Manufacturing and Access in Public Health, Government, and Developing World Markets

Growing public health initiatives, coupled with perpetual threats of pandemics and emerging infectious diseases, highlight the gaps in biopharmaceutical development capabilities, as well as access to medicines within the developing world (1, 2). The recent H1N1 pandemic also revealed the access inequity of the pandemic influenza vaccine between developed and developing nations.

To help fill this gap, developing nations have nurtured their local biotechnology industries to help grow existing and new biotechnology capacity. Just in the past 10 years, multinational (MNC) pharmaceutical companies have established a strong presence in BRICM (Brazil, Russia, India, China, and Mexico) countries through initiatives ranging from joint ventures with local manufacturers, to the building of captive research and development (R&D) centers, to the acquisition of local companies.

Even with the biopharmaceutical industry’s increasing footprint, low- and middle- income countries (LICs and MICs) still face challenges in accessing medicines. For instance, BRICM countries represent 43% of the world population, but collectively account for only 1.8% of the global vaccine market (3, 4). Whereas US health expenditures per capita exceeds $7000 (as defined by purchasing power parity, PPP, international dollars), none of the BRICM countries’ expenditure exceeds $1000 (PPP) (5). This differential explains, in part, why many licensed vaccines are still unaffordable in developing and emerging countries, thus inhibiting access to essential treatment.

Aside from economic challenges, there are unique unmet medical needs typical for MICs and LICs that render biopharmaceuticals licensed in the Western world inadequate for the developing market. For some diseases, such as rotavirus and pneumococcal diseases, the distribution of disease serotypes in the developing world can differ from those in developed nations. There also are few effective medicines for prevention and sometimes only moderately effective existing therapies for neglected tropical diseases that are endemic to LICs (6).

Changing approaches

Table I outlines the market characteristics of biopharmaceutical products targeting underserved populations in developing countries. The models for providing access to biopharmaceuticals to underserved populations continue to undergo an interesting evolution. An emergence of private entities, state-owned enterprises, and public–private partnerships has led to innovative business models that address gaps in the development and commercialization of medicines for emerging and developing countries. Some examples are noted below.

Table I: Market characteristics of biopharmaceutical productstesting underserved populations in developing countries.

Market characteristic

Description

Demand unpredictability

Securing long-term contractual commitments from UNICEF or PAHO requires WHO prequalification, a challenging task for local biomanufacturing industry

Reliance on only local demand is risky due to dependence on each country’s health policies and maturity of the supply chain.

Product economics

Long, high-cost product-development cycle most often culminates in low-price products.

Limited incentives
for multinational corporations

Low profits coupled with high-risk, high-cost research and development do not provide incentives for multinational corporations to invest in the production and delivery of biopharmaceuticals addressing neglected tropical diseases and country-specific serotypes of infectious diseases.

Reliance on public-sector financing

State and product development partnership-supported biotechnology companies are the key stakeholders in the developing world’s biopharmaceutical research and development and manufacturing.

WHO is World Health Organization. PAHO is Pan American Health Organization.

Donations from MNCs.This approach involves free donation of medicines by MNCs through partnerships. One example is Merck & Co.’s Mectizan Donation Program (MDP) for the treatment of river blindness. MDP is still one of the largest ongoing medical donation programs in history, reaching more than 60 million people each year. The MDP is a partnership between public, private, and nongovernmental development organizations (7).

Transforming the marketplace from a low-volume, high-cost enterprise to a high-volume, low-cost business. The Clinton Foundation HIV AIDS Initiative (CHAI) has improved the demand side of the market through prevention and treatment programs and has provided technical assistance to develop procurement and supply-chain management practices. The initiative resulted in cumulative price reductions of 30% for second-line antiretrovirals and 60% for pediatric antiretrovirals to 70 countries and an increase of market size to more than two million people since 2002 (8).

Emergence of state-owned and private manufacturers in developing countries. In the last decade, a few prominent players in the developing countries’ biopharmaceutical sector have emerged (see Table II). Different business models were employed by these organizations. Some enterprises initially began as a manufacturing hub, growing through technology in-licensing, infrastructure development, or collaborations with MNCs into integrated R&D and manufacturing organizations. The Serum Institute of India is one of the most prominent vaccine manufacturers on this list: it is the fifth largest vaccine manufacturer by volume (after GlaxoSmithKline, sanofi-aventis, Merck & Co., and Novartis) and is one of the world's lowest-cost vaccine producers (7).

Table II: Select list of prominent private
and state-owned vaccine manufacturers in developing countries.

Company name (location)

UNICEF and PAHO contracts,
WHO Prequalification

Non-prequalified products

Private

Serum Institute of India (India)

UNICEF:Meningococcal A; rubella; measles; hepatitis B; measles and rubella (MR); measles, mumps, and rubella (MMR).
PAHO: Bacillus Calmette-Guérin (BCG); diphtheria, pertussis, and tetanus (DPT); hepatitis B; measles; MMR; MR; tetanus
WHO-prequalified vaccines: BCG; Haemophilus influenzae type B (Hib); polio; combined DPT; tetanus; pertussis; hepatitis B; Hib.

Antisnake venom sera

Panacea Biotech (India)

UNICEF: hepatitis B; polio
WHO-prequalified vaccines: Combined DPT, tetanus, pertussis; Hib.

Shantha Biotechnics (India)*

UNICEF: hepatitis B
PAHO: hepatitis B
WHO-prequalified vaccines: tetanus

Pentavalent vaccine against DPT, hepatitis B, Hib, pertussis, tetanus; oral cholera

Biological E (India)

WHO-prequalified vaccines: tetanus

DPT; recombinant hepatitis B; antisnake venom sera

State-owned

Fiocruz (Brazil)

UNICEF: yellow fever; Meningococcal A and C
PAHO: yellow fever

Pertussis; Hib; tetanus; MMR; DPT

Butantan (Brazil)

PAHO: DPT; tetanus
No vaccines are WHO-prequalifed

Tetanus; BCG; hepatitis B; rabies, combined DPT, tetanus, and pertussis

ChengDu Institute of
Biological Products (China)

No vaccines are WHO-prequalifed

Pneumococcal; Japanese encephalitis; BCG; typhoid; combined DPT, tetanus, and pertussis.

* Acquired by sanofi-aventis in 2009.
PAHO is Pan American Health Organization. WHO is World Health Organization
Sources: UNICEF Contracts and Awards for Supplies and Logistics 2001 to 2010; PAHO Contract 2003 to 2008; WHO Prequalified Vaccines; “Biotech in India: Special Feature on India’s Emerging Biotech Industry” insert, Nature Biotechnology, November 2010.

Even though there is currently an impressive list of biopharmaceutical manufacturers in developing nations, many are still challenged with obtaining prequalification from the World Health Organization (WHO) and securing contracts from large purchasers, such as UNICEF and the Pan American Health Organization. Less stringent local regulatory and quality assurance standards, coupled with bioprocessing challenges, such as the inability to gain access to best-in-class technology and development know-how are some of the factors contributing to these difficulties.

Public–private partnerships. One prominent example of a MNC–public sector partnership undertaking an R&D effort tailored to the needs of developing world is the Hilleman Laboratories, a $147-million investment by Merck & Co. and Wellcome Trust, which was launched in India in 2009. The Hilleman Laboratories focuses on the development of affordable vaccines for low-income countries. Recently, Hilleman Laboratories announced a £90-million ($145-million) commitment to develop a new heat-resistant, affordable rotavirus vaccine using components of Merck’s existing rotavirus vaccines and formulation technology from Boston-based Medicine in Need (9).

The public–private partnership model offers unique access to best-in-class commercial know-how for developing countries’ scientists and engineers and fills a need to translate discoveries into commercial products by establishing linkages among discovery, development, and delivery experts. This business model relies on the public–private partnership undertaking the product development from discovery through proof of concept, then having other public sponsors fund the rest of product development. The challenges are obvious: availability of sufficient public funding to enable development post-proof of concept and, most importantly, an interest from capable local manufacturers to complete technology development. For MNCs, such as Merck, this approach is an opportunity to contribute to the development of new medicines for underserved populations while advancing discovery and early development of dual-use platforms and new leads that could be further developed for commercial, high-profit indications.

Creating biomanufacturing infrastructure

The task of creating a reliable and efficient low-cost biomanufacturing base in developing and emerging countries is daunting, and several innovative approaches to addressing those challenges have been explored. Below are examples of some of the challenges and possible solutions.

Need for capital investment to build and sustain a biomanufacturing base. There are several examples of how public financing can be used to build and sustain successful biomanufacturing capacity in developing countries. The state-owned Oswaldo Cruz Foundation (known as Fiocruz) in Brazil has leveraged state buying power to develop products through the in-licensing of technologies. Fiocruz also has forged some 20 public–private partnerships in recent years, both with domestic producers, such as Ache, and with MNCs, such as Novartis and sanofi-aventis, as well as with GlaxoSmithKline (GSK), with whom Fiocruz signed an agreement in 2009 to produce a 10-valent pneumococcal vaccine and develop vaccines against dengue, malaria and yellow fever (10). Another example is the PATH Malaria Vaccine Initiative strategic investment to create a cGMP-compliant dedicated malaria vaccine-manufacturing facility at Gennova Biopharmaceutical (India) to produce recombinant protein-based malaria vaccine candidates (11).

New manufacturing capacity built through joint ventures (JVs). The JV model presents an opportunity for both parties to have a tangible interest in the successful implementation and long-term sustainment of a new facility. One example of such a model is the long-term JV agreement between GSK and Jiangsu Walvax Biotech, resulting in a total investment of £41.2 million ($66.4 million) to develop and manufacture pediatric vaccines for use in China. The JV will build a new manufacturing facility for GSK’s pediatric vaccine Priorix in China, with both partners making investments and having an equity stake.

Another example is the 2009 deal between Novavax, based in Rockville, Maryland, and Cadila Pharmaceuticals, based in India, to develop and commercialize the seasonal influenza and H1N1 pandemic vaccine in India. Through equity investment and service contracts with Novavax, Cadila gained access to a novel vaccine production platform and flexible biomanufacturing facility design. The construction of Cadilla’s new vaccine facility was completed in 2010.

Access to bioprocessing technologies, expertise and know-how. Greater access to bioprocessing technologies will expedite the entry of new manufacturers into the market, which will ultimately drive product prices down and make drugs and vaccines more affordable for the developing and emerging world. Creating an environment where general bioprocessing platforms, standards, and quality controls can be openly discussed will be invaluable to address growing biopharmaceutical production needs. This task could be considered by the largest infectious-disease portfolio funders, such as the Bill and Melinda Gates Foundation, the the National Institute of Allergy and Infectious Diseases, National Institutes of Health, the Global Alliance for Vaccines and Immunization, and state governments. Through a structured analysis of a holistic infectious disease portfolio, focusing on technology platforms, expression vectors, and product-delivery strategies, critical questions can be asked about building and maintaining capabilities (i.e., assay development and animal-model development) and infrastructure (process development and GMP manufacturing). This approach will enable an open dialogue and knowledge sharing about lessons learned from a diverse group of biopharmaceutical developers and manufacturers.

The Developing Countries Vaccine Manufacturers Network is one example of a biopharmaceutical manufacturers’ forum with a mission to facilitate such an exchange of ideas and expertise. Another similar forum is the influenza vaccine hub established by WHO and the Netherlands Vaccine Institute to provide access to new manufacturing bioprocesses, technology platforms, and expression systems. The hub also provides guidance on alternative approaches to quality compliance for developing and emerging countries’ biopharmaceutical manufacturers (12).

Conclusion

Great strides have been made to establish biopharmaceutical development and manufacturing capabilities in developing and emerging countries although significant barriers for new market entrants still exist. The collaborative nature of relationships between MNCs and emerging and developing countries’ biomanufacturers is critical for gaining access to new bioprocessing technologies and know-how.

Innovative business models, such as JVs and public–private partnerships, are becoming the models of choice for growing the local biotechnology sector in developing nations. The management of technology transfer issues among discovery, early-development, and advanced-development stakeholders, including realistic assessments of funding and human capital needs, as well as timely planning, is becoming increasingly important.

Public-sector funders and public–private partnerships will continue to play a pivotal role in advancing R&D and building new product development and manufacturing capabilities to address the unmet medical needs of the developing world. The well-considered and timely alignment of stakeholders along the healthcare value chain will ensure optimal market sizing/demand assessment, adequate financial planning, alignment of product development and commercialization capabilities, and finally, structured and agreed-upon procurement and distribution strategies, all of which are critical for the successful delivery of new medicines to developing and emerging countries.

Chan Harjivan (charjivan@prtm.com) is a partner and Diana Elkis (delkis@prtm.com) is a principal, both in the Global Public Health practice at the global management consulting firm PRTM.

This article is Part II of a three-part series on biopharmaceutical issues in public health, government, and developing-world markets. Part I , which focused on drug development, appeared in the March 2011 issue of Sourcing and Management. Part III, which focused on distribution and administration, appeared in the May 2011 issue of Sourcing and Management.

References

1. WHO and UNICEF, Global Immunization Vision and Strategy 2006–2015 (Geneva and New York, Oct. 2005),, accessed Mar. 25, 2011.

2. UN, The Millennium Development Goals Report 2010 (New York, 2010), , accessed Mar. 25, 2011.

3. Central Intelligence Agency, The World Factbook (Washington DC, 2010).

4. Business Insights, The Vaccines Market Outlook to 2014: Competitive Landscape, Pipeline Analysis, Growth Opportunities and Market Forecasts (London, Aug. 2009).

5. WHO, World Health Statistics 2010 (Geneva, 2010),, accessed Mar. 25, 2011.

6. WHO, Diseases Covered by NTD Department, , accessed Mar. 25, 2011.

7. Merck & Co., Fact Sheet: Merck Mectizan Donation Program, River Blindness (Whitehouse Station, NJ).8. Clinton Foundation, Access Programs (New York), , accessed Mar. 25, 2010.

9. “Hilleman Lab to Invest about Rs 650 CR to Develop Vaccines,” Economic Times(Mumbai, Jan. 24, 2011).

10. A. Jack, “Brazil’s Prescription for Pharma,” Financial Times, Dec. 22, 2010.

11. “Gennova Biopharmaceuticals Collaborates with PATH MVI,” Moneycontrol.com , June 17, 2008.

12. J. Hendricks and C. Boog, “Influenza Technology Hub, a WHO Vaccinology Center of Excellence,” presented at the WHO Technology Transfer Workshop, Bilthoven, The Netherlands (Nov. 30–Dec. 1, 2010), , accessed Mar. 25, 2011.