U.K. vaccine expansion a boon for GSK and Merck

Vaccines are widely viewed as offering value for money. Outlay on shots is offset by saved lives, less need for healthcare interventions and knock-on financial benefits of a healthy population. But manufacturers--particularly of new, more costly vaccines--struggle to pry open payers' purses.

The United Kingdom has knocked back a succession of drugmakers, but it looked favorably on the cost-benefit analysis of two vaccines this week. From July, sales of GlaxoSmithKline's ($GSK) rotavirus vaccine Rotarix will be buoyed by its inclusion on the U.K. national immunization schedule. All babies will receive the vaccine at two and three months old to reduce the 140,000 cases of diarrhea and 14,000 hospitalizations the virus causes in the U.K. each year. The National Health Service (NHS) expects to save $31 million a year by cutting healthcare interventions, partly offsetting the $39 million spent on the vaccination program.

Expanded use of the vaccine in the U.K. comes 7 years after it won approval in Europe. Over those 7 years, GlaxoSmithKline has fought for market share in other regions with Merck's ($MRK) RotaTeq. Last year both racked up global sales of around $600 million. Now GSK will benefit from Rotarix being given to the more than 700,000 babies born in England and Wales each year.

For Merck, the blow of seeing GSK snag the rotavirus business was offset by news that its shingles vaccine is being added to the U.K. immunization schedule, too. Merck has struggled with the supply of Zostavax for years, but having grown sales in the U.S., committed to a limited international rollout in 2013.

From September, Zostavax will be available to anyone over 70 as a routine vaccination. People aged 79 and over can receive the vaccine as part of a catch-up program, potentially giving Merck a short-term sales bump. An estimated 800,000 people will be eligible for the vaccine in England in the first year, the BBC reports.

- here's the Guardian article
- read the BBC's take
- check out the official update
- see the NHS release