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Nina Schwalbe The GAVI Alliance’s vaccine market shaping approach IOM – Session V: Learning from Other Models Washington DC, 31July 2012
Nina Schwalbe
The GAVI Alliance’s vaccine
market shaping approach
IOM – Session V: Learning from Other Models
Washington DC, 31July 2012
IOM – Session V – GAVI Alliance
Washington DC, 31 July 2012
GAVI’s mission
To save children’s lives and protect
people’s health by increasing access
to immunisation in poor countries
WHO/Jim Holmes
IOM – Session V – GAVI Alliance
Washington DC, 31 July 2012
The GAVI Alliance: an innovative partnership
IOM – Session V – GAVI Alliance
Washington DC, 31 July 2012
Four strategic goals 2011-2015
The vaccine goal
Accelerate the uptake and use
of underused and new vaccines
The health systems goal
Contribute to strengthening the
capacity of integrated health
systems to deliver immunisation
The financing goal
Increase the predictability of
global financing and improve
the sustainability of national
financing for immunisation
The market-shaping goal
Shape vaccine markets to
provide appropriate and
affordable vaccines
1 2
3 4
IOM – Session V – GAVI Alliance
Washington DC, 31 July 2012
Increased competition reduces vaccine price over
time
Price decline of pentavalent vaccine and number of manufacturers
from which vaccines were procured in each year
Source: UNICEF Supply Division, 2012
IOM – Session V – GAVI Alliance
Washington DC, 31 July 2012
Context: Global vaccine market
• Global sales in 2010 ~ $ 28 billion
• “UN market” represents less than 5% of market
• 5 large Multi-National Corporations (MNC) make
up ~85% of the global market. Remaining from
both developed and developing counties
• Clear focus by MNCs new vaccine development
for industrialised countries
IOM – Session V – GAVI Alliance
Washington DC, 31 July 2012
Context: Safety & Quality
Quality is the over-riding criterion
Very low acceptability of side effects –administered to healthy population
WHO pre-qualification
Highly regulated production environment
Dependency on well functioning National Regulatory Authority
GAVI/07/Atul Loke
IOM – Session V – GAVI Alliance
Washington DC, 31 July 2012
Context: Production Complexity
Highly sensitive products
Biological products requiring constant temperature control - cold chain from manufacturer to child
Limited shelf life
Complex manufacturing
Specific know how, large scale investment: high barriers for entry
Significant risks of production failures
Long production cycle – long lead times required
Long term and reliable demand predictions are important
GAVI/07/Atul Loke
IOM – Session V – GAVI Alliance
Washington DC, 31 July 2012
Market dynamics
Oligopsony / Oligopoly
Limited competition both on demand and supply sides
Few buyers: Oligopsony (196 countries but.....)
Key role of governments or health insurances – vaccines
typically delivered free of charge by public health
providers
Pooled procurement: UNICEF (80-100 countries); PAHO
Revolving Fund (40 countries)
Few Sellers: Oligopoly
For GAVI-supported vaccines, between 1-4 suppliers with
pre-qualified product
IOM – Session V – GAVI Alliance
Washington DC, 31 July 2012
GAVI’s approach to market shaping – key
objectives
Information Communicate timely, transparent and accurate market information
Appropriate
products
Ensure
appropriate,
quality vaccines
& foster
innovation
Balance
Supply &
Demand
Ensure
sufficient
uninterrupted
supply
Vaccine
prices
Minimise cost to
GAVI &
countries
IOM – Session V – GAVI Alliance
Washington DC, 31 July 2012
Tools: Increase predictability
Predictable donor funding to complement country co-financing
Example: pentavalent vaccine $2.49/dose – lowest income countries pay $0.20
Strategic demand forecasts
Long term - up to 2030
Across 73 GAVI countries + other LMICs
Across 10+ vaccines
Regularly shared and discussed with manufacturers
IOM – Session V – GAVI Alliance
Washington DC, 31 July 2012
Tools: Pooling demand and contracting
flexiblities
Procurement through UNICEF Supply Division and PAHO Revolving Fund
Leverage high demand volumes from 73 countries
Example: pentavalent ~155 million doses / year
Adapting buying model / procurement tactics to market environment, examples:
Advance market commitment (AMC) for pneumococcal
vaccines
Multi-year firm contracting
Demand guaranties
Stockpiling
Concentrate volumes versus splitting of demand
Encourage competition - incentivise new suppliers
IOM – Session V – GAVI Alliance
Washington DC, 31 July 2012
Tools: Vaccine quality and oversight
Through collaboration with WHO:
Strengthen national regulatory capacity in GAVI countries – particularly in producing countries to mitigate against risks to supply interruption
Support the process to develop global norms and standards for vaccines, including product suitability and technical guidance to facilitate the development of second generation vaccines
IOM – Session V – GAVI Alliance
Washington DC, 31 July 2012
Tools: Tiered pricing
2011 prices per dose
Source: UNICEF Supply Division; CDC
HPV:
Price commitment to
GAVI of $5/dose
Current US public
price: $96-$112/dose
IOM – Session V – GAVI Alliance
Washington DC, 31 July 2012
Factors influencing GAVI’s market shaping potential
GAVI’s relative market power
• Purchase volume
• Terms and conditions
• Revenues and profits relative to other purchasers/markets or products …
Market environment
• Number of suppliers - competition
• Production capacity
• Company’s strategy
• Ability & willingness to supply GAVI countries
Vaccine production complexity
• More complex expensive technology
• Multiple antigens or serotypes
• Products, regulatory requirements
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IOM – Session V – GAVI Alliance
Washington DC, 31 July 2012
Learnings
Clearly articulated short term vs. long term objectives (price versus supply security versus innovation) for each market
Predictable funding
Visibility and credibility of demand
Ongoing and forward looking market intelligence
Partnership and regular interaction with manufacturers
IOM – Session V – GAVI Alliance
Washington DC, 31 July 2012
IOM – Session V – GAVI Alliance
Washington DC, 31 July 2012
Vaccine supply 2001 – Vaccine supply:
5 suppliers from 5 countries
IOM – Session V – GAVI Alliance
Washington DC, 31 July 2012
Vaccine supply 2011 – Vaccine supply:
11 suppliers from 9 countries
IOM – Session V – GAVI Alliance
Washington DC, 31 July 2012
Vaccine supply 2011 – Vaccine supply:
10 suppliers from 9 countries
IOM – Session V – GAVI Alliance
Washington DC, 31 July 2012
Accelerates the manufacture and delivery of vaccines:
Donors commit funds for new vaccines at pre-
agreed price
Manufacturers get incentive to invest in R&D for
new vaccines
Vaccines must meet stringent criteria and be
requested by developing countries
Manufacturers legally commit to supplying
vaccines at lower price long term
Long-term price is paid by beneficiary countries
and GAVI
Advance Market Commitment (AMC)
IOM – Session V – GAVI Alliance
Washington DC, 31 July 2012
AMC commitments: US$ 1.5 billion
Source: GAVI Alliance, 2010
AMC commitments US$ millions
Italy 635
United Kingdom 485
Canada 200
Russian Federation 80
Norway 50
Bill & Melinda Gates Foundation 50
Total 1,500
IOM – Session V – GAVI Alliance
Washington DC, 31 July 2012
GAVI supports the world’s poorest countries
Type and value of support, 2000–2011
Source: GAVI Alliance , 2012
IOM – Session V – GAVI Alliance
Washington DC, 31 July 2012
Factors influencing GAVI’s market shaping potential
GAVI’s relative market power
• Purchase volume
• Terms and conditions
• Revenues and profits relative to other purchasers/markets or products …
Market environment
• Number of suppliers - competition
• Production capacity
• Company’s strategy
• Ability & willingness to supply GAVI countries
Vaccine production complexity
• More complex expensive technology
• Multiple antigens or serotypes
• Products, regulatory requirements
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