Beating the Market

The vaccine industry is looking healthier and happier than it has in years, according to The Economist, thanks to the combination of new science, new money and new recognition of the value of prevention. The advances in adjuvants - ingredients in vaccines that make the antigens go further and work better - and new ways to deliver vaccines without needles, such as nasal sprays mean that genuine innovations are hitting the market. And it appears to be a market ready to place a value on products that can prevent disease and associated treatment costs. Health care payers in both developed and developing countries are willing to pay for higher-priced vaccines than before, making the vaccine business substantially more attractive than in the past. Interestingly, The Economist cites the importance of GAVI's vaccine purchases, and new financing approaches like Advance Market Commitments, as contributors to the rosier picture.

What The Economist doesn't mention is that the vaccine industry looks particularly good in comparison to the drug side of the pharmaceutical business, which has few true innovations in the pipeline and has developed a business model largely predicated on minor tweaks of old products - the "me too" generation - and expanding the list of approved uses for existing on-patent medicines. Take, for example, the news from Pfizer that their cholesterol-reducing big seller, Lipitor, is now OK'd for five additional therapeutic uses; this is decidedly good news, at least in the short run, for a firm that faces the patent expiration of its major money-makers, and has an anemic pipeline of new products. In the medium term, the weak pipeline has to mean trouble, and it's a problem across the industry.

In a world where prevention and public health have long been the poor cousins of high-tech curative care, it's refreshing to think that vaccines are giving the drug business a run for its money.