Flu Inc.: How vaccines became big business/ Globe and Mail

Paul Waldie and Grant Robertson of the Globe and Mail, Canada have published a detailed investigative piece on how vaccines have been transformed into a huge industry in the space of a few years. Thirty-two percent growth per year has followed the expanding use of yearly flu vaccines (and the expanding population groups for whom it is advised). This article is a must-read explanation of the vaccine industry and the strategies it is employing. Snippets follow:

... H5N1 (avian or bird flu virus) would alter government approaches to pandemic planning. But it would also create a new and unprecedented opportunity for the global pharmaceutical industry. It was, as Dr. Ossi recalls, “an obvious commercial opportunity” for the drug companies – one that is reshaping their businesses.

In a matter of a few years, flu shots have gone from being a marginal, money-losing business to a massive profit generator for a small number of global companies, as
governments and the public hasten to protect themselves from getting sick.
Between 2004 and 2007, vaccine sales across the industry soared an average
of 32 per cent each year, with flu vaccine leading the way. That is roughly four
times faster than any other pharmaceutical product.

This is the story of how that happened – how Flu Inc. grew out of nowhere, transforming a once struggling business characterized by lab closures and lawsuits into a high-profit industry in less than a decade, and of the steps the pharmaceutical industry has taken to ensure the dollars keep flowing.

The change is driven by a new way of thinking in government about how to approach future threats of a flu pandemic. Health officials have begun to see merit in pursuing a strategy of stockpiling vaccines, even at a much higher cost per dose than they paid in the past...

The problem with making vaccines

For years, scientists had tried to find a faster way to make vaccines. They chased a variety of theories, including isolating the DNA of a virus, which many researchers believed would unlock new ways to fight infections. But at its main vaccine facility in Rixensart, Belgium, Glaxo had found a way to make vaccines more potent using another kind of technology: adjuvants...

Adjuvants are like superchargers for vaccines. They are mild contaminants that cause the body to respond with a more intense immune response. When paired with antigens, the adjuvant liquid can make the vaccine's impact stronger. This allows for more doses to be produced from less antigen...

Adjuvants allowed companies to pump out more, but it is also a higher-margin business than antigens... “The barriers to enter the market are extremely high,” said Mr. Monteyne in Belgium. “You don't become a vaccine maker over night. That's why we have a few big players, and very few only.” That meant the giants could push hard to increase prices. And they did.

...the cost of a flu shot is flexible depending on whether the buyer can pay more. “We have a tiered pricing strategy,” Mr. Monteyne said. “It is mainly based on the level of income of the country.”

...Switzerland was the first country to jump in. In October, 2006, with fear over H5N1 at fever pitch, the Swiss signed a contract with Glaxo on a stockpiling deal that called for 8 million doses of avian flu vaccine, slightly more than one shot for every citizen. This emerging business – pre-pandemic treatment – was rounding into shape. Glaxo began trade-marking the names of vaccines along those lines, registering its vaccines as Prepandrix.

... There was just one problem: the H5N1 pandemic never happened. The virus stayed mostly with animals. The Swiss were left with one of the world's largest stockpiles of unused H5N1 flu vaccine. Glaxo's sales of avian flu vaccine fell 54 per cent in 2008, as countries realized their stockpiles weren't needed.

... Once a country bought a large supply of adjuvant, it was locked in as a buyer for Glaxo's antigen for years to come. Countries were not just vaccine buyers now; they were subscribers, coming back annually to the company for more and different types of shots... In the past 12 months, the number of countries using such stockpiling methods has grown to 60 from less than 10. (See discussion of how the UK is negotiating with GSK to cancel H1N1 shots and in exchange stockpile GSK's adjuvant, here.)

... Soaring vaccine sales are also pushing companies to chase profit in other types of shots. The race is now on to develop blockbuster vaccines, defined as those that bring in more than $1-billion annually. Two recently developed vaccines – Prevnar for pneumonia and Gardasil for cervical cancer – have become blockbusters, selling close to $2-billion a year.... It's a new marketplace.