Dynamic vaccine market attracts more MNC investment
The outlook for the Asia Pacific vaccine market is favourable. Indeed, governments continue to invest in immunisation programmes as vaccination campaigns represent a cost-effective tool to improve public health. The active involvement of non-governmental organisations, such as GAVI, further facilitates access to vaccines by mitigating some financial barriers through co-funding schemes. However, rising competition from domestic vaccine producers and a heterogeneous regulatory environment that demands a country specific approach do pose some challenges to multinational drugmakers.
The dynamic Asia Pacific (APAC) vaccine market holds significant commercial opportunities for pharmaceutical firms. Based on UN Comtrade data, Japan imported the largest value of human vaccines for domestic use in 2015, amounting to USD36 9mn. This was followed by India (USD30 3mn), Australia (USD28 7mn) and South Korea
As trade values are reported in US dollar terms, we note that y-o-y currency fluctuations are an important factor shaping the value imported.
Multinational drugmakers are highly active in the APAC region. For example, Glaxo Smith Kline (GSK) operates a global vaccines production facility in Singapore and Merck & Co a pharmaceutical manufacturing facility in Hang zhou, China, both of which supply medicines and vaccines to other countries.
Support for public health to be key
A focus on immunisation among the APAC region’s governments will be a fundamental factor driving the sale of vaccines and reflects a growing appreciation of the benefits of a strong public health policy. We highlight that the strengthening of national immunisation programmes is not exclusive to developed countries such as Japan, which has a routine vaccination schedule, or in Singapore, where there is a well-established National Childhood Immunisation programme. The Philippines, for example, has steadily increased the budget allocated for its National Immunisation Programme (renamed from the Expanded Programme On Immunisation in 20 16), raising it from PHP316mn (USD6mn) in 2006 to PHP3,34 2mn (USD6 6mn) by 2015. Indeed, such programmes are integral
to the commercial strategies of multinational drug makers, particularly in APAC’s emerg ing markets where the low purchasing power creates financial barriers.
Beyond the role of governments in APAC region, international organisations such as the WHO and UNICEF are also important stakeholders in the region’s vaccine market. In 2014, UNICEF helped to procure immunisation supplies on behalf of several As ian countries such as India (partial schedule) and Myanmar (full schedule). Similarly, the Global Alliance for Vaccines and Immunisation (Gavi) has provided funding that has significantly improved access to vaccines in the region. According to Gavi, its funds have helped immunise approximately 50mn children in APAC with the pentavalent vaccine from 2001 to 2013. This represents an opportunity for multinational drug makers to partner with such organisations to help expand the availability of vaccines in the region.
Vaccine cost effectiveness key
We expect vaccines to be actively employed by both health officials and non-governmental organisations going forward due to their cost effectiveness in alleviating the disease burden. Researchers in a cost-benefit study of GSK’s Rotarix (rotavirus vaccine) in Vietnam noted that the treatment should be classified as very cost-effective as it allowed the healthcare system to reduce one dis ability-adjusted life year (DALY) lost for every USD540 spent. A more recent study analysing the cost effectiveness of a universal infant rotavirus vaccination strategy in China drew similar conclusions. Based on the analysis, patients in the rotavirus vaccination and Merck & Co’s Rotateq (rotavirus vaccine, live, oral pentavalaent) groups had to pay CNY3,760 (USD540) and CNY7,578 (USD1,090), respectively to avert one DALY. This was an amount researchers noted was highly cost-effective when compared to the nonvaccinated group.
Asia-based firms present competitive threat
Given the demand for vaccines in the APAC region and the corresponding commercial rewards, domestic pharmaceutical firms will be incentivised to compete for market share. Critically, the competitive landscape can often be skewed in favour of local firms as governments seek to develop their pharmaceutical sector and establish greater self-sufficiency. In Vietnam, the country’s 2020 strategy is to have local production supply 100 per cent of domestic demand. This has prompted the Vietnamese government to actively include locally produced vaccines into its Expanded Programme on Immunisation, the latest to be introduced being a measles -rubella vaccine produced by the Ministry of Health’s Centre for Research and Production of Vaccines (POLYVAC).
regulatory landscape to continue to evolve
MNCs will also have to navigate a highly diverse regulatory environment in APAC. The drug approval process, for example, varies greatly across the region’s markets both in terms of the pathways available and the timeframe. Exemplifying this, while Hong Kong has two main drug approval pathways, Indonesia has six drug categories. Sanofi’s experience seeking regulatory approval for Dengvaxia (dengue vaccine) in South East Asia is instructive in the challenges that vaccine producers face in their pursuit of regulatory approval. While the Philippines was the first to approve the vaccine in December 2015, the firm has yet to receive approval in Malaysia as of December 2016, with Minister of Health S. Subramaniam citing a lack of information on its effectiveness in patients aged 18 and older. The level of intellectual property protection, while improving in several APAC markets, remains low, particularly in markets such as India. In March 2016, Médecins Sans Frontières (MSF) was able to file a pre-grant opposition to prevent Pfizer from patenting Prevenar 13 (pneumococcal conjug ate vaccines).