Vaccines' Allure Remains Solid for Pharma, Attracting $2.5 Billion in North American Capital Investment

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Reported by Annette Kreuger, Industrial Info Resources (Sugar Land, Texas)--Vaccines continue to attract the drug industry for the same reasons as they always have. The vaccines sector is a darling in that there always seems to be some government funding involved. That particular flow has been staunched a bit, but this is not expected to last, as the clamor for vaccines never really dissipates.

By the end of 2012, the global vaccine market is expected to hit $34 billion in sales. With an estimated annual growth rate of 14% during the next five years, it is believed that vaccines will be the fastest growing therapeutic area, eventually outpacing oncology, according to a recent report from Research & Markets, an industry market research firm. Chronic diseases and increasing demand for different seasonal flu vaccines are two of the most important segments driving vaccine market growth. The market is basically divided into the Adult and Pediatric sectors, with the youngsters attracting the most interest.

Click on image at left for a listing of active vaccine projects in North America.

A large global population below five years of age and the threat of epidemics across the globe also adds to the increase in the development and sales of vaccines. The vaccine market is sure to reap benefits by the launch of major disease-control campaigns from various government agencies.

The leading market share for human vaccines remains in North America. This can be attributed to a variety of factors, including high vaccination rates and the launch of innovative vaccines. It cannot be overstated that vaccines are for far more than influenza. Product extension is firmly entrenched when it comes to vaccines as companies seek and receive expanded treatment targets.

Merck (NYSE:MRK) has invested nearly $1 billion (up from an initial expected investment of several hundred million dollars) into its Gardasil vaccine plant in North Carolina. Originally, the cervical cancer vaccine targeted girls and young women aged 9-26, but the company has raised some eyebrows in seeking approval for older women, young boys and men.

The treatment of Hepatitis B is an important market, with Merck and GlaxoSmithKline (NYSE:GSK) both offering these important products. Vaccines targeting lethal staph infections, drug addiction, smoking and a host of other maladies continue to garner research dollars and industry interest.

As of 2010, just five companies held 80% of the total vaccine market: Sanofi Pasteur (NASDAQ:SNY) GlaxoSmithKline, Merck & Co., Pfizer (NYSE:PFE), and Novartis (NASDAQ:NVS). Vaccines are susceptible to large fluctuations in both supply and availability thanks to the small pool of top manufacturers; a number of recommended vaccines are often produced by a single company.

The combination of new biotechnology research techniques and manufacturing technologies has helped create today's vaccine business. The sector targets no less than the world, thanks to increasing demand and improved profitability. The World Health Organization (WHO) estimates that there are currently more than 500 vaccines in various stages of development for a variety of diseases. In addition to the expected vaccines for influenza, scores of new products are targeting AIDS, pneumococcal disease and cervical cancer.

There has been a surge in the development of novel therapeutic vaccines for chronic infections such as cancer and hepatitis. The desire for such vaccines has greatly contributed to the aforementioned M&A activity by Big Pharma to acquire companies with the expertise to develop these therapies. Since the development of vaccines targeted at adults and especially the elderly, age-based product development continues to be one of the key strategies of vaccine makers.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.