Immunology Takes Center Stage

Jun 3

Key Insights

Marion Street Capital suspects that companies developing new vaccines or new vaccine technologies will see billions in new investment this decade.
The vaccines market should generate more than $93B in revenue by 2026
Each vaccine requires an average of 15 years and $521MM to $2.1B to develop.
Vaccines using conjugate technology generate 32% of market revenue.
Pneumococcal vaccines may continue generating more than 10% of market revenue through 2025.
COVID-19 prompted over $12B in funding for vaccines.
Demand for newer vaccines appears global, whereas demand for mature vaccines varies by geography.
Just five multinational pharmaceutical companies generated 80% of vaccines market revenue.
The vaccines industry may be able to double its size relative to the $1.25T pharmaceutical market by 2026.

Market Size Dynamics

Pre-COVID-19, Fortune Business Insights estimated that the global vaccine industry would grow from $41.6B in revenue during 2018 to $93.1B in revenue during 2026, representing a CAGR of 10.7%.[1] The prevalence of infectious diseases drives the growth of this market. This leads to more initiatives to enhance vaccine R&D, to more government support for vaccine development, and to greater focus on immunization. However, developing vaccines requires large capital investments, and this dynamic could restrain future market growth.[2] The average vaccine takes a minimum of 10 years to develop, with a mean of 15 years. The Washington Post estimates development costs of a successful vaccine to fall within the range of $521MM and $2.1B.[3]

According to the WHO, vaccines currently in development include:[4]

The classification of vaccines include three dimensions: technology, type, and disease indicator. Technologies include conjugate vaccines, inactivated and subunit vaccines, live attenuated vaccines, recombinant vaccines, and toxoid vaccines. Types include monovalent vaccines and multivalent (or polyvalent) vaccines. Finally, disease indicators can include pneumococcal disease, influenza, HPV, among many others.[5]

By technology, the conjugate vaccines segment accounted for the largest market share in 2018.[6] Government support and greater company investments into conjugate vaccine development has driven this significant market share. According to Markets & Markets, the conjugate vaccine market grew at a 12.5% CAGR from $7.5B in 2014 to $13.5B in 2019, representing a 32.3% share of the overall vaccine market.[7]

The monovalent vaccine segment commanded the largest share by type, in 2018. The rising prevalence of diseases and increasing government and private initiatives to promote immunization has led to this significant market size.[8]

Pneumococcal disease is the largest disease indication segment of the vaccines market. The high prevalence of pneumococcal disease and increasing government investments in pneumococcal vaccination programs has contributed to the size and growth of this segment. Sales in the global pneumonia vaccine market totaled $7.0B in 2017 and are expected to reach $10.2B by 2025, growing at a CAGR of 5%.[9]

Compensation & Funding Data [10]

While funding data for startups and companies in the vaccine industry is sparse, data is widely available on funding from governments and private entities for a COVID-19 vaccine. In recent COVID-19 funding news:

$8.0B from various countries for worldwide vaccine development[11]
$2.3B globally from 47 private sector initiatives toward treatments and vaccines
AstraZeneca received $1.0B from the U.S. for an Oxford study[12]
Moderna received $483MM from federal sources[13]

WHO on the State of the Vaccine Market:

Compared to the pharmaceutical market which generated $1.25T in revenue during 2019, the vaccine market is relatively small and concentrated on both supply and demand sides.[14] “It is highly regulated and largely dependent on public purchasers and donor policies. The vaccine market has very distinct features, which increase the complexity of assessing and understanding pricing and procurement. It consists of individual markets for individual vaccines or vaccine types, each with their own specificities, particularly on the supply side.”[15]

Individual Vaccine Markets

“Individual vaccine markets are constantly changing as countries introduce new vaccines and change preferences for more traditional vaccines. Until recently, only high-income countries (HICs) were purchasing more complex and more expensive products whereas low- and most of the middle-income countries were purchasing more mature vaccines. Now the dynamic is different: there is more convergence in demand for newer vaccine types and more divergence in demand for mature and combination vaccine types. UNICEF provides regular updates on markets and supply for the antigens it procures on behalf of low- and middle-income countries.”[16]

Supply of Vaccines & Competitive Environment

“About 80% of global vaccine sales stem from five large multi-national corporations (MNC) that were the product of various mergers and acquisitions of pharmaceutical companies over the past decades. There are relatively few vaccine manufacturers that meet international standards of quality established by WHO.” Many of the individual vaccine markets are monopolies or oligopolies.[17] The top vaccine manufacturers by revenue (as of 2018) include GlaxoSmithKline, Merck, Sanofi, Pfizer, and Novavax.[18]

“The entry of emerging market manufacturers, particularly in the underused vaccines market, has resulted in lower vaccine prices due to increased competition and higher production capacities for individual vaccines. A few emerging market manufacturers are also trying to expand their production to newer vaccines.” Emerging manufacturers are represented by the Developing Countries Vaccine Manufacturers Network (DCVMN).[19]

Demand for Vaccines

“The main actors on the demand side of the vaccine market are governments of industrialized and developing countries, pooled procurement agencies, the private sector, and the various regulatory and advisory bodies overseeing vaccine quality and safety. High Income Countries (HICs) constitute 82% of global vaccine sales in terms of value, corresponding to about 20% of the annual volume of vaccines sold. Not only do HICs pay higher prices, they are more likely to implement newer vaccines. Together, low- and middle-income countries account for about 18% of the value of global vaccine sales, constituting approximately 80% of the annual volume sold.”[20]

“With a WHO estimate of 5 to 10% of total vaccine sales in developing countries, the private sector plays a relatively small role on the demand side, except in some populated countries with rapid economic growth where demand from middle classes for new and non-EPI vaccines can be of significant value. Private sector demand mainly consists of more affluent population segments in developing countries that decide to take on responsibility for their own immunization, using preferred presentations not offered by the public sector.”[21]

About Marion Street Capital

Marion Street Capital (MSC) is a business growth consultancy helping innovative growth companies solve their most pressing challenges.
We collaborate with ambitious leaders to provide time-saving partnership, unparalleled support, and world-class expertise designed to ensure lasting business success — at scale. We work with clients to achieve growth of 10x or more by delivering world-class services in five key areas: FinOps, DataOps, RevOps, HROps, and SpecialOps.

MSC’s resources include relationships with institutional investors (family office, private equity firms, venture capital firms, hedge funds, and mutual funds), relationships with local and international banks, “expert networks,” relationships with top academic institutions, outsourced software development teams, graphic design services,
and industry information providers. This robust suite of services enabled MSC to help clients across 16 different industries during the last two years.

Footnotes

[1] https://www.fortunebusinessinsights.com/industry-reports/vaccines-market-101769

[2] https://www.marketsandmarkets.com/PressReleases/vaccine-technologies.asp

[3] https://www.passporthealthusa.com/2018/02/how-much-does-it-cost-to-develop-a-new-vaccine/

[4] https://www.who.int/immunization/research/vaccine_pipeline_tracker_spreadsheet/en/

[5] https://www.marketsandmarkets.com/Market-Reports/vaccine-technologies-market-1155.html

[6] Conjugate vaccine, according to Merriam-Webster: a vaccine containing bacterial capsular polysaccharide joined to a protein to enhance immunogenicity

[7] https://www.marketsandmarkets.com/Market-Reports/conjugate-vaccine-market-199230303.html

[8] https://www.marketsandmarkets.com/PressReleases/vaccine-technologies.asp

[9] https://www.alliedmarketresearch.com/pneumonia-vaccine-market

[10] https://www.devex.com/news/interactive-who-s-funding-the-covid-19-response-and-what-are-the-priorities-96833

[11] https://www.nbcnews.com/news/world/countries-pledge-8-billion-coronavirus-vaccine-u-s-absent-n1200066

[12] https://www.cnbc.com/2020/05/21/coronavirus-us-gives-astrazenena-1-billion-for-oxford-vaccine.html

[13] https://www.cnbc.com/2020/04/17/moderna-soars-on-483-million-in-funding-for-coronavirus-vaccine.html

[14] https://www.statista.com/statistics/263102/pharmaceutical-market-worldwide-revenue-since-2001/#:~:text=The%20global%20pharmaceutical%20market%20has,just%20390%20billion%20U.S.%20dollars.

[15] https://www.who.int/immunization/programmes_systems/procurement/market/en/

[16] https://www.who.int/immunization/programmes_systems/procurement/market/en/

[17] https://www.who.int/immunization/programmes_systems/procurement/market/en/

[18] https://blog.technavio.com/blog/top-10-vaccine-manufacturers