The vaccine sector appears to be in good health. After coming through a period in which low profit margins and liability concerns deterred investment, EvaluatePharma now tips the sector to grow from $25 billion to $39 billion between 2012 and 2018. Yet, in some areas, old complaints can still be heard.
While the scaling back of President Clinton's Vaccines for Children plans in 1993 limited the proportion of jabs the U.S. government buys at reduced prices, the state is the major customer across Europe. And with governments across the continent reigning in spending, the pressure is on companies to supply vaccines at ever lower prices. Vaccine manufacturers are once again questioning the financial viability of the business.
"Prices have become unsustainably low in Europe," Jean-Paul Kress, head of Sanofi ($SNY) and Merck's ($MRK) European vaccine joint venture, told Reuters. Kress said bulk flu vaccine orders are now priced at around €3 ($4.80) a dose, down from €6 a few years ago. In the U.S., the Center for Disease Control (CDC) pays Sanofi around $8 (€6) per dose of its trivalent influenza vaccine Fluzone. More specialized jabs, such as pediatric dose and preservative-free versions, command slightly higher prices.
Vaccine manufacturers are looking to quadrivalent flu jabs to secure more significant price premiums, but uptake is largely limited to the U.S. for now. GlaxoSmithKline ($GSK) is selling its quadrivalent flu vaccine to CDC for $13.65 a dose, almost 50% more than the price of its trivalent version. AstraZeneca's ($AZN) biotech unit MedImmune is selling its quadrivalent FluMist vaccine for even more, although it has always been a higher-priced product on account of its nasal delivery system.
AstraZeneca is now on the verge of negotiating prices with European governments for the four-strain vaccine. Late last week the Committee for Medicinal Products for Human Use (CHMP) gave a positive opinion on the vaccine, called Fluenz Tetra in Europe. If Fluenz Tetra also wins European Commission approval, AstraZeneca could switch to the quadrivalent version for the 2014-15 flu season.