The Vaccine Prevnar 13 And Its Competitor: Pfizer Vs. Merck

| About: Pfizer Inc. (PFE)

In February Pfizer (NYSE:PFE) announced that its vaccine Prevnar 13 demonstrated efficacy in a trial of adults 65 years of age and older.

The trial called Capita was a major undertaking: it enrolled 85,000 people in the Netherlands at 58 hospitals.

The primary objective was to show that Prevnar 13 works against a first episode of community-acquired pneumonia.

Pfizer will now submit the data to U.S. and worldwide regulatory authorities for updating Prevnar 13 labels and related guidelines. The Phase 4 trial was required by the FDA as a condition of Prevnar 13's approval for older adults.

Detailed results will be presented at a scientific conference in India, in March.

Prevnar 13 from Pfizer's Wyeth division is already the best-selling vaccine in the world and a major bright spot in Pfizer's lineup of new drugs.

The trial results could dramatically increase the number of adults who are vaccinated against the pneumococcus bacteria. Both Prevnar 13 and Pneumovax, an older vaccine offered by Merck (NYSE:MRK) are approved for application in older people, but Prevnar's use was limited so far due to the lack of sufficient evidence showing how well it prevents people from getting sick.

Now the evidence is in. Favorable data from the study are expected to increase the vaccine's appeal to doctors with elderly patients. Analysts believe, this could generate an additional billion dollars for Pfizer, increasing the income from the Prevnar family from the current $4 billion to $5 billion a year.

Prevnar 13

The FDA approved Prevnar 13 in 2010, to protect children against additional strains of Streptococcus pneumoniae bacteria that cause a range of diseases, like pneumonia, ear infections and meningitis.

Then in late 2011 the use was widened to include adults age 50 and older, to prevent pneumonia and invasive infections. The approval was conditioned on the success of the now-completed CAPiTA study.

There are more than 90 types of pneumococcal bacteria, Prevnar 13 protects against 13 of them. These 13 strains are the ones causing the most severe infections in children and about half of infections in adults.

The original 7-valent formulation contained serotypes 4, 6B, 9V, 14, 18C, 19F, and 23F, and its use results in a 98 percent probability of protection against these strains.

In 2010, Pfizer has added six additional strains: 1, 3, 5, 6A, 19A and 7F, which protect against the majority of the remaining pneumococcal infections.

Before the vaccine existed, pneumococcal infections caused lots of problems each year in the U.S. in children younger than 5, including 700 cases of meningitis a year, 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.

Pneumococci account for up to 36 percent of adult community-acquired pneumonia and 50 percent of hospital-acquired pneumonia. Pneumonia is a common bacterial complication of influenza and measles. The fatality rate is between 5-7 percent and may be much higher among elderly persons.

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, the vaccine currently recommended for these groups of adults.

ACIP is an advisory body, made up of medical and public health experts that develops recommendations on how to use vaccines to control diseases in the U.S. The recommendations stand as public health advice.

The ACIP consists of 15 experts who are voting members and are responsible for making vaccine recommendations. The Secretary of the U.S. Department of Health and Human Services selects these members after an application, interview, and nomination process. In addition there are 8 ex-officio members who represent various federal agencies with responsibility for immunization programs in the U.S., and 30 non-voting representatives of liaison organizations that bring related immunization expertise.

The Committee holds 3 meetings each year at the Centers for Disease Control and Prevention in Atlanta, Georgia.

The CDC previously stated that it will wait for the outcome of the Capita trial before recommending the vaccination for all adults aged 50 or older.

Selling vaccines is a large scale, highly politicized, capital intensive business which is ideally suited for large pharmaceuticals like Pfizer or Merck.


Prevnar 13's only real competitor is Merck's 23-valent pneumococcal vaccine Pneumovax.

In 2013 Merck has sold $653 million Pneumovax worldwide, as opposed to Prevnar's $3.97 billion in global sales. Studies suggest the Pfizer vaccine can stimulate a stronger, more durable antibody response.

With the new results, depending on the new ACIP guidelines, if any, Pfizer could grab some or most of the $650 million Merck is earning from Pneumovax and could increase Prevnar's revenues to about $1.5 billion in that age group.

Of course, Merck sells several other vaccines besides Pneumovax and its total vaccine sales amounted to $5.18 billion in 2013.

Also, Merck is not giving up on the segment. According to the site it is evaluating pneumococcal vaccine V114 candidate in newborn babies (6-12 weeks old) in comparison with Prevnar 13 in a Phase 2 study.

1152 patients are enrolled and two versions tested, one of which is aluminum-adjuvanted and the other without adjuvation. Four dosages of 0.5 mL are given at ages of 2, 4, 6, and 12 to 15 months.

Separately, last year Merck has signed a non-exclusive licensing deal for Pneumovax with a fast-growing Indian firm, Lupin Pharmaceuticals.

Lupin is bullish on the strength of the Indian adult vaccine market. In recent years awareness of the benefits of adult vaccines has grown in India and this is driving "tremendous growth." Merck completed a Pneumovax safety study in India in 2007 and subsequently marketed the vaccine itself, but now it may believe that an Indian company is better suited for the job.


Prevnar 7 has been in use since 2000 and statistics show that there is significantly less pneumococcal disease. Even so, other strains of pneumococcal bacteria have become more common, particularly one serotype, 19A.

Prevnar 13 includes the original 7 serotypes plus 6 additional serotypes, including 19A. The result is a vaccine that protects against the most common strains of pneumococcal bacteria responsible for severe pneumococcal infections among children and elderly adults.

After 13 years of use in the U.S., statistics show that Prevnar has been beneficial to the healthcare systems too.

A paper published in New England Journal of Medicine documents that Prevnar 7, the predecessor to Prevnar 13, has prevented 168,000 hospitalizations a year in the U.S.

People aged over 85 benefited the most from the 7-valent pneumococcal conjugate vaccine, with 73,000 trips saved to the hospital every year.

Prevnar 7 also prevented an estimated 47,000 pneumonia hospitalizations a year among infants under two years old. This represents a 43 percent decrease from the time before the vaccine was available.

The vaccine is also helping in ways not tracked by the study, for example by preventing ear infections.

The fall in hospitalizations of seniors happened despite a lack of routine vaccinations in this population and some attribute the trend to "herd immunity", with the vaccinated kids helping to cut incidence of disease among seniors.

Herd immunity means that when a critical portion of a community is immunized against a contagious disease, most members of the community, even those not vaccinated, are protected, because there is little opportunity for an outbreak.

The vaccine has had less impact between the two age extremes, the very old and the very young. No significant change in hospitalizations seen in people aged 5 to 17 and 18 to 39. These groups had the lowest rates of pneumonia hospitalization before the introduction of Prevnar 7, and the FDA never approved the vaccine's use in them.

The bugs strike back

Concerns about the so-called "serotype replacement" have been circulating since the CDC published a study in 2006.

Children who were vaccinated with Prevnar 7, showed an increased rate of carriage of serotype 19A, a strain not included in the vaccine. Strain 19A is now part of the Prevnar 13 vaccine, but new replacement problems and vaccine adjustments can be counted on in this ongoing war with bugs.

Investors' summary

Pfizer's revenues for 2013 decreased by $3.1 billion or 6 percent, to $51.5 billion. The reasons for the decrease are the unfavorable impact of foreign exchange of $1.2 billion, or 2%, further erosion of branded Lipitor in the U.S. and decreased government purchases of Enbrel in certain emerging markets.

Products that showed good growth were Lyrica, a nerve pain treatment that is Pfizer's biggest selling product, that rose 11 percent in the fourth quarter to $1.26 billion and the Prevnar family of vaccines which rose 3 percent to $1.1 billion. Sales of Enbrel, a treatment for psoriasis and arthritis, rose 5 percent to $1 billion, and Celebrex, used to treat pain and arthritis, rose 6 percent to $798 million.

The cancer business was also a bright spot, up 26 percent to $468 million, including Xalkori for lung cancer, Inlyta for kidney cancer approved in 2012 and Bosulif for chronic myelogenous leukemia approved in 2013. But the company's oncology program suffered a setback recently when Pfizer's experimental treatment for lung cancer, dacomitinib, failed to meet its goals in two late-stage studies.

Sales of impotence drug Viagra fell 14 percent to $476 million, hurt by sharply lower sales in overseas markets.

Pfizer forecasts for 2014 adjusted profit of $2.20 to $2.30 per share and revenue of about $50.2 billion, despite expecting another $3 billion in revenue losses due to generic competition.

Investors remain focused mainly on the company's pipeline of experimental drugs, including a treatment for advanced breast cancer palbociclib and Prevnar-13's extended use in adults of age 65 and older.

Some analysts believe that palbociclib could reach peak annual sales of $5 billion if ongoing trials succeed and it is approved.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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