Economies of Health
The vaccine trial industry in the world: an economic review
Abstract
In the ongoing pandemic, every individual has understood the
importance of vaccine trial industry across the globe. The vaccine
industry in the world plays a major role in developing different drugs
and vaccine. The vaccine industry is the one which are engaged in
research, development, manufacturing, sales, marketing and
distribution. The companies earn revenue from the sale of the product
mainly. These are different factors along with expectation which drives
the industry. There are some international industries involved in these
practices. The vaccine development work is done in phases and the
third phase which has two part is the most expensive one (around 58%)
of the total expenditure. Based on year 2020, the market size is
estimated to be 33 billion dollar which is expected to be growing at
compound annual growth rate of 5% by the year 2027. In the recent
time the increasing demand of vaccine for covid has increased the
research, funding and hance the market size of the vaccine in the world.
The article published in the international chamber of commerce titled
‘the economic case of global vaccination’ highlight the market size
with figures and the research published in the NCBI titled ‘the vaccine
industry’ by R. Gordon Douglas and Vijay B. Samant focuses on the
development procedure of vaccine, different phases time gaps and the
revenue side by looking at the cost and sell data of different leading
companies. In this paper we also look at the role of government and
different developing partners in order to understand the whole cycle of
research to sell and development needs.
Objective
in this paper we will look at the development phases of any vaccine
industry and economic impact it does to any country. As the
international council of commerce has predicted that the world
economy will fall by about 4% due to covid crisis, the economic impact
to different developing as well as the developed country need to be
assessed. We will also see the development cases of different vaccine
companies and try to estimate the profit share earn by different leading
companies. We will also look at the companies getting registered as the
vaccine trial industry and their success rates. We will look at the
government aids and infrastructure development done in order to
develop an industry in a particular country. The paper will also focus
on the growth perspective in this industry and look for opportunities, if
any, for the growing population. Since the whole process of the
industry from the research to development and distribution are in the
hands of the industry itself, this paper will look to find the ways, how
the process of distribution of developed vaccine be made fair and the
effect of cost on the people in general.
Methodology used/ Methods:
For the collection of reports and data, I will collect it from the economic
research done in 2020 and before from the international forum of
commerce on the vaccine trial industry. For the economic part and
revenue part, we need to collect data from the individual companies
and some of the studies done in the market analysis report done by
grand view research and the research done by R. Gordon Douglas and
Vijay B. Samant published on the NCBI. For the government aids and
infrastructure investment as well as the laws in different countries we
need to find the different lows prevailing and financial aid programs
run by the country and different news articles available on the internet.
For the cost and revenue part, we can also estimate using the sales data
of the big international companies involved in the clinical trial. For the
economic impact as a whole we need to look at the data from world
trade organisation and data of different GDP measuring countries. We
will look at the leading companies in the vaccine trial industry and their
development process and phase wise expenditure done in the past for a
successfully developed vaccine in order to understand the actual profit
made by these companies like GlaxoSmithKline, Pfizer, Sanofi etc.
Literature review:
The study on the economic impact is less available as the cost to a
company and the revenue are the intrinsic things to be determined, still
researched analysis different phases, resources required and the time
taken to estimate the cost to company as well as to a society. Similar
kind of study is done by Mr Douglas and Mr Samant and published the
findings in the NCBI and tries to estimate the size of vaccine industry
in the world. They estimate the market size along with the factors
required for vaccine development in detail and tries to find the
economic impact. Similar kind of study is done in the recent time by
the international council of commerce to estimate the market size and
further growth opportunity in the clinical trial industry. Different
market analysis publications like the grand view research also
publishes the market reports on estimated market size, cost incurred in
different phases and research and then try to project the profit by
estimation of revenue. So, these research findings help to understand
the clinical trial industry in the world.
Data and further analysis:
The different vaccine manufacturing phases include majorly five steps.
First of the step include the pre-clinical, research and development
phase of the trail. In this phase we look at how vaccine work and how
can we develop the required immunity against the disease or the
vaccine. The second phase includes the safety check of the vaccine the
search for right doses required. In the second step, small group of
people are administered to check the safety and dose required also
called the phase one of the trail. In the next step relatively large number
of people are monitored with the vaccine in order to check the
effectiveness. The next step includes the regulatory approval and
licensing of the vaccine. This is the phase in which vaccine trials are
provided with the regulatory approval, in some cases the emergency
use approval is also provided like in the case of the covid 19 vaccine.
Now, let’s turn toward the economic impact of this in a country.
The economic impact of vaccine development can be calculated in two
ways, first directly and second one is indirect effect. The direct impact
can be seen as it is the cost-effective measure in comparison to other
public investments. The reduction in morbidity and mortality
associated with successful vaccine programs, through a combination of
direct and indirect protection, has led to reduced incidence of diseases
and their associated treatments and healthcare costs (Deogaonkar et al.,
2012) which is the indirect benefit. Also, the vaccine cast on an average
of $50 investment per life gains in major cases like polio and small pox
etc. if we talk about monetary gains, the developing countries like north
Africa is expected to extract a profit worth of $27 billion by the end of
2024. The potential growth in Asian pacific region is the most due to
rise in the population and disposable income with limited healthcare
infrastructure. The rising awareness and immunity understanding has
increased the demand in this reason (market analysis by GVR).
Along with this there are productive gains as well which are attached
to vaccination. The growth in an economy increase help expenditure
and heathy nation increases nation’s productivity. So, there are health
effect on the economy as well from the vaccination drive. For a nation
vaccination is the cost-effective measure for pandemic outbreak control
as well. As the vaccination provide the required immunity and the
administration of vaccination is relatively cost effective comparing the
medical cost and time required and the loss of life.
The clinical trials can be classified on the basis of the field in which
most researches are done as well. These areas include the autoimmune
or inflammation which has the share of 18% in the vaccine market. The
pain management research which is about 9%. The next sector which
is oncology has a market share of about 30% which is highest among
all the sectors. Then comes the CNS condition which is about 20%.
Diabetes research and trial takes about 15% of the total research and
market share. Obesity, cardiovascular and others comprises of the rest
of the market share which is about 8% of the market share. All these
sectors and there market shares are growing rapidly and as we see the
growing awareness and education is attracting more people towards
better health and healthcare practices.
Now, the growing market demand and the potential sell, the market of
the vaccine industry is also expanding rapidly. It’s not that the vaccine
industry dries up all the profit that can be earned from the pharma
sector. The cost of research and development and the chances to get
success are much less in the pharma sector. In the data published in
GAVI, Vaccine production involves high investment costs for research
and development, and for production facilities. It also requires
significant know-how. Knowhow is difficult to acquire and so
technology transfer requires a strong cooperative relationship between
the partners. All of these factors create barriers of entry into vaccine
production. As a result of these high barriers to entry, there are
relatively few vaccine producers, compared with producers of other
classes of pharmaceuticals. In addition, the world’s vaccine market is
very small—less than 2 percent of the pharmaceutical market—
attracting few suppliers. Also, when we look at the success in this
industry, they are very small fraction. According to the data published
in CDC, only 9.6% is the success rate of a vaccine to get approval from
phase one. The graph of the success rate in different phases are given
below.
According to the data published in the US national library of medicine,
ClinicalTrials.gov currently lists 378,460 studies with locations in all
50 States and in 220 countries. The studies done in US only is about
33% according to the same report. From the data we can find the
number of researches done in different branches of medical science like
drug
or
biology,
behavioural
or
other, surgical and other devices.
If we talk about other countries, about 60% of the total clinical trial
phases are performed in developing countries because of cost
effectiveness and relatively easier laws. Over the period, the number of
registered trials grown significantly from about 2500 in year 2001 to
about 378460 in the starting of the year 2021. The non-US and US and
non- US combined research has also increased significantly. With these
numbers the growth and investment in these industries has also
increased. The government of different countries have also provided
with the financial aids to these companies as the fixed cost of a vaccine
or clinical trial are very high and the success rate is quite low as we
have seen from the data as well.
When we look at the historical revenue side of the data, we found that
the top performing research companies are making money in millions
and billions. The role of government support and infrastructural
building by the government and different grants and aids also become
important which we see in the following data.
Now, let’s see the government expenditure on these clinical researches
of various projects. Different countries provide financial support in
different manner. Some of the government do partnership to share the
cost burden, some provide them tax benefits. Some government
purchases a certain amount of doses prepared or some bear the cost of
research and development. Let’s look at the data of US economy first
which provide infrastructure investment and financial aid directly for
research
purposes.
The table above shows the financial support provided by the US
government for various vaccine development to different countries.
These expenditure are a significant proportion of the budget
expenditure. In the recent time, during this covid pendamic outbreat,
US and other government has opened up their treasury for the fast track
vaccine development and approval. Along with USA, other developed
countries like EU has also funded many research works and clinical
trials. In the last 11 months, about 93 billion euros has been spent
globally on research and vaccination drive in the world(according to
global health watch report of 1st may). The europian union provide
financial support based on their certain criteria like the vaccine
produced in EU or the number of supply to the union, the scientific
approch, coordination with EU norms etc. The developing country like
India and other asian countries are also providing financial support. The
least developed countries are dependent on the financial help from the
global bodies and hence on the humanitarian ground an equitable
distribution of vaccine is also necessary. We have seen in the recent
time, the developed and financially strong countries have stocked
vaccine much greater than their population requirment. In such a
scenario the role of global authorities, WHO, CDC becomes
significant. Apart from this, those who succeed in the clinical trial, the
companies gains significantly. We can see in the recent covid vaccine
development, the developing companies have earned in billions. Pfizer,
one of the leading company in vaccine development is expected to sell
vaccine worth $30 billions in 2021 alone. Moderna is expected to gain
about 372% in one years etc. Therefore, on incentive side we can see
these profits apart from the government aids provided to these
companies for clinical trials.
After the production phase by means of research and development then
clinical trials and the funding for all of this, the effectiveness measures
are calculated and the use approval is applied in front of the regulatory
bodies. Now, based on efficiency and immunity againt the disease, and
other criteria, a clinical trial finally gets converted into a finished
goods. Here also the use approval can be emergency use purpose or the
general purpose based on the requirement of the vaccine, like we have
the emergency use approval of different covid vaccine in different parts
of the world. Apart from this, the role of approving authorities doesn’t
get over. They need to monitor the after effects of the vaccination as
well. The effectiveness and actual result is seen only after a certain time
period, so in such a scenario, the authorities work is to regulartly check
for the side effects if any or the symptoms developed in any person
after the vaccuination. So, these are all the steps required in a vaccine
production and clinical trial.
Now, the next important thing to notice is the responsibility of global
authorities for an equitable and effective distribution of vaccine as the
economically rich countries have resources but the poor will have to
suffer, so an effective and equitable distribuition of vaccine is required.
For this the coordinated approach of countries are required so as to
minimise wastage and stop hoardings.the CDC can play a coordinating
role between the countries, in developing countries there is requiremet
of policy support as well as government initiative also play significant
role. The world also needs to address the cost and financing at global
scale for a vaccine which is of mass uses like polio, covid etc. The
effective distribution can be done by engaging the local bodies in the
distribution process.
Conclusion:
The clinical trial process is a time taking and costly process. Its not that
anyone can reap unlimited benefits from the vaccine development as
the research and development costs a lot and the rate of success is quite
low. But we have seen that for a disease control, vaccine is one of the
best measure as it is cost effective with several benefits as discussed in
the paper. Since, the development of clinical trials are costly, so the
role of government and financial support becomes crucial and we have
seen in figures the financial support provided by the developing world.
For an euitable and effective distribution, the role and coordination of
global bodies become crucial. So, the clinical trial industry can be seen
as one of the best industry in terms of benefits from it to the society.
We have also seen in text how much profitable it can be for a company
as well a for country and world as a whole.
The way forward:
The rise in awareness of people towards the immunity requirements
and the growing population has given rise to the vaccine demand for
different diseases. Over a period there has been significant investment
done in the infrastructure development for the clinical trials. In the
covid time only, we have witnessed an expenditure of about 93 billion
euros been spent for covid vaccine development and research. The
government of even the developing countries have understood the
requirement of vaccine and clinical trial industry. The profit of some
african countries also encourage government in seting up and
strenthning the clinical trial industry in the country. The clinical trial
industry is expected to grow at a compound annual growth rate of
10.3% from 2020-2025. So, from all this we can say that there is
demand and government support as well as the global support, which
are sufficient incentive for the further growth in the clinical trial
industries.