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GSK turns to adult respiratory vaccines in bid to replicate Shingrix success


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GSK turns to adult respiratory vaccines in bid to replicate Shingrix success

GlaxoSmithKline PLC is looking to develop more vaccines for older adults, including one for smoker's cough and for the respiratory syncytial virus, in a bid to replicate the success of its newly launched Shingrix vaccine for shingles in the over 50s, for which demand is outstripping supply.

A vaccine for RSV, which causes infections in the lungs like pneumonia, bronchiolitis and croup, will target older adults and infants, as well as pregnant women — in order to offer protection to newborns. While the spread of many pediatric diseases has been curtailed by the development and uptake of multiple vaccines since the introduction of the polio one in the 1950s, RSV remains unchecked and was responsible for 2.7 million deaths in 2015.

"In the pediatric space a lot of vaccines have been developed — it doesn't mean nothing is left, you can still combine different vaccinations ... but that's life-cycle management," said Thomas Breuer, chief medical officer at GSK vaccines. "The one big vaccine which is still missing in the pediatric space is RSV," he said in an interview with S&P Global Market Intelligence.

SNL Image

Sales of Shingrix, the shingles jab that was preferentially recommended by the U.S. Centers for Disease Control and Prevention's Advisory Committee for use in adults over 50 years old, are forecast to reach £700 million to £750 million in 2018; total vaccine sales for 2017 came in at £5.2 billion, accounting for 17% of the group's turnover. CEO Emma Walmsley said recently that she expects Shingrix to become GSK's single largest vaccine over time. In the U.S. alone, there are 1 million cases of the chicken pox-related herpes zoster virus every year, and half of those living over the age of 85 are likely to develop the painful rash.

Pediatric vaccine saturation

Despite the best efforts of the anti-vaccination movement, the uptake on many vaccines in children remains solid across the world, with polio numbers down by 99%, rubella down by 96%, diphtheria by 93% and pertussis by 94%. However, the prevalence of many vaccine-preventable diseases has shifted to older adults and of the more than 40,000 of those deaths in the U.S. every year, 99% are in adults, according to GSK.

As the pediatric market approaches saturation, the Brentford, London-based pharmaceutical group, which produced the first polio vaccine in the 1950s, is working on a range of vaccines from HIV to an immuno-oncology vaccine against cancer, and one for chronic obstructive pulmonary disorder, more commonly known as COPD or smoker's cough.

"Looking at older adults is financially attractive and since we are an innovative company, we are looking for assets in that space," Breuer said in a recent presentation at Wavre in Belgium, its largest vaccines plant in the world. In the last decade, GSK has introduced adjuvants to its vaccines, which boost their strength, as it looks to address the needs of an older adult population whose immune system has weakened with age.

Vaccines and pharmaceuticals collaboration to intensify

With a breakup of GSK on the cards in the next three years after the CEO announced a consumer joint venture with Pfizer Inc., the pharmaceuticals and vaccines businesses are likely to be knitted even more closely together in the future. Walmsley said the vaccines business "will be a key part and a key contributor to the future growth of new GSK, critically with a re-set balance sheet which is significantly de-levered so that we can invest with much more flexibility and power behind our priorities." She pointed out that the pharma and vaccines businesses operate as one across the world.

"The vaccines business — it is a pharma and vaccines business, that will be, by the way, if you look from just a turnover point of view, twice the size of the current turnover size of the new consumer company," Walmsley told reporters on a call following the deal announcement. "It is a company that is the world leader in vaccines, the world leader in respiratory, a leading player in HIV with a very exciting pipeline coming through right now on that, and plenty of new news to come in the building specialty portfolio, again not least from Tesaro Inc. over the next few years."

Since taking over the U.K.'s largest pharmaceutical group in 2017, Walmsley has pledged to reinvigorate the pharmaceutical business and increase the productivity in its research laboratories. She appointed the widely admired Hal Barron as head of R&D nearly a year ago, who has turned the group's focus toward genetically validated targets and immunotherapies, rather than specific disease areas. While Barron has dropped a number of experimental respiratory medicines, collaboration between scientists in the pharmaceuticals unit and those working on vaccines for respiratory diseases is likely to intensify as his overhaul of R&D migrates to immune-led medicine, the bedrock of the vaccines business. GSK is working on 14 candidates.

"The new head of R&D, [who] wants to turn the pharma organization around and make it look more towards immunology, which is our core business, obviously opens the door to work together potentially on cancer vaccines, monoclonals – all this kind of stuff," Breuer said. "Because they have expertise, they are looking more into a therapeutic approach but we have the expertise too. ... I am absolutely sure there are more points of doing things together than in the past."

Market competition

GSK competes with Paris-based Sanofi, plus Merck & Co. Inc. and Pfizer Inc. of the U.S., among other large pharmaceutical companies with vaccines businesses.

SNL ImageEmmanuel Hanon, head of R&D at GSK vaccines
Source: GSK

Analysts at HSBC believe that pharmaceutical companies with vaccines divisions are well placed for the future due to increased vaccination rates in emerging markets and population growth, in addition to the fact that there are few large-scale players in what is a global oligopoly with high barriers to entry. "Vaccine manufacturers are likely to benefit from volume growth due to these growing populations and the increased ability and willingness to vaccinate against more (mainly childhood) diseases," Steve McGarry wrote in a recent research report. "Vaccine manufacturing has ultra-high barriers to entry and there are few global players that can provide or develop vaccines against the majority of pathogenic diseases."

McGarry said that GSK, which he rates a "buy," and Sanofi, a "hold," are best placed for long-term growth given that vaccines are relatively immune from pricing pressure — although his comments were made before the break-up of GSK was announced Dec. 19.

The asset swap with Novartis in 2015 saw GSK gain the Swiss company's Siena, Italy-based vaccines business in exchange for the U.K. group's oncology products.

Emmanuel Hanon, head of R&D at GSK vaccines, said the strength of the alliance lies in allowing three completely different vaccine research centers – GSK has one in Rockville, Md., in addition to the Belgium location — to work together and "create something that is amazing." While each site has a different working culture, the merger allowed scientists who had previously been rivals, accustomed more to eagle-eyeing each other at conferences, to ask outright about different ways of carrying out research work.

"You need to allow crazy people to work for a while in the lab," he said. "It's vital for vaccines to continue to innovate," Hanon said.