseases which are now relatively rare. In contrast, for most developing countries where these diseases are still widespread, the benefits of the traditional vaccines still heavily outweigh their risks, while the newer vaccines are currently too expensive to be a practical option.

Among the changes in industrialized countries, for example:

  • Acellular pertussis (aP) has largely replaced whole-cell pertussis (wP) in the traditional "triple" vaccine for diphtheria, tetanus and pertussis (DTP);
  • Inactivated polio vaccine has largely replaced the oral vaccine;
  • Measles vaccine is usually combined with mumps and rubella, instead of being given alone; and
  • Vaccines are packaged as single doses, without preservative, whereas in developing countries the norm remains multidose vials and some contain the preservative thiomersal.

Now, a team from WHO, the World Bank and the company Aventis Pasteur have investigated whether this trend towards two separate "tracks" is affecting the supply or price of vaccines needed for developing and industrialized countries (1) . The answer is that, while today’s picture is still uncertain, current trends could lead to supply difficulties and higher prices in the forseeable future. Supplies of some traditional vaccines, once well in excess of demand, have now fallen to the point where they only narrowly exceed demand (see Box 1 ). "A batch failure now could precipitate a shortage," says Julie Milstien at WHO, one of the study’s authors. And, in some cases, prices that had remained stable for years are creeping up.

1: Endangered species: how and why supplies have been falling

For years, the availability of traditional vaccines supplied to UNICEF for the Expanded Programme on Immunization exceeded demand, usually by many millions of doses. But in the past three or four years, supplies of some vaccines have declined so that they only narrowly exceed demand. These include BCG, DTwP, tetanus toxoid and measles (see Figure 1 ). For example, in 1998, UNICEF was offered 600 million doses of DTwP. In 2000, the agency received a response to their tender of just 150 million doses. Prices of these vaccines have remained static for long periods but several, including measles and DTwP, appear to be rising slightly now (1,2) .

Part of the reason for the fall in supplies is that the traditional vaccines, typically priced at a few cents per dose for UNICEF, fail to compete with newer vaccines such as Haemophilus influenzae type b(Hib), whose profit margins are much higher, for manufacturers’ limited capacities for production, filling and packaging. "We buy the 'penny' vaccines and compete for filling-line space with multidollar vaccines," André Roberfroid of UNICEF told delegates at last year’s GAVI Partner’s Meeting in Noordwijk, the Netherlands (2) . And, as the number of routine children’s vaccines available in industrialized countries has roughly doubled in 30 years, the competition for capacity is increasing.

This situation particularly affects vaccines with extremely low profit margins, such as BCG and meningitis A/C polysaccharide. For example, Glaxo SmithKline (GSK) has said that it cannot commit itself to producing as much meningitis A/C vaccine for next year as it did for this year, partly because its freeze-drying capacity has been allocated to the manufacture of Hib vaccine. "It’s true that both [vaccines] need to be freeze-dried and you have to allocate capacity," says Tony Lakavage at GSK. He adds, however, that ensuring a match between demand and supply is always difficult with meningitis A/C vaccine, because epidemics are irregular and unpredictable.

The low prices offered by producers in developing countries have also reduced the incentive for manufacturers in high-income countries to make traditional products, says Walter Vandersmissen at GSK, citing "gigantic offers from [suppliers in] developing countries to UNICEF" as one reason for the fall in DTwP supplies from the industrialized countries. However, there are other technical reasons for the reduced availability of DTwP, he says, including changes in production methods and the increased demand for both diphtheria and tetanus toxoids for use as components of the new conjugate vaccines.

Some manufacturers in North America have actually stopped making products such as DTwP. But European-based manufacturers have traditionally served a more global market and say they will continue to do so. For example, says Michel Greco of Aventis Pasteur in France, 70% of the vaccine doses made by the company are destined for developing countries, although these represent a fraction of overall revenue. Whole-cell DTP, for example, will continue to be made, not least because the supply of acellular pertussis is likely to be limited. "You can manufacture 10 doses of whole-cell pertussis for every 1 dose of acellular pertussis in the same facility," says Mr Greco.

Indeed, in Mr Greco’s view, there is no reason why developing countries should not continue to use different products from their industrialized counterparts, provided quality is assured. "Even if philosophically the dual-track concept is not a pleasant one, in practice it may be preferable," he argues, given that many countries cannot afford the higher-priced vaccines. Products should be chosen case by case, he says, based on a country’s disease burden, its resources, and the vaccine’s efficacy and safety.

But what is less obvious – and more important in the long term – is how far these trends will continue, or whether different patterns will emerge.

The global vaccine market is evolving rapidly for at least two reasons: first, the rise of new entrants into the market, in the form of manufacturers in developing countries whose products are increasingly important for global supply; and second, new buying power and mechanisms, through GAVI and the Vaccine Fund, for the low-income countries. These changes are also happening against a background in which the requirements of regulatory bodies are becoming increasingly stringent. So in some respects, today’s "divergence" of products along two tracks for developing and industrialized countries reflects the conditions of the past decade, and events over the next five years may be different. "This marketplace has changed dramatically," says Tony Lakavage, senior director of external affairs at Glaxo SmithKline in Rixensart, Belgium.

First to agree would be the manufacturers in developing countries, who were once labelled as "local" producers but who now play a much bigger role. "Manufacturers such as Bio Farma have actually changed the global supply picture radically," says Thamrin Poeloengan, president director of this Indonesian supplier to UNICEF, based in Bandung.

Immunization Focus sought the views of a range of producers in developing countries on the direction that vaccine production is taking. Their responses demonstrate that they are all highly committed to meeting the health needs of developing countries, with vaccines against diseases that primarily affect poorer populations. However, the actual products they make to meet these needs may change fast. And the prices they charge may change too. Some of the developing-country vaccine producers, particularly those who are public-sector institutions, insist that they will be able to continue making vaccines at today’s very low prices, taking advantage of economies of scale. But others say that their prices may have to rise.

Until now, most developing-country producers have concentrated on making traditional vaccines such as DTwP and measles and also, recently, monovalent hepatitis B vaccine. For most low-income countries, the high prevalence of childhood disease and a lack of resources make the traditional vaccines the most appropriate response, they argue. Take, for example, DTwP – an order of magnitude less costly than DTaP. In Brazil, says Isaias Raw, president of the Sao-Paulo based producer Instituto Butantan, "Adopting aP would represent going from cents to many dollars [per dose], and would result in a decrease in vaccination."

But it would be a serious misjudgment to think that the developing-country manufacturers are restricting themselves to the "old" vaccines. Some, such as Bharat Biotech and Shantha Biotechnics, both of Hyderabad, India, are already developing combination vaccines such as DTP-HepB, for which the emergence of GAVI and the Vaccine Fund has sharply increased demand. In some cases, says Susan McKinney at WHO, combinations are being achieved by different developing-country producers collaborating and "marrying" components. "These producers are on a fairly fast track to providing a DTP-HepB combination," says Ms McKinney.

Aventis Pasteur
Expensive kit: vaccine production is capital-intensive

Another mistake would be to assume that the developing-country producers will make products only for developing countries. As well as these, says Krishna Ella of Bharat Biotech, "We also see ourselves as contract manufacturers for vaccines and other biologicals for the industrialized countries." Indeed, a few manufacturers in developing countries are considering developing vaccines that may appeal to industrialized and developing countries equally – such as meningitis conjugates or rotavirus.

Equally, it would be simplistic to assume that developing countries will never want the products that have replaced traditional vaccines in most of the industrialized countries. Varaprasad Reddy, managing director of Shantha, is just one of the producers who believes that populations in at least some emerging and middle-income countries will gradually shift their demand as income increases and disease burden changes. Dr Ella at Bharat Biotech agrees.

In the short term, however, a more pressing issue issue is whether the developing-country producers’ prices will rise. Traditionally, these manufacturers have offered their products to UNICEF at very low prices – even lower than the concessionary prices charged on sales to UNICEF by the industrialized-country manufacturers. But this situation may not be sustainable. As developing-country manufacturers improve their production facilities to meet the increasingly stringent regulatory requirements for international sales, their production costs are rising. Whoever makes the traditional vaccines, it seems that they cannot remain as cheap as they have been.

Modern vaccine production requires massive capital investment, but once the plant is up and running the number of personnel needed is small. So the savings on labour costs that can be made in developing countries by other industries, such as clothing or software production, do not apply to vaccine producers. Producers that have traditionally charged very low prices may have to raise them if they are going to invest in modernizing equipment.

Companies in the industrialized countries, meanwhile, have historically been prepared to sell vaccines for use in developing countries at reduced prices because they make more money on sales of the same products in the industrialized countries. But, obviously, if few in the industrialized countries want to buy these same products, the options for offering them at these "tiered" prices in the developing-country markets may diminish. For David Salisbury, head of the immunization and infectious diseases group in the UK government’s Department of Health (see Box 2 ), this is a major problem for the world as a whole. It is implausible, he believes, that the major manufacturers will continue to offer vaccines at reduced prices for developing countries if they can no longer get the higher prices they need from the industrialized country markets to make their products profitable.

2: Not every industrialized country wants to ditch the "old" vaccines

For David Salisbury, head of the immunization and infectious diseases group in the UK government’s Department of Health, the falling supply of certain "traditional" vaccines is a major problem. In his view, it has become a seller’s market. "We find it difficult because you cannot say to a manufacturer, 'This is which vaccine we want' – and we are the customer."

In the UK, children are still immunized with DTwP because, Dr Salisbury says, trials have shown that the whole-cell vaccine protected 85% to 90% of children, whereas acellular products’ efficacy ranged from 70% to 85%. Despite other vaccine safety "scares", British parents today generally find DTwP acceptable, says Dr Salisbury, and immunization rates with the vaccine remain high. "Why would we change to a less efficacious vaccine at higher cost?" he asks. Yet, because of supply problems with whole-cell vaccine, Britain recently had to use the acellular product for a period.

British children are also given oral polio vaccine when many other industrialized countries have shifted to inactivated vaccine to avoid the risk of vaccine-associated outbreaks. The country’s historical links with the Indian subcontinent and some West African states, where polio remains endemic, mean that there is constant and large-scale traffic between Britain and these regions, and this raises the risks of wild-type virus entering the country. "We constantly review and review this policy," says Dr Salisbury. When polio transmission stops in these regions, the balance of risk and benefit will change, and the switch to IPV will be made, says Dr Salisbury.

Companies such as Aventis Pasteur and GSK have said they will keep tiered pricing – for now. "We are committed to tiered pricing as long as we have protected pricing in Europe and the United States," says Lakavage. "That is our stated public position. But what happens in the developed world does have an impact on what happens in the developing world."

In circumstances as uncertain as today’s market, then, what can anyone do to ensure that high-quality, appropriately priced vaccines keep flowing to meet the needs of developing countries? In the end, says Dr Milstien at WHO, it’s vital that manufacturers from both the industrialized and the developing countries stay in the market to assure a range of products and continued investment in R&D. And that means keeping the incentives for both to stay.

In the medium term, the emergence of GAVI and the Vaccine Fund may be improving the incentives to manufacturers – at least for some vaccines. Companies’ decisions about whether or not to develop products for developing countries are based, says Lakavage at GSK, on "an assessment of what the purchasing entities can and will buy". With GAVI and the VaccineFund catalysing changes in the market, he says, "there are more resources for purchase, and improvements in the infrastructure to deliver the vaccines". Demand for vaccines is also becoming easier to foresee with work done by the GAVI Financing Task Force’s subgroups on forecasting and procurement, together with the new purchasing arrangements that UNICEF is now adopting for new and under-used vaccines paid for by the Vaccine Fund. And in the longer term, as tougher regulatory demands drive costs up, both producers and buyers in a global market will need to be willing to invest more in products whose value the world has taken too much for granted. The next few years will be critical.


(1) Divergence of products for public sector immunization programmes. Milstien, Julie, S. Glass, A. Batson, M. Greco and J. Berger. Presentation to the Strategic Advisory Group of Experts of WHO’s Department of Vaccines and Biologicals, Montreux, 15 June 2001. Powerpoint presentation

(2) Roberfroid, A. presentation to the GAVI Partners’ Meeting, Noordwijk, the Netherlands, November 2000 Powerpoint presentation

Phyllida Brown

Immunization Focus June 2001 - Contents

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