Stock Watch: The Rise Of Vaccine Cannibalism
Sales Of Non-Coronavirus Vaccines Are Not Immune To The Pandemic
Executive Summary
Influenza and pneumococcal vaccine sales were initially strong at the start of the pandemic. Recent weak revenues for travel, childhood and premium vaccines could raise population immunity concerns, however.
Vaccines are the unsung low-priced heroes of modern medicine − a status elevated further by the coronavirus pandemic. Paradoxically, the pandemic has damaged uptake – and sales – of non-coronavirus vaccines.
Mainstream Vaccines: A Mixed Bag In 2020
Even before sales of coronavirus vaccines started to skew the financial results of the vaccine divisions of big life science companies, 2020 was a mixed year for vaccines. The vaccine sales of Sanofi, Pfizer Inc. and Merck & Co., Inc. grew by 4.2%, 1.1% and 0.8%, respectively, in 2020, but at GlaxoSmithKline plc (GSK), vaccine revenues fell by 2.4%. Pfizer would also have seen a decline in its vaccine sales if it hadn’t been for the $154m contribution from its coronavirus vaccine. For all these companies, vaccines make an important contribution to turnover, representing 20.5% of GSK’s 2020 full-year revenues, 18.1% of Merck’s, 16.6% of Sanofi’s and 14.4% of Pfizer’s.
Flu And Travel Vaccines
Until the coronavirus pandemic, the principal threat of respiratory viral infections to older populations was recognized by seasonal influenza vaccination campaigns. Two of the biggest influenza vaccine manufacturers supplying the northern hemisphere, GSK and Sanofi, reported influenza vaccine sales that grew by 35.5% and 30.7% in 2020, respectively. The pandemic brought a heightened awareness of serious respiratory infections and this resulted in a bumper year for influenza vaccine manufacturers as the start of the relaxation of restrictions coincided with the last two quarters of the year when typically about 95% of northern hemisphere influenza vaccine sales occur.
Travel vaccines, on the other hand, were the obvious vaccine casualties of the pandemic. Sanofi is the only big manufacturer that segments its vaccines into a travel category and these include vaccines to prevent hepatitis A, typhoid, rabies and yellow fever. Sanofi’s travel vaccine sales fell by 42.2% in 2020 and continued that trend in the first quarter of 2021 to fall by 40.4% compared to the same quarter of 2020. This trend was confirmed by GSK’s hepatitis vaccine revenues, which declined by 34% in 2020, continuing into the first quarter of 2021, with a fall of 55%. Seasonality may also affect travel vaccine sales.
Premium Vaccines More Robust?
Most big vaccine manufacturers have premium products which are usually the market leader. They are generally recombinant, often multivalent products and sometimes use a novel adjuvant. Examples of these are Merck’s Gardasil franchise for the prevention cervical cancer caused by human papillomavirus infection, GSK’s Shingrix for the prevention of shingles and Pfizer’s Prevnar 13 vaccine for the prevention of pneumococcal disease.
Merck’s Gardasil vaccine revenues grew by 5.4% in 2020, but were flattered by the replenishment of the CDC pediatric vaccine stockpile. This stockpile restocking was a one-off, as in the first quarter of 2021, Gardasil revenues fell by 16.4% over the same quarter of 2020 and by 8.1% on the final quarter of 2020. (Also see "Merck & Co.'s Transitional Year Is Off To A Sluggish Start" - Scrip, 29 Apr, 2021.)
After a shaky middle part of the year, when seniors were probably at home and hoping for a different vaccine, GSK’s Shingrix revenues grew by 9.9% in 2020, but like Gardasil, first-quarter 2021 Shingrix revenues retreated to half those of 2020’s strong first quarter, and were just under half those of the similarly strong final quarter of 2020. (Also see "GSK Sees Light At End Of Shingrix Tunnel As COVID-19 Eases" - Scrip, 28 Apr, 2021.) It seems that the pandemic has not cannibalized non-coronavirus vaccines linearly.
While GSK attributed the weak Shingrix sales in the first quarter of 2021 to a “prioritized focus on COVID-19 mass vaccination of older adults” and the re-introduction of stay-at-home directives in some markets, an additional factor complicated this picture. In July 2020 the CDC recommended against the coadministration of reactogenic vaccines like Shingrix and the coronavirus vaccines and suggested that different vaccine doses should be separated by 14 days. (Also see "CDC Advisors Like Pfizer’s COVID Vaccine For Adolescents But Are Less Sure Of Coadministration" - Pink Sheet, 12 May, 2021.) This advice was recently dropped after the Advisory Committee on Immunization Practices (ACIP) meeting in mid-May 2021 cited delays to vaccination catch-up schedules.
Pfizer’s Prevnar 13 vaccine, like Gardasil and Shingrix, was not immune to the pandemic. Despite highlighting Prevnar 13’s fourth-quarter European growth, which resulted from a “greater vaccine awareness for respiratory illnesses”, Prevnar 13 sales were flat in 2020. In the first quarter of 2021 however, Prevnar 13 sales fell by 11.4% on the same period of 2020 and by 26.6% on those of the last quarter of 2020. Pfizer attributed the first-quarter Prevnar 13 sales weakness − with US revenue down by 20% − to “disruptions in wellness visits due to COVID-19-related mobility restrictions” and the ACIP’s recommendation. Merck’s pneumococcal vaccine Pneumovax 23 fared a little better in 2020 with sales growing by 17.4% but similar dynamics occurred in the first quarter of 2021 with sales falling by 33.2% on the same quarter of 2020 and by a half on the last quarter of 2020.
Childhood Vaccines And Catch-Up Dynamics
Before premium recombinant vaccines, much of the vaccine market was, and volume remains, in large tender contacts for products on the childhood vaccination schedules. Vaccines like those to prevent meningococcal disease, either alone or in combination with other vaccines to prevent bacterial meningitis (like HiB), now feature in the schedules, and most big vaccine manufacturers have such a product.
Sales of Sanofi’s meningitis vaccines fell by 18% in 2020 and first-quarter 2021 sales fell by a further 2.3% on the same period of 2020. GSK’s meningitis vaccine sales grew by 1.1% in 2020 but like Sanofi’s meningitis vaccine franchise, sales fell by 15.6% in the first quarter of 2021, compared to the same period in 2020. GSK attributed the meningitis vaccine performance in both time periods to lower demand. Pfizer’s Nimenrix meningococcal vaccine sales also declined by 3.9% in 2020 and by 38.7% in the first quarter of 2021. The lack of demand for childhood vaccines is probably a result of delays to pediatric schedules brought about by the pandemic.
From a commercial perspective, the potential for a large catch-up program in both pediatric and adult schedules may be a silver lining after the pandemic. On the other hand, vaccine manufacturing is complicated and requires campaign and seasonal planning. Meanwhile population immunity is waning.
Andy Smith gives an analyst and investor's view on life science companies. He joined the independent research house Equity Development in October 2019 having previously been an analyst at Edison group and a Senior Principal in ICON PLC’s Commercialization, Pricing and Market Access consulting practice. Smith has been the lead fund manager for four life science–specific funds, including 3i Bioscience, International Biotechnology and the AXA Framlington Biotech Fund, and was chief investment officer at Mannbio Invest. He was awarded the techMark Technology Fund Manager of the year for 2007 and was a global product manager at SmithKline Beecham Pharmaceuticals until 2000.