GlaxoSmithKline CEO Andrew Witty took plenty of heat when he traded away his company's cancer meds to bulk up on vaccines, a traditionally low-margin business that he wanted to take high-volume. But with pricing pressure continuing to mount on drugmakers, CEOs with vaccines units may be all the more glad to be established in the sector.
Vaccines will likely remain a reliable source of growth for the field's biggest players, industry watchers say. After all, they're not nearly as vulnerable to price squeezing, which was the reasoning behind Witty's strategy in the first place.
But those looking into the vaccines world from the outside may be out of luck. As Jefferies analyst Jeffrey Holford has said in a research note, he believes vaccines sales will be “highly durable” going forward, citing high barriers to entry as one reason the market isn’t likely to be disrupted by newcomers.
GlaxoSmithKline, the top vaccines company in the world, boosted its position in the field with the Novartis asset swap that closed in 2015. And after absorbing Novartis' portfolio, excluding the Swiss drugmaker's flu products, GSK's vax unit outgrew any other at the pharma giant in the second and third quarters of this year. GSK will remain on top of vaccines in the coming years, according to a World Preview report by EvaluatePharma, riding 6% growth annually to $8.5 billion in 2022.
Sanofi, for its part, recently posted third quarter vaccines sales that were 14% above the same period last year. That was enough to best all the French drugmaker’s other groups except the rare disease unit Genzyme. Vaccines grew 6.3% in the second quarter and 8.2% in the first quarter at Sanofi, back when CEO Olivier Brandicourt said Sanofi Pasteur “continues to deliver.” And next year will certainly feature developments in the ongoing Dengvaxia launch.
Pfizer may have a tougher time posting big vaccines growth moving forward, as its Prevnar 13 is set for a slight decline in the coming years. The world’s bestselling shot captured so much of the market early on that it can’t deliver the kind of sales increases the company’s vaccines unit experienced in 2015. EvaluatePharma predicts Pfizer’s vaccines sales to grow 2% each year through 2022.
But aside from the pneumococcal blocker Prevnar, Pfizer has worked to expand its vaccines offerings by backing a new cancer vax startup and advancing candidates against C. diff and S. aureus, among others.
Led by the big-selling Gardasil, Merck is poised to post 2% growth yearly through 2022, EvaluatePharma predicts. The company bested that figure by a wide margin, however, in the third quarter of 2016 with a 27% increase in sales, outgrowing all other major vaccines companies in the period. Gardasil’s position may be strengthened further in the U.S., as GSK has pulled rival Cervarix from the key market. Gardasil contributed $1.9 billion to Merck’s top line in 2015.
All told, the four leading vaccines players will continue to dominate the market in the coming years, Evaluate predicts, holding more than 80% of market share in 2022.
That's not to say smaller players will be totally stymied. Next year will also likely see growth for new entrant Seqirus, which has earned multiple FDA approvals for flu vaccines since its formation. A unit of Australia’s CSL, Seqirus formed when the parent company picked up Novartis’ flu vaccines assets and combined them with its own bioCSL unit.
Editor's note: This article ran as one in a series of predictions about the pharma industry in 2017.