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Prevnar 13 from Pfizer's (PFE) Wyeth division is an enormously successful pneumococcal conjugate vaccine, currently the best-selling vaccine in the world. Prevnar 13 was first introduced for use in infants and young children in December 2009 in Europe and in February 2010 in the U.S., and it is now approved for use in 120 countries. More than 500 million doses have been distributed worldwide. The drug is included as part of a national or regional immunization program in more than 60 countries, offering coverage against invasive pneumococcal disease to nearly 30 million children per year. Prevnar 13 is also approved for use in adults 50 years of age and older in more than 80 countries, and it is the first and only pneumococcal vaccine to be granted World Health Organization prequalification in the adult population.

In 2012, sales of the product hit $3.72 billion, up from $3.66 billion in 2011. Analysts anticipate revenue to hit a whopping $6.75 billion by 2018. If so, it would remain the best-selling vaccine and outsell the next best seller, Sanofi's (SNY) PENTAct-HIB, by more than 3 to 1. There are more than 90 types of pneumococcal bacteria, PCV13 protects against 13 of them. These 13 strains cause the most severe infections in children and about half of infections in adults. PCV13 is routinely given to children at two, four, six, and 12-15 months of age. Children in this age range are at the greatest risk for serious diseases caused by pneumococcal infection.

Before the vaccine existed, pneumococcal infections caused many problems each year in the U.S. in children younger than five, including yearly 700 cases of meningitis, 13,000 blood infections, about 5 million ear infections, and about 200 deaths. About 4,000 adults still die each year from pneumococcal infections. Pneumococcal infections can be hard to treat because some strains are resistant to antibiotics. This makes prevention through vaccination even more important.

Gavi Alliance

Participation of the GAVI Alliance has also made a difference. The GAVI Alliance is a public-private global non-profit committed to saving children's lives and increasing access to immunization in poor countries by bringing together the World Health Organization, UNICEF, the World Bank, the vaccine industry, the Bill & Melinda Gates Foundation and other private philanthropists.

By promising to buy a certain number of doses, it guarantees the pharma company a massively efficient volume. In exchange, GAVI sets a ceiling for what it will pay long term. Prevnar, for example, goes for $114 in the U.S. but will cost no more than $3.50 to GAVI. Gates and his peers subsidize the losses. The numbers are staggering. To deliver pneumococcal and rotavirus vaccines to 250 million children, GAVI raised more than $3 billion from various governments, including the U.K., Norway, and the U.S., and Gates kicked in the final $1 billion.

The results have been massive: 3.4 million lives saved from hepatitis B, which causes liver cancer, 1.2 million lives from measles, 560,000 from the Hib bacteria, 474,000 from whooping cough, 140,000 from yellow fever and 30,000 from polio. In the past year, the new initiatives have prevented another 8,000 deaths from pneumonia and 1,000 from diarrhea.

Targets

Pneumococcal disease is a group of illnesses caused by the bacterium Streptococcus pneumoniae, also known as pneumococcus. It can affect people of all ages, although older adults, young children and individuals with certain chronic medical conditions are at increased risk. Invasive manifestations of the disease include bacteremia (bacteria in the blood) and meningitis (infection of the tissues surrounding the brain and spinal cord).

Indications for Prevnar 13 vaccine in the U.S. are as follows:

  • Prevnar 13 is approved for the prevention of invasive disease caused by 13 S. pneumoniae strains (strain types 1, 3, 4, 5, 6A, 6B, 7F, 9V, 14, 18C, 19A, 19F, and 23F) in children 6 weeks through 17 years of age, and in children 6 weeks through 5 years for the prevention of otitis media (middle ear infection) caused by 7 of the 13 strains (4, 6B, 9V, 14, 18C, 19F, and 23F).
  • Prevnar 13 is also approved for adults 50 years of age and older for the prevention of pneumococcal pneumonia and invasive disease caused by the 13 vaccine strains. Prevnar 13 is not 100% effective and will only help protect against the 13 strains included in the vaccine.

At a meeting held in June 2012, ACIP (Advisory Committee on Immunization Practices) voted to recommend the routine use of Prevnar 13 for adults 19 years of age and older with immuno-compromising conditions such as HIV infections, cancer, advanced kidney disease and other immuno-compromising conditions. The vaccine should be administered to eligible adults in addition to the pneumococcal polysaccharide vaccine (Pneumovax 23, made by Merck & Co.(MRK)), the vaccine currently recommended for these groups of adults.

Competition

Although Prevnar 13 is the biggest selling vaccine in the world, some other companies generate more money from vaccine manufacturing than Pfizer. They are competitors only in a sense that they are also making vaccines but not necessarily against the same targets.

In 2012, the top five vaccine makers captured more than 90% of the global vaccine sales. In 2012, Sanofi was No. 1 in the world, earning $5.54 billion. It makes the second best-selling vaccine: PENT Act-HIB for diphtheria, pertussis/whooping cough, tetanus, haemophilus influenza type b and polio. It also makes Menactra for meningitis and Fluzone for seasonal flu.

Merck was second with $5.27 billion revenue from vaccines. Merck's star vaccine is Gardasil for human papillomavirus. The product, first of its kind, having hit the market in 2006, is far ahead of its competitor Cervarix from GlaxoSmithKline (GSK). Gardasil brought in $1.63 billion last year, compared to the $416.44 million Cervarix's sales. GlaxoSmithKline has generated $5.26 billion and is projected to become the largest seller of vaccines in the next 5 years, with revenue forecast at $8.8 billion.

The company is responsible for Cervarix, a human papillomavirus vaccine that trails behind Merck's Gardasil in sales. It also has a hepatitis vaccine franchise used for Hepatitis A and B. Pediarix is used for diphtheria, tetanus, pertussis/whooping cough, hepatitis B, and polio. Pfizer's 2012 vaccine revenue came in fourth with $4.11 billion which includes Prevnar 13 and its predecessor Prevnar 7.

Prevnar 7 recorded a decrease in worldwide revenues of 18% in 2012, to $399 million from $488 million in 2011. Many markets have transitioned from the use of Prevnar 7 to Prevnar 13, resulting in lower revenues for Prevnar 7, and this trend will likely to continue. Novartis' (NVS) 2012 vaccine revenue was $1.38 billion. In 2012 the company has bought Chiron, a U.S. vaccine manufacturer, for $7.5 billion.

Anti-Vaccine Activists

There is a sizable number of people around the world who do not believe in vaccines and oppose them vehemently, with explanations ranging from the truly silly to the less so. But you have to remember that there is no medicine or medical procedure ever without risk and the possibility of side effects. Also, vaccines are applied on a truly mass scale, including millions of people, and the adverse effects -- although they should be investigated and paid attention to -- usually represent a minuscule percent of the grand total.

Investor Summary

A few years ago there was little commercial interest in making vaccines. That has changed drastically. Thanks in part to the adult influenza market and new blockbusters like Gardasil and Prevnar, the global vaccines market enjoys a rebound. Ten years ago, the vaccine market generated $5.7 billion, but now the market has soared to $27 billion. Market research firm Kalorama forecasts that sales of adult vaccines will increase at a compound annual rate of 10.3% from 2010 to 2015.

Prevnar 13 is a product that does make a difference to Pfizer's bottom line. In 2012 Lyrica, Lipitor, Enbrel, Prevnar 13, Celebrex and Viagra each delivered at least $2 billion in revenues, while Norvasc, Zyvox, Sutent and the Premarin family each surpassed $1 billion in revenues. Worldwide revenues for Prevnar 13 increased 2% in 2012, compared to 2011. In the U.S., revenues for Prevnar 13 decreased 2% in 2012, compared to 2011.

In developed Europe, Prevenar 13 revenues also were lower in 2012, compared to 2011. Revenues in the U.S. and developed Europe declined as the pediatric catch-up dose commercial opportunity declined significantly in 2012 compared to 2011, with fewer children eligible to receive the catch-up dose. In addition, utilization in older adults is modest at this time.

Regarding guidance for 2013, Pfizer's total revenue is projected between $56.2 to $58.2 billion and adjusted earnings per share in the range of $2.20 to $2.30. In the past 52 weeks, Pfizer's share price ranged from $21.40 to $29.32. From receiving FDA approval in 2010 Prevnar 13 has grown to $3.7 billion in sales in 2012. The vaccine has been a great growth story. In a post-Lipitor world, Pfizer needs new growth engines to stay on top and Prevnar 13 is certainly one of them.

Source: Pfizer's Prevnar 13: The World's Leading Vaccine And Its Competitors