AIDSWEEKLY Plus; Monday, May 18, 1998
Daniel J. DeNoon, Senior Editor

Greco warned that such a technological breakthrough could come from any of a number of different fields of inquiry.

"You have plenty of avenues; which ones will work is your guess as well as mine," Greco said. "But some things will work. And those that do could create an earthquake in the vaccine industry."

Greco addressed new trends in the global vaccine industry in a presentation to the European Center for Pharmaceutical Information (ECPI) Rapid Development of Combination Vaccines Conference, held April 20, 1998, in London, England.

The speaker himself represents one of the industry's new trends: consolidation of major players. Greco's firm, Pasteur Merieux MSD, is a 50/50 joint venture between U.S. giant Merck and European colossus Pasteur Merieux Connaught. The firm holds rights for 19 Western European nations on all existing and future vaccines created by the parent corporations. Because it instantly acquired a 45 percent market share, the venture required special approval - reviewed each year - from the European Union (EU).

"Development of combined vaccines was definitely one of the key reasons for forming this company," Greco said. "In fact, the EU would never have approved this union were it not for the importance of developing combination vaccines."

Greco noted that the world vaccine market has grown from $1 billion to $4 billion in the last seven years. This expansion has been due to sale of new vaccines (Haemophilus influenzae type b (Hib), hepatitis B and A vaccines, and the varicella vaccine) to developed nations and to the major World Health Organization (WHO) effort to increase vaccine coverage in developing nations.

"Global vaccine coverage has expanded in a huge manner," Greco said. "The result has been a very, very big expansion of this market."

While the vaccine share represents less than 2 percent of the gargantuan $240 billion world pharmaceutical market, Greco said that the vaccine market can be expected to experience continued double- digit growth for the next 10 years.

He identified a number of converging factors expected to drive this growth.

The first of these factors is technological innovation. Greco noted that advances may come from any of several directions including new adjuvants, new vectors, non-injectable vaccines for oral and mucosal application, DNA vaccines, and genetic approaches.

A second factor is increasing public and medical acceptance of vaccines for use throughout life:

* Infant immunizations will include immunizations against diptheria, tetanus, pertussis, intravenous polio vaccine (IPV), hepatitis B (and perhaps also hepatitis A), measles, mumps, rubella, vaccinia, meningococcal conjugate, and pneumococcal conjugate vaccines.

* "Beyond infants we will see the expansion of boosters for children," Greco said. Such immunizations will include diptheria, tetanus, acellular pertussis, intravenous polio, measles, mumps, rubella, and perhaps hepatitis B and A, and varicella vaccines.

* Adults may also require booster vaccinations. In addition, they may require immunization against various disease risks such as travel vaccines for hepatitis A, typhoid fever, and yellow fever; vaccines against sexually transmitted diseases (STDs) such as herpes; and specific geographic risks such as Lyme disease.

* Pregnant women. "I'm quite convinced that pregnant mothers will be vaccinated not only for their health but also to protect their children against disease early in life," Greco said.

* Senior adults will require vaccination against influenza, pneumococcal disease, and herpes zoster reactivation.

A third factor is expansion of vaccines to cover exotic diseases. In the next 10 years, Greco predicted the development of vaccines against many of these diseases, such as dengue, and vaccines to prevent diseases for which the infectious agent is less obvious, such as a Helicobacter pylori to prevent gastric ulcers. This latter application could have far-reaching consequences, as gastric ulcers are linked to gastric cancer.

This leads to a fourth factor: development of vaccines to protect against long-term health risks. This class of vaccines will have two members: vaccines against infectious agents such as H. pylori, and vaccines against tumors themselves.

At this point, the term "vaccine" begins to blur.

"For me this is the most troublesome thing," Greco admitted. "For vaccines being developed today, many are considered therapies before prophylactics. You start wondering, 'Okay, can we call these vaccines?'"

The PM MSD CEO offered a list of vaccines currently in development. Those whose completion is "almost definite" are pneumococcal conjugates, rotavirus, Lyme disease, and meningococcal A and C conjugates.

A second category Greco includes as "my own modest view of what would be most important." These include vaccines against HIV, hepatitis C, herpes simplex virus, malaria, respiratory syncytial virus (RSV), meningococcus B, H. pylori, human papillomavirus, and Epstein-Barr virus.

Other vaccines in development include cytomegalovirus (CMV), gonococcus, hepatitis E, non-typeable Haemophilus influenzae, polyvalent bacterial vaccines, urinary-tract infection, staphylococcus, dengue, schistosomiasis, and group B streptococcus.

All of these factors, Greco predicted, will in the next 10 years swell the vaccine market to some $20 billion: a much larger share of the world pharmaceutical market.

"This will not be without consequences, as you can imagine," he said.

Greco suggested that these consequences will lead to a more constrained expansion of the market. He listed several of these constraints:

* Technological failures could undermine public and investor confidence in vaccines.

* A very complex regulatory environment makes it difficult for manufacturers to gauge future vaccine needs.

* The time and cost of vaccine development. "This is a major issue for us," Greco said. "In the pharmaceutical industry you see a shortening of time. In the vaccine industry it is just the opposite. We must stop that."

* Governmental cost-containment policies will result in trimming of healthcare budgets, bringing vaccine spending under closer scrutiny.

* Public misconceptions about vaccine safety, sometimes fuelled by irresponsible media overemphasis on vaccine risks, may limit vaccine coverage.

To describe the vaccine industry of the future, Greco described the industry's past. This history he divided into three ages.

The first age of the vaccine industry was characterized by the development of national or public vaccine institutes in nearly every country to facilitate production of bacterial vaccines. This fragmented situation existed for several decades.

In the second age of the vaccine industry, the development of viral and recombinant vaccines required more extensive research and development resources than most national vaccine institutes could provide. As combination vaccines became available, small producers of monovalent vaccines were pushed out of the market.

"The necessity to internationalize the marketing of new vaccines, to cover skyrocketing costs, resulted in the fast concentration of the industry," Greco said. "A number of small players exited the business, were absorbed, or became increasingly dependent."

Rising costs led several major players - Wellcome, Sandoz, Hoechst, and Glaxo, for example - to leave the field of traditional vaccines.

The third age of the vaccine industry saw the concentration of the industry to only a few major players. Greco listed as examples:

* Merieux Institute and Pasteur Vaccines became Pasteur Merieux Serums & Vaccines.

* Pasteur Merieux Serums & Vaccines and Connaught became Pasteur Merieux Connaught.

* Pasteur Merieux Connaught joined with Merck's European division to create Pasteur Merieux MSD.

* SmithKline and Beecham and, more recently, East Germany's SSW became SmithKline Beecham Biologicals.

* Lederle and Praxis and American Home Products became Lederle.

* Ciba-Geigy and Chiron and Sclavo and Novartis created Chiron Vaccines.

* Chiron and Behring became Chiron Behring.

* Glaxo created Evans MBO, which became Medeva.

* Medeva acquired Wellcome's vaccine division and became Evans Medical Limited.

But as access to new technologies arises, major companies may find themselves in a position to capture new segments of the vaccine market.

"We have to ask ourselves, 'What will be the next step'"? Greco said. "Will others enter the field? The answer is yes. You will see a lot of companies re-entering the field."

Greco therefore envisions the vaccine industry splitting into two major groups.

The major industrial players include what Greco characterized as leaders: Pasteur Merieux Connaught, SmithKline Beecham, and Merck/PM MSD. Challengers to these leaders are Lederle and Chiron. Strong regional players will be Amvax, Medeva, Berna, CSL, Immuno (Baxter), and others.

But there will still be room for a second category of players, the "cherry pickers," as Greco dubbed them. These firms may be major biotech firms such as Astra or Glaxo or may be any of a large number of small biotech companies. What they all will have in common is a focus on a single antigen or vaccine type.

Greco concluded his lecture by posing several questions and providing brief answers (shown in the quotations below):

* Will broad-line vaccine companies be able to keep a global strategy? "My answer is probably no."

* Will vertical integration with pharmaceuticals prevail over horizontal integration? "The trend is for vertical integration, but it's still too soon to tell."

* Will biotech companies be able to integrate downstream? "We will watch very closely what happens in this area."

* Will emerging countries be able to develop as viable new players? "It will be limited to a few countries, and will take significant time."

* How fast will proper epidemiological tools be developed and/or improved? "They do exist, these tools, but there is still much to do in this area."

* Will there be increased harmonization of vaccine composition, recommendations, and vaccination schedules in the EU? "I believe Europe is a very small continent. I do believe harmonization will happen over time."

* Can the complexity of developing combined vaccines be mastered in a timely and effective manner? "Obviously the difficulties have been much greater than we expected when we started."

* Will there be a limit to the number of vaccines that can be combined? "Recent studies give good news."

* How will combined vaccines be made available/affordable to emerging countries? "There has to be a way, keeping in mind that industry itself cannot solve this problem."

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