6 Jun 2011

UK ‘missing out’ as drug giants slash vaccine prices

The world’s top drug makers slash vaccine prices in the developing world but industry experts say the radical change is a strategic business decision, not philanthropy.

Several global pharmaceutical firms have cut the prices of life-saving treatments in the developing world. But as the step is hailed a “landmark move” that will save lives, industry experts say it is a smart financial decision that could see UK firms missing out.

An industry insider told Channel 4 News that, while he welcomed this move, he feared for the lack of investment in medical research in Britain. Dr Andy Sutton, chief executive of a British bio-tech company, said that investment opportunities for early stage research were “pitiful” and could lead to the country missing out on valuable new treatments.

Industry giant GlaxoSmithKline (GSK) has announced it will make Rotarix, a vaccine that protects against diarrhoea, available in poor countries for £1.50 a dose instead of £30.

Merck said it will offer its Rotateq anti-rotavirus shot at an initial price of £3 a dose, falling to £2 when the purchase volume increases to 30 million doses.

The company also announced it will offer its Gardasil shot, which protects against the human papillomavirus that causes cervical cancer, at £3 per dose – a 67 per cent discount.

Other price cuts are being offered by Serum Institute, Panacea Biotec, Johnson & Johnson, Crucell and Sanofi Pasteur, which is offering a yellow fever vaccine and an anti-rotavirus drug being developed by its Indian subsidiary Shantha at a discount.

‘Not a gimmick’

Diarrhoea is one of the biggest killers of children under five, and rotavirus is the leading cause of severe diarrhoeal disease in children, killing more than 500,000 every year.

The Global Alliance for Vaccines and Immunisation (Gavi), a partnership between private and public sector groups, wants to fund vaccination projects against the rotavirus in 40 of the world’s poorest countries by 2015.

Price cuts from the drug companies are an effort to bridge a £2.25bn funding gap needed to achieve that target.

I hope this will enable millions of children to receive this important vaccine. Andrew Witty, GSK Chief Executive

GSK’s chief executive Andrew Witty said the move was “not a gimmick or one-off philanthropic gesture, but part of a concerted strategy to change our business model”.

He added: “I believe industry, including the pharmaceutical sector, sometimes hasn’t helped itself by operating as if we were detached from society. I hope this will enable millions of children to receive this important vaccine, saving countless lives in the future.

“Specifically, we are aligning our commercial success with doing what we can to tackle the healthcare needs of people in all countries, including the poorest.”

News of the discounting was welcomed by charities including Save the Children, who called it a “landmark move”.

Andrew Mitchell, the International Development Secretary, said: “I hope that the entire industry will follow the path down which Andrew Witty and GSK is blazing a trail.”

Market opportunities

Dr Andy Sutton, chief executive of British biotechnology start-up CompanDX Ltd, said he was prepared to give the pharmaceutical giants “the benefit of the doubt”, although the discounting may be influenced by a need to expand into lucrative new markets in China and India, as firms look for ways to shore up dwindling profit margins.

He told Channel 4 News: “There may be additional benefits for the companies and they may have an eye on China, but I think this is a genuine move to try to reduce the cost of pharmaceuticals in the developing world. They can’t be doing this for purely financial reasons.”

There are clear market opportunities, but the investment community in this country is just unbelievably cautious at the moment. Dr Andy Sutton

The price cuts come as the big pharmaceutical companies are expected to lose £85bn by 2013 as patents expire and copycat drugs come on to the market, according to analysts IMS health.

CompanDX was launched in partnership with Nottingham Trent University in a bid to offer an expert outsourcing service to drug firms desperate to slash their massive research and development costs.

The company has come up with a method of giving victims of breast cancer a more accurate prognosis, and is working on a test that it says could revolutionise the diagnosis of TB.

Not prepared to take risk

But the likelihood of other start-ups cashing on what could be a growing market for British scientific expertise is slim as UK investors show reluctance to get involved, Dr Sutton said.

“We are in the middle of a fundraising round at the moment. We are getting interest from China and from the US in terms of our services and products. In the UK the investment opportunities for early stage research are pitiful,” he said.

“We have given some consideration to relocating outside the country and certainly seeking funding from outside the country.”

“There are clear market opportunities, but the investment community in this country is just unbelievably cautious at the moment. They are not prepared to take any risk.

“We are incredible innovative in this country but there is a real disconnect between what is still a highly innovative academic set-up and investors. I’ve been in the industry for 25 years and have never known it to be as bad as this.”