Bio News & Views: Vaccines and CMOs

How will a growing market affect the contract manufacturing business?

by Gil Roth

Flu season is upon us once more, and with it another round of fears of an H5N1 pandemic. Several countries have reported human deaths from the bird flu, and others have reported their first instances of infected poultry.

Drug companies have been working overtime to develop new vaccines and treatments for the avian flu. Government agencies have co-sponsored these efforts, helping large and small companies push their development programs along.

In January, the Department of Health and Human Services (HHS) awarded three grants totaling $132 million to Novartis, GlaxoSmithKline and Iomai Corp. for H5N1 adjuvant vaccines. GSK and Novartis’s grants were for vaccine products and facility expansion, while Iomai’s contribution is a transdermal patch that boosts the immune response of another party’s vaccine. This round of grants was intended to guarantee a supply of 150 million doses.

Of course, flu vaccines aren’t the only ones causing a stir. Recently, several states have debated whether to mandate injections of Merck’s HPV vaccine Gardasil in pre-teen girls, in hopes of protecting them from HPV infection, which is the cause of approximately 70% of cervical cancer cases. If such laws are passed — at press time, the governor of Texas had issued an executive order mandating the vaccine for fifth-grade schoolgirls, but members of the state legislature were looking to overturn it — the vaccine market could skyrocket.

Market Report

According to a new report from Kalorama Information, Vaccines: The World Market, worldwide revenues from vaccines — including therapeutics, not just preventatives — is expected to hit $10 billion this year and clock in at $15 billion in 2012. New targets, advanced production methods, and infrastructure growth in developing countries means there’s lots of growth potential for the vaccine market.

In particular, Kalorama’s study contends that cancer vaccines — both preventative ones like Gardasil and soon-to-be-approved Cervarix, and therapeutic products like OncoVAX — could account for as much as $8 billion by 2012. It was around $16 million in 2005. The study also points out that, while pediatric vaccines comprise the majority of vaccine revenues, the new generation of products are geared toward adolescent and adult populations. In addition to major health indications, some companies are developing what some call “lifestyle” vaccines. In recent years, we’ve seen reports of “anti-nicotine” and “anti-cocaine” vaccines.

The five key players in vaccines are Sanofi-Pasteur, GlaxoSmithKline, Merck, Wyeth and Novartis. The top four companies held a combined 91.0% of the market in 2005, according to Kalorama. GSK was the leader at 30.3% market share, followed by Sanofi-Pasteur at 30.2%. Wyeth trailed at 17.8% and Merck comprised 12.7% of the market. That year, Novartis lost significant marketshare due to the Chiron manufacturing disaster.

Those major players are investing significant capital in manufacturing facilities, but CMOs still play a valuable role in the vaccine process. As more vaccines are approved and some gain broad public health mandates, a capacity crunch may be in the offing. CMOs are ready for an increased role.

“We’re seeing very healthy growth in the vaccine market,” said Terry Novak, executive vice president and chief marketing office for DSM Pharmaceuticals and DSM Biologics. “The major reason is a better regulatory and pricing environment. It coincides with the maturation of pipelines from several of the big five vaccine companies.”

Mr. Novak said that, while DSM provides liquid and lyophilized aseptic fill/finish services at its Greenville, NC site, the company is more interested in expanding the biologics API side of its business. “I think there is an opportunity for a high quality CMO to produce vaccine APIs and provide fill/finish services for the smaller companies entering the market,” in addition to its work with larger companies, Mr. Novak remarked.

Crunch or Glut?

CMOs have different takes on available (and future) fill/finish capacity. Mr. Novak remarked that there appears to be ample capacity for finished dose products, but Craig Mastenbaum, vice president of manufacturing and business development at Spokane, WA-based HollisterStier, contended, “There seems to be an overall shortage of available capacity within the CMO industry.” He remarked that HS has positioned itself well to meet the needs of its vaccine customers, and is working on a $30 million expansion that includes a commercial high-speed filling area.

One CMO (who requested anonymity) confessed that the capacity picture is murky, remarking, “It sure looks like the Big Five are making moves to secure dosage form capacity for the future. This is primarily in pre-filled syringes. It could be a race, because the vaccine market is growing, but no one is releasing capacity right now.”

The CMO added that it can be difficult to gauge the true availability of capacity. “What may appear to be a supply-crunch might not be real,” the CMO commented. A major blindspot, this CMO contended, derives not from a vaccine, but another injectable drug. “The big wildcard in fill/finish capacity is the status of Sanofi Aventis’ Lovenox.”

Online Extra: Vaccine News UK-based Cobra Biomanufacturing Plc has joined a consortium formed to develop a new vaccine delivery system based on live bacterial spores. This is funded from a European Union Sixth Framework grant, coordinated by the Royal Holloway, University of London, and includes international experts in immunology and vaccine development. Spores of the harmless gut bacterium Bacillus subtilis are already taken orally as a probiotic to aid digestive health. The research programme will involve genetically engineered spores to express vaccine determinants on their coat. Such spores are able to survive ingestion, and can therefore deliver the vaccine to the immune system of the gut and induce immunity. Spores are very stable and do not require cold storage, and the oral delivery will avoid the problems associated with needles, making this technology particularly valuable in developing countries, according to a statement from Cobra. The initial disease targets will be malaria and tuberculosis, which kill millions of people annually, but the spore-based approach represents a platform technology to deliver vaccines against a wide range of diseases. David Thatcher, chief executive officer of Cobra Biomanufacturing, commented, remarked, “This consortium brings together creative science from around the world including, UK, Germany, Italy, Austria and Vietnam with the aim of applying modern genetic techniques to develop cheap effective oral vaccines. Cobra is delighted to be collaborating on this innovative project which along with Cobra’s proprietary ORT-VAC technology reinforces Cobra’s position at the forefront of oral vaccine research.”

With sales around $3.2 billion in 2006, Lovenox is SA’s #1 product and one of the world’s top-selling injectable drugs, but it faces severe patent challenges, and may face generic competition long before its expiry in 2012. If that occurs, then much of the fill/finish CMO capacity that SA was employing may become available. “It’ll throw a monkey-wrench into the capacity equation,” said the source. “Are we going to see manufacturers overinvest and wind up with excess capacity? I hope not.”

Buy and Cell

New production models represent another of those monkey-wrenches. The push is on to transform flu vaccine in particular, the production of which currently employs the antiquated egg-based model.

In May 2006, HHS announced a $1 billion investment to support development of cell-based production technologies for flu vaccines and to “modernize and strengthen the nation’s influenza vaccine production by creating an alternative to producing influenza vaccines in eggs,” according to a department statement.

Flu vaccine bulk manufacturing will benefit from cell-based manufacturing methods, but it remains to be seen how this will affect dosage form CMOs. One school of thought is that improvements in production could cause another capacity crunch, but some fill/finish providers contend that the benefits of cell-based production will also trickle down to them.

Said one manufacturer, “The thing to realize about cell-based production is that it shortens bulk production lead time, which can’t start until the World Health Organization identifies the annual strains that are out there. By shortening the lead time — getting away from the egg-based production in favor of cell-based — dosage manufacturing can begin earlier in the year. In essence, this will increase available capacity for flu vaccine dosage forms, because the production timeline won’t be as constrained as it is now.”

Another CMO concurred, saying, “Cell-based production should allow for a little more predictability for dosages. From a fill/finish perspective, it could make things much easier to schedule. Conceivably, you could spread manufacturing over three to four months, instead of the one or two months we currently have available.”

Mr. Mastenbaum of HollisterStier contends that new vaccine production models may also lead to new players in the field: “Cell-based flu vaccine manufacturing has the potential to utilize a large amount of industry capacity. If this type of vaccine is as successful as is anticipated, we believe overall demand will be strong, opening up new investment capital from sources that previously showed little interest.”

Mr. Novak at DSM remarked, “We have had an increase in the number of companies seeking fill/finish services, as most of the companies receiving federal grants are small and do not have manufacturing facilities.”

Several CMOs we spoke to brought up that same theme: that the improved regulatory environment, government support and grants, fairer pricing structure, and new production technologies may attract smaller players into the vaccine field.

Said Mr. Mastenbaum, “There’s no doubt that government programs have helped to step up the overall vaccine business, including fill/finish. If it is possible to minimize the global pandemic threat, the government appears prepared to assist manufacturing organizations.”

Anthony Bonanzino, Ph.D., president and chief executive officer of HollisterStier, added, “The U.S. government now understands the significant financial risks of manufacturers and is attempting to provide programs to mitigate a segment of that risk.”

Still, with the Democratic party winning a majority in Congress last November, some industry-watchers fear that we’ll see a resurgence in liability issues, which could provide a chilling effect on new companies entering the market. Will the (inter)national need for vaccine preparedness trump the tendency of government programs to try to overmanage every cost (except their own)?

Gil Roth has been the editor of Contract Pharma since its inception in 1999. He can be reached at [email protected].