GSK looks to manufacturing to reduce vaccine costs

GlaxoSmithKline ($GSK) is building up its vaccine business in developing markets and is currently looking for a partner that can help it crack the vaccine market in China. But vaccines can't return the same margins in these markets as they do in the West, and that is where manufacturing is expected to make a difference in closing the gap.  

Christophe Weber, head of the company's vaccines unit, tells Bloomberg that the unit is looking at managing margins by finding ways to get more productivity out of its manufacturing processes at its vaccine complexes and by keeping a tight rein on costs. A recent acquisition of a company with a new technology platform is also expected to play a role.

GSK's vaccine unit is headquartered in Wavre, Belgium, where the company maintains the largest biotechnology production and research complex in the world. The Wavre site has 4,500 employees, a GSK spokesperson said. It has four bulk vaccine manufacturing facilities, a new formulation facility, a filling unit and a large facility where it packages most of the vaccines manufactured at all of the sites. Another 3,500 people work at its Rixensart site where most of GSK's vaccines were discovered. Besides R&D, however, that site also includes bulk, conjugation, formulation, freeze-drying and filling facilities.

According to Bloomberg, the company is building a new polio vaccine manufacturing facility at Wavre that will include more efficient technology and a greater capacity than the facility it replaces. Earlier this year, the company licensed technology from the U.K. National Institute for Biological Standards and Control for a low-cost manufacturing platform for inactivated polio vaccines that can be used in developing countries but hasn't said how that might integrate into its plans.

A GSK spokesman pointed out that in May, GSK paid €250 million ($325 million) in cash to buy Swiss-based Okairos. That deal includes some early-stage assets, but the company focused on the fact that Okairos has a novel platform which it sees complementing GSK's existing technology and helping it develop new prophylactic and therapeutic vaccines.

All of this technology will be brought to bear as it builds its vaccine business in emerging markets like China, where greater volume is undercut by lower profits. It is currently talking to potential partners that can help it there, in the same way that a deal with Biological E is expected to build its business in India. GSK plans to add its own polio vaccine to Biological E's 5-in-1 shot against diphtheria, tetanus, whooping cough, hepatitis B and Haemophilus influenzae as a way to create a more cost-effective shot for a local population.

- read the Bloomberg story
- here's the Okairos release

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