Struggling Vaccines From Novartis Turn Into Sales Boon for Glaxo

  • Glaxo sees 2016 vaccine sales at nine times Novartis forecast
  • Meningitis shot Bexsero being studied as gonorrhea prevention

Outbreaks of the meningitis B disease in the U.S., along with the social-media frenzy that followed the death of a British toddler, have helped propel sales of GlaxoSmithKline Plc’s vaccine well past initial projections for its use.

The U.K. drugmaker is poised to deliver nine times the 2016 sales Novartis AG had forecast for vaccines including the meningitis B shot Bexsero, said Thomas Breuer, chief medical officer at Glaxo’s vaccines division. Glaxo acquired the business in March 2015, and revenue for vaccines last year was five times what Novartis had estimated, Breuer said.

Glaxo negotiated a price with the U.K. that paved the way for the world’s first infant immunization program using Bexsero last year. Fresh efficacy and safety data from that program are set to be presented next month at a conference in Manchester, England. That may persuade the U.S. and other countries to start their own mass vaccination campaigns against the rare but serious infection.

“When this new evidence becomes available, public health agencies will re-evaluate,” Breuer said. “But I don’t want to make any predictions.”

Meningitis B infection can cause devastating effects in children and young adults including brain damage and loss of limbs. There have been seven college outbreaks in the U.S. since 2009, with one this year at Rutgers University in New Jersey. The death of a British girl in February and the photographs of her that went viral spurred public demand for wider vaccination in the U.K.

In the U.S., where the majority of meningitis B cases occur in older teenagers and young adults, the vaccine is approved for people ages 10 to 25. In Europe, it’s approved for use in children aged two months and older. The U.K.’s National Health Service covers vaccination for infants under 1.

Glaxo is exploring ways to expand the use of the vaccine, including a large study to test whether Bexsero can prevent carriage of meningitis B in teenagers, who frequently have the bacteria in the backs of their nose and throat.

Meningitis belongs to the same family of bacteria as gonorrhea, and data on Bexsero’s role in preventing the sexually transmitted disease will be presented at the conference in Manchester. Gonorrhea is the second-most commonly reported infectious disease in the U.S. The rise of strains resistant to antibiotics has created new challenges in treatment, and a strong case for a vaccine.

Sales of meningitis vaccines at Glaxo nearly doubled to 144 million pounds in the second quarter from a year earlier. While business looks brisk today, the picture was less than perfect two years ago when Glaxo agreed to trade assets with Novartis. Novartis Vaccines had been plagued by years of losses as sales failed to offset increased investments into developing products including Bexsero, which won approval in Europe in 2013 and in the U.S. two years later.

The swap of assets with Glaxo -- which included cancer medicines and consumer-health products as well as vaccines -- enabled Novartis to focus on pharmaceuticals, eye care and generics, and “positioned vaccines as a global leader under GSK,” Novartis spokesman Eric Althoff said in an e-mail.

Glaxo’s position as one of the world’s biggest vaccine makers helped it steer a new course for the combined business, Breuer said. Before the addition of Novartis’s vaccines, Glaxo produced vaccines for flu, hepatitis A and a range of childhood diseases and had a sizable and experienced sales force.

“We were convinced that if we take their business and put it into our machine, we will be a much better owner,” Breuer said.

Since Glaxo added Bexsero to its portfolio in the first quarter of last year, analysts have hiked their projections for 2020 sales of the vaccine by about 39 percent to 576 million pounds ($745 million).

Much of that optimism comes from a confidence in Glaxo’s sales prowess -- showcased last year when it ended an 18-month standoff between the U.K. and Novartis. Novartis’s list price was 75 pounds a dose, while Health Secretary Jeremy Hunt had wanted to pay around 5 pounds a dose. Both Glaxo and the Health Department declined to disclose the price of Bexsero. U.K. media have reported the price is 20 pounds.

“Novartis’s vaccines business was sub-scale and really didn’t have the same global reach and breadth of portfolio that Glaxo has,” said Dani Saurymper, manager of the AXA Framlington Health Funds in London, who oversees $875 million in health-care stocks including shares of Glaxo. “They’ve got much better connections in terms of contracting with governments and payers.”

Demand for the vaccine in the U.K. surged this year, as parents whose children weren’t covered by the infant immunization program sought Bexsero through private clinics. It led to supply constraints at its manufacturing site in Siena, Italy, where it takes up to two years to manufacture a dose. Since then, Glaxo has added syringe-filling capacity at the site, and boosted supply in the quarter ended June, the company said.

In the U.S., Glaxo has launched a campaign on the risks of meningitis last month. Jamie Schanbaum, an American Paralympic cyclist and meningitis survivor, spoke about the disease at an event with thousands of bloggers.

U.S. public health officials, however, remain cautious. Important information on how Bexsero works against the strains circulating in the U.S. isn’t yet available because it was licensed under an accelerated approval process, said Ian Branam, a spokesman for the Centers for Disease Control and Prevention, in an e-mail. Data on the vaccine’s effectiveness, safety and impact on carriage of the bacteria are also not yet available, Branam said. The CDC would need such data to assess whether to recommend widespread inoculation in the U.S.

Collecting efficacy data on the vaccine is difficult because of the low incidence of the disease, Glaxo said in an e-mailed response to questions. The data being presented in Manchester from the U.K. immunization program, the first of its kind, will provide public health authorities in other countries with “a first clear indication of how well this vaccine performed,” Breuer said.