Biomedical Engineering Reference
In-Depth Information
number of vaccine manufacturers, are likely to experience future industry consoli-
dation. Low-quality manufacturers will leave the industry as regulatory agencies
raise quality standards, price competition fueled by overcapacities will reduce the
number of fl u vaccine manufacturers, and multinational companies will acquire
emerging country players with low-cost high-volume manufacturing capabilities to
compete in middle-income countries and multicountry public market tenders.
Examples are Sanofi Pasteur's acquisition of the Indian company Shanta Biotechnics
and the acquisition of the Chinese company Tianyuan by Novartis under 19 years.
13.2.2
Entry Barriers
Entry barriers are high in high-income countries for both innovative and follower
vaccines.
Product patents play a lesser role in the vaccine industry compared to therapeutics,
although they can play a role for specifi c antigens, adjuvants, manufacturing tech-
nologies (e.g., in hepatitis B vaccine production), and administration technologies
(e.g., intradermal administration). Because of the complex production, clinical
development, and regulatory approval processes, know-how in these domains repre-
sents a signifi cant barrier to entry.
Manufacturing scale-up typically occurs in late phase II, and decisions to build
expensive manufacturing capacity to scale must be made years before regulatory
approval. Unlike the multipurpose manufacturing facilities for small-molecule
pharmaceuticals, vaccine facilities for bulk antigen production are generally
uniquely dedicated and therefore are sunk costs (Berndt et al. 2009 ).
High regulatory costs are another important barrier to entry. Clinical trials
designed to show the effi cacy of fl u vaccines require large number of subjects
because a low attack rate drives the need to power the clinical studies to demon-
strate effi cacy. Serious yet rare side effects detected for a vaccine raise the regula-
tory hurdles for similar vaccines. For example, subsequent to the market
withdrawal of a previous rotavirus vaccine (RotaShield) due to rare but fatal
adverse effects, Rotateq pre- and post-licensure safety studies ended up enrolling
70,000 children.
High fi xed manufacturing and regulatory costs result in substantial scale econo-
mies. The size of a vaccine market relative to the minimum effi cient scale therefore
is an important determinant of entry (Scherer 2007 ; Danzon and Pereira 2011 ),
which explains why there are more competitors in the large fl u vaccine market than
in most other, much smaller markets (see Fig. 13.2 ). Moreover, because vaccines are
biological products, generics cannot use the low-cost abbreviated new drug applica-
tion (ANDA) process that has resulted in rapid and deep market penetration by
generic versions of small-molecule therapeutics in many countries. The resulting
longer product life cycles of vaccines compared with small molecules are refl ected
in higher residual values in vaccine deal NPV calculations.
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