That’s It

After more than five years and 280 posts, I’m moving on. My goal with Retronyma was to improve my knowledge of business opportunities in global health, find clients needing my services, and encourage others to apply their skills to improving the health and welfare of others, especially in the rest of the world. I succeeded in the first, had a bit of success in the second, and hope I contributed to the last.

Thanks to everyone who found my posts worthwhile enough to read and I’ll keep the site up for anyone interested in accessing them.

As Kai Ryssdal of NPR’s Marketplace closes:  that’s it. I’m outta here.

The Business of Global Health No. 24

High Tech Cold Chain  Sanaria, a Maryland-based company that has been plugging away at a malaria vaccine for more than ten years, recently brought attention to its collaboration to develop a “robust” cold-chain distribution system for Africa. In a press release, the company noted a collaboration with Cryoport, a CA company that makes liquid nitrogen dry vapor shipping containers which maintain a constant below -150°C temperature. Sanaria’s vaccine, called PfSPZ, is soon to enter field trials in Mali and will require refrigerated storage and distribution. The cost and feasibility of such a distribution system was not mentioned.

Dx Automat  Thyrocare Technologies, Inc., is an Indian company that may be a model for drastically reducing the cost of diagnostics testing. According to its website, the company offers a menu of almost 200 tests and runs more than 30,000 samples overnight in an automated facility in Navi Mumbai. It services 200 clients in 2000 cities and towns, uses an IT-enabled air cargo system for sample delivery, and plans to go public this year (story in FierceMedicalDevices).

Made in China  In a first for a drug being developed by a Taiwanese company, the FDA granted a “breakthrough therapy designation” for a novel HIV-entry inhibitor called TMB-355 (ibalizumab) to TaiMed Biologics. As described in a FiercePharmaAsia story, the drug has been under development for about a decade and is being manufactured for clinical studies by WuXi PharmaTech, an international and NYSE-listed CRO based in Shanghai. The designation is intended to accelerate the regulatory approval of needed and novel meds.

IP Theft versus Deals  A recent academic study published in Health Affairs, Beall et al. 2015, compared the prices of antiretroviral drugs resulting from compulsory licensing (in which a country’s government allows an in-country manufacturer to make a drug it would otherwise be required to obtain a license for from the drug originator company) to prices available through an international procurement program. Compulsory licensing has been promoted by global health “advocates” as a method for decreasing the cost of needed drugs in developing countries. The authors looked at 30 compulsory license cases and 673 procurements made by the WHO and Global Fund and found the compulsory license prices exceeded the procurement price median in 19, often with a difference of more than 25 percent. Application of these findings by governments, international agencies, and pharma companies may result in improving access to medicines in low-income countries.

BMGF Ventures Again  The Bill and Melinda Gates Foundation recently placed a substantial bet when it invested $52 million in the German company, CureVac (press release in FierceBiotech). The Foundation evidently liked the company’s unique mRNA-based technology and its potential low-cost and thermostable vaccines since this equity buy and additional undisclosed project-specific funding is many times any of the Foundation’s few previously-made investments. According to CurVac’s website, the company has more than six RNA vaccines in development, several of which (rotavirus, HIV, and tuberculosis) have large developing-world demand. CureVac has two major pharma partners and long-time backing by Dievini, a leading European venture capital firm founded by IT billionaire, Dietmar Hopp, which also made an additional $24 million investment (story in FierceBiotech).

Trickle Down Again (Again)

I have been busy recently dealing with the continuing snowfall and work as a volunteer tax return preparer, so, short of time, I am replaying a post from last April.

On Monday, March 31, 2014, Andrew Witty, CEO of GlaxoSmithKline (GSK), the UK-based pharmaceutical company, announced a substantial strategy (in funding and scope) for Africa. Speaking at the 5th EU-Africa Business Forum in Brussels, he outlined plans that commit $216 million over five years to several efforts: improving non-communicable disease, pharmaceutical science, engineering, and logistics research at African institutions; expanding GSK distribution and manufacturing capabilities; and supporting community healthcare worker training. Lots of details were provided in the company press release, and the announcement got some press in FiercePharmaManufacturing and Reuters (thanks to a alert reader for finding this). The announcement of GSK’s strategy for Africa reminded me of report on the efforts of major pharmaceutical companies to expand their presence and sales in emerging markets. Here is what I wrote about the report last October.

Another thing the editors of the Fierce newsletters do well, in addition to aggregating important news stories for the pharma/biotech/medtech industries, is the synthesis and analysis of those stories to yield a bigger picture. Last week Tracy Staton of FiercePharma reported on the “Top 10 Drugmakers in Emerging Markets” (FP report) that provided some interesting numbers and insight into the emerging market strategies of the multinational pharma companies (MNCs). I should note that in the context of the report, emerging markets (EM) are those in countries other than the US, the EU (mostly), and Japan (usually) and represent broadly the low and middle income countries as defined by the World Bank (nice graphic at ChartsBin). With apologies to Ms. Staton, here’s my overview of her report followed by my take on the role of MNCs in improving global health.

First, here’s a tabular presentation of some key data ranked by the company’s share of total revenues derived from sales in the EM:

MNC EM Share of Total Revenue (%) Recent Annual EM Revenue ($B) Annual EM Revenue Growth (%) EM Country Focus
Bayer 33 8 8-15 China, India, SE Asia, Latin America, Africa, Mideast
Sanofi 32 15 10 China, Mideast
Merck KGaA 29 2 13 China, Latin America, Mideast
GlaxoSmithKline 26 11 20-76 China, India, Africa, Mexico, Russia
Novartis 24 14 Russia, SE Asia, Mideast
Johnson and Johnson 23 17 China, India, Brazil
Novo Nordisk 22 3 ~20 China, Mideast, SE Asia, Africa
AstraZeneca 21 6 4 China, Russia, SE Asia
Pfizer 20 12 Russia, China
Roche 20 10 ~15 China, India, Mexico, Russia, Brazil

Second, here’s a summary of the strategies these MNCs have been using to build their share in the EM.

  • Bayer: marketing of country-specific drugs, training of physicians and hospital managers (more than 4,500 in rural China in 2012).
  • Sanofi: putting manufacturing sites in emerging countries (more than 40), training of physicians, acquiring EM vaccine and generics companies, selling EM-specific brands at lower prices, funding public health initiatives including with capital investment, training doctors, e.g., in India (100,000), China (10,000), and Morocco.
  •  Merck KGaA: pricing products to fit the budgets of a growing middle class, partnering with local/regional pharmas to make and sell its own and generic drugs; building local sales forces (30% of all employees are in EM).
  •  GSK: discounting of all products in the EM with focus on low margin and high volume, increasing local employees (37% of its employees work in EM).
  •  Novartis: partnering with governments; undertaking local manufacturing, public health projects, and clinical trials; discounting of patented products; running a management development program.
  •  JnJ: setting up local R&D and manufacturing centers, partnering with local companies for new products and regional local products, selling inexpensive devices (e.g., cheap glucose monitors), conducting physician training, investing in improving management and operations.
  •  Novo: undertaking public health work in education, screening, access to care (e.g., mobile clinics); discounted pricing; physician training (50,000 in China); mobile clinics; continuing production of inexpensive generic substitutes to its patented products; increasing local manufacturing, R&D, and sales and marketing.
  •  AstraZeneca: conducting local hiring (47% of all employees are in the EM) and local acquisitions and partners.
  •  Pfizer: selling a mix of branded generics and patented drugs, making deals for local acquisitions and partners.
  •  Roche: with insurer Swiss Re offering health care coverage through five insurers in China, engaging local partners to make and sell its patented drugs at discounted prices, providing oncologist and pathologist training.

Third, here are my spins. The MNCs are serious about building their EM revenues which account for 20-30% of total revenues for some companies, an important contribution to their bottom lines considering that EM products have lower profit margins than non-EM products. The MNCs are using a variety of strategies to increase their EM sales, including the traditional one of ramping up the number of sales people to those that increase the capacity of the health care system like doctor training, public health projects, and sponsoring insurance. The MNCs are spending a substantial amount of money on their emerging market effort, most directly in the EM countries. My guesstimate on the total aggregate spend of these ten companies is $78 billion per year based on this hand-waving: according to the FB report, the total aggregate revenue is $98 billion and assuming that 20% of this disappears as corporate profit margin (20% is the industry average reported by Yahoo Biz) and assuming the remaining revenues are applied to the companies’ EM efforts, one ends up with $78.4 billion spent per year. Granted some of this doesn’t build capacity or the local economy (like company administrative spending) and some may be pernicious (like bribes, although I think the Chinese government is over-estimating the amounts of MNC bribery) and it is aimed at the mid and upper economic strata, the MNC spending compares favorably to the $28 billion spent in 2012 for “development assistance for health” by government aid agencies, multilateral donors, private foundations, and charities according to Institute for Health Metrics and Evaluation at the University of Washington (IHME press release). Clearly, the latter is vitally important in addressing desperate needs that companies (and unfortunately, local governments) are not now addressing on their own, but, in terms of improving health care in the rest of the world over the long term and in an economically sustainable way, the MNC effort is important.

What effect will the MNC EM effort have on health care for those at the bottom of the economic pyramid? I am guessing that by building their EM market share by improving access to and use of their products the MNCs will improve the overall health care system and general economic conditions to the point where, like in the EU, Japan, and the US (where 30% of the population gets its health care through the government), governments will be able to subsidize care for those at the bottom. Not a trickle or a downpour, more like a steady rain.

The Business of Global Health No. 23

Candidate No. 4  A fourth Ebola vaccine candidate has advanced to human trials. Last week, Novavax announced that it was recruiting 230 subjects in Australia for a Phase I study of its Ebola GP Vaccine (FierceVaccines press release). The candidate, comprising a Ebola glycoprotein and a proprietary adjuvant called Matrix-M™, is the first vaccine to employ an Ebola subunit rather than the entire virus and was designed, animal tested, and manufactured at scale in an amazingly short six months. As reported by a FierceVaccines story, although the Novavax candidate is starting behind three others (by GlaxoSmithKline, Merck, and Johnson & Johnson), due to its subunit design, it is closely matched to the epidemic strain and may be more effective. The candidate is also unique in that it is made using Novavax’s pioneering insect-cell-based and single-use (disposable) manufacturing that can generate large quantities of protein at lower costs than traditional approaches.

Fast Track  As for getting an Ebola vaccine tested and approved, the track has been a bit murky because each country in which a vaccine is tested for efficacy or approved for use needs to have a strong regulatory authority and/or trust a national (like the USFDA), regional (none), or international (like WHO’s Prequalification Program) review agency. An expert panel convened by UK’s Wellcome Trust and the University of Minnesota’s Center for Infectious Disease Research and Policy examined this question and others and recently published guidelines for accelerating vaccines against Ebola and other emerging infectious diseases (Wellcome press release). The Recommendations all make sense (e.g., streamlining manufacturing, working with afflicted countries’ public health officials, and stockpiling vaccine for the future) but, to me, are too non-specific to be helpful. For example, at the country level I’d like to know who is responsible in the afflicted countries for approving trials, who will be responsible for post-marketing monitoring, and who will provide liability coverage. Also disappointing was the lack of interest in defining the role of the private sector. Instead the panel noted a (incorrect) “fundamental conflict between public health and profit as a driver for developing new vaccines” and the assumption that “price transparency” is needed to assure vaccine supply. I found it surprising that the panel did not even acknowledge that many companies are making substantial and risky financial commitments and the least it can do is make realistic, specific recommendations to reduce that risk to increase the likelihood that an effective vaccine is developed soon.

More Water in the Pool  The UN-backed organization, Medicines Patent Pool (MPP) announced completion of a license agreement with Merck & Co. for use of its antiretroviral drug, raltegravir, a key medicine approved for children living with HIV, in pediatric formulations (MPP press release). Under the terms of the license, the MPP may offer sublicenses to generic drug makers at no or low royalty cost for formulations to be sold in 92 low- and middle-income countries, the intent being stimulation of wider access and the invention of regionally-tailored versions (MPP did a similar deal with AbbVie for two antivirals last December). Since its founding in 2010, MPP has closed agreements with five companies and the NIH for 11 antiretrovirals and one medicine and has sublicensed 10 manufacturers who are “actively distributing low-cost medicines in developing countries or pursuing development plans for future introduction.” While I think this is a valid and potentially fruitful approach to providing needed global meds, if done aggressively and widely (for a bit more see my post, “Checking the Pool’s Temperature”), I favor business-to-business deals with technology transfer as Gilead Sciences has done for its antivirals and more recently for anti-hepatitis C drugs. In this B2B approach, the originator company engages the strongest and most committed partners and has a stake in their success.


The Business of Global Health No. 22

Get Smart  As reported in a story in FierceMedicalDevices, researchers led by Samuel Sia of Columbia University published results from a field study of a prototype point-of-care diagnostic device for HIV and syphilis infections that plugs into a smart phone. The device is about the size of a deck of cards, uses disposable plastic cassettes preloaded with reagents, and analyzes blood from a single finger prick. The results are displayed on a smart phone or iPod screen that also serves as a power source. In the study, Laksanasopin et al. 2015, the device correctly identified infections in 96 patients in Rwanda 90-100% of the time with a specificity of 79% to 100%, and results were provided in 15 minutes. In a story by Columbia University, Prof. Sia estimated the device can be manufactured for $34 and said “We are really excited about the next steps in bringing this product to the market in developing countries and we are equally excited about exploring how this technology can benefit patients and consumers back home.”

Patient Patients  Containment of the Ebola outbreak will be enhanced by methods to diagnosis and monitor suspected cases, to implement treatment sooner and reduce transmission. The Scripps Translational Science Institute recently announced it had received a grant from the Fighting Ebola program of USAID to develop such a mobile system (press release in FierceMedicalDevices). As described in a FierceMedicalDevices story, the system will use “Band Aid-type” sensors to monitor an individual’s vital signs and the data will be transmitted through two wireless monitors to a laptop-based analysis program. Then a “personalized physiology analytics” platform will use advanced machine learning algorithms to detect subtle changes in the individual’s physiology, changes that indicate an advancing infection. Technology for the system will be provided by three collaborating companies. No estimate for the time to a prototype was given.

Needless Needles  Vaxxas, a Cambridge-MA start-up with global ambitions, closed a second tranche of funding recently, a $20 million round that brought its total VC input to $33 million (press release in FierceVaccines). Vaxxas is developing a needle-free vaccination device called a NanopatchÔ, an ultra-high density array of projections that are dry-coated with vaccine which is quickly and painlessly delivered just below the skin. The system offers advantages in administration, packaging, and transport (no refrigeration needed). The company has a collaboration with Merck and last fall received funding from WHO to conduct preclinical studies on a version to administer a polio vaccine. For background, see my post, “Vax Patch”.

Eyes on the Prize  According to its website, ayzh (pronounced “eyes”) is a “for-profit social venture providing health and livelihood solutions to impoverished women worldwide through development of low-cost, appropriate technology designed to meet the unique needs of women in resource-poor settings.” The company’s lead product is a four-piece clean birth kit to enable safer and healthier births in low-resource hospital settings (see PATH one-pager). According to an MIT story, the kit has a retail price of about $2 and has been used in more than 100,000 births in countries including Afghanistan, Ghana, Haiti, Honduras, India, Kenya, Malawi, Tanzania, and Uganda. The company is registered in both India, where it does its manufacturing and is focusing B2B sales, and the US, where it has a business office in Ft. Collins, CO.

The Business of Global Health No. 21

SII May Do it Again  The Serum Institute of India (SII) is a leading for-profit provider of vaccines to global public health programs and has a corporate policy of quality and low price. Already known for venturing where the big pharma vaccine companies fear to tread (e.g., making the Africa-specific meningitis vaccine, MenAfriVac, and developing a low-cost ten-valent pneumococcal vaccine), SII recently announced it was on track to launch a low-price human papilloma virus vaccine to compete against Merck’s Gardasil and Glaxo’s Cervarix. As reported in FierceVaccines, an SII exec said the price may be one-third the current UNICEF/GAVI price of Gardasil which is $4.50 per dose and thought to be a barrier to its use in public health programs.

Sanofi Invests in India  The Paris-based multi-national drug company, Sanofi, announced significant investments in reaching diabetes patients in India, estimated to number 65 million. As reported in FiercePharmaManufacturing, the company will buy into a chain of 26 diabetes clinics run by India’s Apollo Hospitals for $14.5 million and build a $74 million facility to make its version of human insulin in Hyderabad, the only one outside Germany.

BMGF Ventures Again  Although I have criticized the lackadaisical approach to investing in early-stage companies by the Bill and Melinda Gates Foundation (see my post, “Nothing Ventured”), I am glad to see its venture group continues to grind forward. Last week, , Sera Prognostics, Inc. said in a press release that the BMGF added $5 million to a recent B Series funding round, bringing the total to $25 million. The company is using proteomics to identify markers in blood associated with complications of pregnancy. The new funding will be used in part “to advance the development of a new tool that can be effectively and economically deployed in underserved developing countries to identify women’s risk of preterm birth,” the leading cause of newborn mortality.

Ebola Update  While an acute public health failure, the Ebola outbreak in Western Africa continues to provide an example of how quickly public and private resources can be applied in global health, if there is the will. Here are updates on vaccines, a drug, and a diagnostic.

Jumping a step in standard product development, the NIH will soon initiate a Phase III trial of vaccine candidates from GlaxoSmithKline and Merck/NewLink. According to a story in FierceVaccines, either one of the candidates or a placebo will be administered to 30,000 people in Liberia.

As reported in FierceBiotech, researchers from the French Institute for Health and Medical Research (Inserm) will soon publish results of a Phase I study of favipiravir, an anti-viral drug developed by Toyama Chemical, a division of Fujifilm, on 80 Ebola patients in Guinea. The study found that the drug, which is marketed in Japan for treating influenza, decreased mortality by half for patients in early stages of the disease, but was not nearly as effective in treating those with high viral levels.

The German company, Stada Pharma, announced that it will begin selling a rapid diagnostic assay for Ebola developed by the German start-up, Senova (FierceMedicalDevices story). The test detects an antigen using a lateral-flow format and centrifuged body fluid samples, so requires battery power but otherwise is good for field use.

Running on Empty?  From an article in the Boston Globe, I learned of a study that found the revenues of recently developed drugs have not exceeded their development costs. Berndt et al. 2015 analyzed the economic returns for four groups of new prescription drugs launched in the US in 1991–94, 1995–99, 2000–04, and 2005–09 and found lifetime net economic returns were positive and reached a peak with the 1995–99 and 2000–04 groups, but that “returns have fallen sharply since then, with those for the 2005–09 cohort being very slightly negative and, on average, failing to recoup research and development and other costs.” Perhaps pharmaceutical companies should try developing drugs that could be sold at low margins to billions of people outside the US.

Teapot Tempest

Médecins Sans Frontières (MSF, or Doctors Without Borders) is likely the world’s most well-know and effective humanitarian health care organization. In many large-scale, nature- and human-made disasters, MSF is the first-responder, for example, treating patients in the Ebola outbreak before the WHO had even issued a press release. But in the hoopla surrounding the recent release of its report on vaccines, the MSF’s bashing of Big Pharma may have obscured a more positive message.

The sound bites that accompanied the report, called “The Right Shot: Bringing Down Barriers To Affordable and Adapted Vaccines” (Report), were “Glaxo, Pfizer Blamed for High Vaccine Prices in Poor Countries” (Bloomberg) and “MSF Slams Expensive Vaccines” (Reuters) and may have been a result of the combative phrasing of the Report’s executive summary: “the challenges we face in purchasing vaccines at an affordable price have become acute. In addition, countries that are unable to afford these high prices are increasingly voicing their frustration at the inability to protect their children against life-threatening—but preventable—diseases.” My reading of the Report is that it does a good job in reviewing the complications, and success, of the current global immunization effort and makes several good recommendations. I address some of these points below, but first some background. Not surprisingly, MSF is a not a major provider of vaccination; it notes delivering 6.7 million doses of vaccines and “immunological products” (I’m not sure what is meant) in 2013 while, in comparison, the national programs subsidized by GAVI, the global alliance for vaccination, immunized 145 million children with multiple doses in same year. Also, as noted the Report, MSF has been in five-year negotiations with GlaxoSmithKline and Pfizer, the two pharma companies that developed the most recent childhood vaccine (Pneumococcal Conjugate Vaccine or PCV), to obtain the vaccine at the GAVI price ($3-3.50 per dose), but to no avail. Both companies have been willing to donate the vaccine, and MSF resisted, citing concern about limitations on use, but decided to accept for the near-term (Report, page 12).

MSF’s main points in the Report are as follows.

-Price is a barrier to immunization. Well, yes and no. Not for immunization to the nine childhood diseases as recommended by WHO and covered by GAVI (tuberculosis, measles, rubella, diphtheria, tetanus, pertussis, hepatitis B, Haemophilus influenzae type b, poliomyelitis; under $10 per child per year, Report, page 7). MSF estimates that adding in the three most recently developed vaccines (for pneumococcal diseases, rotavirus and, for adolescent girls, human papillomavirus) may increase the total to $40, a substantial increase, but, as MSF acknowledges, a price that may be reduced by competition from other vaccine makers. MSF also expresses justified concern that some countries, especially those countries now no longer eligible for GAVI subsidy and middle-income countries, will not be able to afford these costs. But the authors also note that “a GAVI-commissioned fiscal space analysis generated a model predicting that GAVI-graduating countries would need to allocate only 0.6% of health budgets to independently support the full cost of vaccines.” (Report, page 8). So it is the cost of the vaccines or a country’s allocation of health funding that is the problem? Also it is not clear to me, and not given in the Report, what proportion of the overall cost of vaccination (e.g., including “human resources, transportation, cold chain, infrastructure, wastage, other immunisation supplies, waste management, etc.” Report, page 106) is the per-dose cost. Further, according the Bloomberg story, Glaxo and Pfizer have already agreed to offer their PVC vaccines to the graduate countries at the GAVI price.

-Vaccine prices are not readily available, i.e., the market is not transparent. This is true (although MSF was able to assemble lots of price data for Annex A of the Report), but this is really a minor factor in the negotiation between a likely purchaser and seller. More important factors to the seller are the volume and period of the purchase. As MSF points out, countries have and are creating procurement pools to better their negotiating position (Report page 23). Also in 2011, WHO started the Vaccine Product, Price and Procurement (V3P) project to gather and disseminate price information (V3P). I also should point out that manufacturers have a difficult time predicting their production costs and therefore need to be cautious in negotiation for a product yet-to-be-made (MSF points out the PCV takes two years to make).

-New vaccines that are better adapted for under-resourced environments are needed. This is true. Longer shelf-life, ease of delivery, and fewer doses are improvements that many companies and research groups are working on with some success. MSF says there have been 30 such improvements but few have been implemented (Report, page 29), and rightly points out that for vaccine makers, “Without clarity on market uptake, developing a business case for adapted vaccines remains challenging.” MSF’s answer is that purchasers, especially the largest like UNICEF, need to use their procurements to drive innovation. I agree and add that the advance purchase contracts could be used to fund late-stage technology development. I should also note that last spring Glaxo announced that it is developing vaccines and other products specific to the health needs of Africans (FierceVaccines story).

-Competition does and will bring down prices. “Efforts to accelerate real competition in the vaccines market will deliver the most sustainable price reductions” (Report, page 4). Amen. That’s how business works.

Of course, Pfizer execs tune in to the media, too, and announced, at the annual GAVI Pledging Conference and six days after the MSF report release, that the company was decreasing the GAVI PCV price by 6% to $3.10 per dose (and extending the price to former GAVI countries) (press release in FierceVaccines). Not good enough, responded MSF, the price should be $1.67 per dose, as reported by FierceVaccines. Why? According to MSF, because Pfizer sold about $4 billion of PCV in 2013 (of which about $500 million were GAVI sales) (relevant?) and the Serum Institute of India, a leading generic vaccine-maker, plans to sell a PCV at $2 per doses (relevant?). Bill Gates, also at the GAVI meeting, added to the tempest, noting in an interview in the Guardian that the PCV price is very cost-effective in comparison to other health costs and that its manufacture is complicated and therefore the price can’t be zero. His ire may have been raised because, as reported by the Guardian, at the meeting “MSF organised a stunt featuring supporters dressed as Merkel, David Cameron, Barack Obama and others spinning “Pharma’s wheel of fortune”, claiming that whichever way the wheel was spun, the drug companies always won.”

The good news is that the GAVI announced at the Pledging Conference that it had received $7.5 billion in new pledges and that with the $2 billion in hand it will be able to meet its immunization program goals for the next five years (GAVI press release). And MSF released a report with lots of solid data and recommendations for improving global immunization. The not-so-good news is that the pledges and the report may have been overshadowed by hyperbole and stunts from MSF’s public relations group.