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Business Impact

Market Injection

Nongovernmental organizations can meet a need in the vaccines market.

In January, GlaxoSmithKline (GSK) launched Rotarix, a rotavirus vaccine, in Mexico. That launch may alter the course of vaccine development for the better: Rotarix was the first vaccine from a major pharmaceutical firm to debut not in the United States or Europe but in a poor country. The story of Rotarix (see The Vaccine That Almost Wasn’t) shows that getting vaccines where they are needed most requires giving companies like GSK financial incentives. The emergence of what can be thought of as a superbuyer for vaccines – the Global Alliance for Vaccines and Immunization (GAVI) – may help create those incentives.

Before GSK’s Rotarix, the vaccine story usually went like this: A drug company would develop a vaccine for a European country or the United States. It would charge a relatively high price for about 15 years, then, once it had made a profit, and the medicine had gone off patent, it would introduce the vaccine at a lower price to poor countries. The trouble with this model is not just that 15 years is a long time to wait; it’s also that certain diseases are much more dangerous in poor countries than in rich ones.

Rotavirus, which induces diarrhea, is one such disease. Although almost every child is exposed to it by the age of five, its horror is not universal. In the United States, it kills between 20 and 40 children per year; in the rest of the world, it kills an estimated half-million children (about 1,000 in Mexico alone).

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Part of what made GSK alter its model was the emergence of GAVI, which was founded five years ago, thanks largely to $750 million from the Bill and Melinda Gates Foundation. In 2003, GAVI named rotavirus a top priority, and this January, the Gates Foundation pledged another $750 million to it over the next 10 years. GAVI’s Vaccine Fund serves countries whose per-capita gross national income is less than $1,000. Though the fund will not directly benefit Mexico, whose average income levels are too high, it is poised to help fund vaccination in scores of countries. GAVI’s buying power helped convince GSK to forgo the traditional road to vaccine development.

If all goes according to plan, GSK will introduce Rotarix to other Latin American countries, and Asia, by the end of the year. While it plans to target Europe and the United States later on, the developing world is its first priority. This is as it should be. Countries should support GAVI and programs like it so that drug developers like GSK have the financial incentive to meet the most urgent medical needs.

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