GSK, Merck lead vaccine price cuts for GAVI

Vaccine makers are pledging big price cuts for developing nations as officials gather to determine how they can pay to protect children around the world from disease. GlaxoSmithKline has promised to cut 95 percent off its rotavirus vaccine for sale to the globe's poorest countries, while Merck has also said it would cut the price on its vaccine against the same illness. Sanofi Pasteur and Johnson & Johnson also promised cuts.

GSK chief Andrew Witty (photo) called on other drugmakers to step up with discounts while stressing his company's pledge isn't a philanthropic gesture, but a sustainable business move. The company will sell the £30 shot for £1.50 to the neediest countries, a cut-rate price that nevertheless covers the company's costs, Witty said. "I hope this will enable millions of children to receive this vaccine," he wrote in a column for The Times of London.

The Global Alliance for Vaccines and Immunization, established by Microsoft founder Bill Gates, said India's Serum Institute and Panacea Biotec are on board for price cuts, too. They have agreed to reduce the cost of their pentavalent vaccine, which protects against five fatal diseases, the Guardian reports. Merck will cut its rotavirus price to $5, and then again to $3.50 once it has sold more than 30 million doses, BBC says. Its Gardasil shot against HPV will be cut to $5 per dose.

GSK is no stranger to slashing prices in developing countries. Indeed, its strategy for growth in emerging markets includes price cuts on some drugs to grow sales volume. The company figures it can achieve the most overall sales growth in those countries with lower prices. Plus, it's a long-term reputation-builder. As Witty wrote in his column, "To be successful in the long term, we have to operate in a way that is in step with society and its expectations."

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