Overview

Emerging markets account for approximately 18% of the global vaccines market, which is valued at more than $24bn. However, there are indications that this is an underestimate, and some observers forecast that the overall marketplace will reach $50bn by the mid-2020s. Gavi – a multilateral agency principally funded by the Gates Foundation – accounts for some $2bn, procured via the United Nations agency UNICEF. The remainder is represented by “self-procuring” middle-income emerging markets, including the BRIC-MT nations (Brazil, Russia, India, China, Mexico, and Turkey) and many smaller, high-growth markets. Gavi is part of an international ecosystem of fundholders, financiers, researchers, and experts, some of whom are more focused on cost containment than rewarding innovation, as is evidenced by attempts to improve “transparency” in international vaccines pricing.

It is expected that Gavi’s dose demand will plateau in the mid-2020s, as more countries that are currently reliant on the agency’s funding for vaccines transition towards national procurement in their National Immunization Programs (NIPs). Given flat Gavi prices for modern vaccines, and stretched production volumes, multinationals are likely to focus even more intensively on middle-income countries in the future. In addition, manufacturers based in developing countries already account for a 40% share of Gavi purchases, and their influence in middle-income countries is growing commensurately.

Nevertheless, some multilateral mechanisms, such as the Pan American Health Organization (PAHO) Revolving Fund, offer opportunities for manufacturers of modern, differentiated vaccines. Emerging markets with “functional” National Immunization Technical Advisory Groups (NITAGs) offer the best long-term potential for multinationals, as value arguments are more likely to resonate; however, payers may exploit economic concepts such as budget impact and cost effectiveness to restrict access to the smallest possible population. In order to mitigate these risks, innovator companies can deploy quantitative and qualitative indicators to assess the market access environment in middle-income emerging markets, from population data to “functionality” criteria for regulators, payers, and technical advisors. In some markets, aggressive cost-containment measures, such as international reference pricing and “winner-takes-all” procurement practices, prohibit entry.

Asia represents the largest opportunity for modern vaccines in population terms, with more than 50 million births per year and a sizable willingness to pay among private individuals. This is an attractive proposition for multinationals, as prices for most NIP-funded vaccines are unacceptably low. India has significantly expanded its NIP in recent years, with pilots at sub-national level driving the changes, but funding continues to lag behind the country’s enormous unmet need for vaccines. The smaller Asia-Pacific markets present some opportunities; Malaysia has a strong marketplace for foreign branded vaccines, but in neighboring Thailand, health technology assessment (HTA) presents an evidentiary hurdle, as well as a justification for negative decisions. Fragmented funding and incomplete reforms to healthcare systems pose physical and financial barriers to new vaccines in many middle-income Southeast Asian markets.

Latin America is the second-largest region in our survey, and – apart from Mexico – all member states of the PAHO participate in the Revolving Fund, a pooled procurement mechanism for the region. The Revolving Fund allows smaller member states to exploit economies of scale achieved by the larger countries, notably Brazil, which has also introduced cost-effectiveness gate-keeping, in addition to benefiting from PAHO’s “lowest price” strategy. Technology transfer is a key goal for regional policymakers, although advanced capabilities in vaccines development and manufacturing are isolated.

In Central and Eastern Europe, technical capability and ability to pay appear inversely proportional to the size of the potential market. Russia is considering major expansions to its NIP, but access remains better at the regional level, although so-called “localization” policies are an additional burden. The Eastern European EU member states offer small but solid long-term prospects, although Romania is a cause for concern.

The Middle East and Africa is essentially three regions. The North African markets conduct largely national procurement, while the wealthy Gulf Cooperation Council (GCC) member states pressurize prices through joint tenders. In sub-Saharan Africa, most markets are Gavi-dependent. The exception is South Africa, which is attempting to merge local production and government procurement via a single entity. While the wealthier markets still represent solid opportunities, as in many emerging markets, the region continues to transition away from reliance on modern vaccines to a mixed system of indigenous production, low-cost basic vaccines, and a limited space for innovative products.

To respond to the market access challenges and opportunities posed by developing countries, which differ fundamentally from high-income countries, no single approach is feasible. Instead, quantitative and qualitative indicators for local populations, payer capabilities, and funding opportunities can inform strategies. Full disengagement from multilateral or national fundholders is not advisable, but pricing and access strategies can be tailored to each market, depending on its attractiveness. These measures include arguing for wider coverage – especially among risk groups – and convincing payers to introduce non-price criteria into their decision-making. In terms of both coverage and new technologies, untapped markets exist, but should be cautiously evaluated for their price and volume opportunities.