Author: Pierre A. MORGON, PharmD, LL.M, MBA 1
Starting a vaccine company is an exhilarating experience. This endeavor is being affected by the naturally slow pace and expensive nature of the development, registration and manufacturing of preventive biological products, as well as by the relatively low gross margins and the limited availability of the required expertise. These decelerators are mitigated by the modest commercialization costs and by the lasting value of assets which is not entirely related to patents but more importantly to know-how, in a global market which is largely demand-driven.
Product portfolio: realism rules, both from the medical and the financial perspectives
In the absence of own R&D and considering the shareholder’s choice of not building a bulk manufacturing capability in the first phase of the investment, the focus of licensing-in efforts has been on products with substantial volume potential (especially in the public markets) from the portfolio of partners willing to consider first procuring finished product and second transitioning to bulk transfer once the manufacturing facility is ready.
Aiming at balancing risks and maximizing profitability and return on invested capital, the strategy to portfolio buildup is targeting a sequence of products reaching the market in the near- to mid-term, some with the potential to command higher prices in the private segment while others will generate higher volumes and lower prices in the public segment. The common driver is the existence of a documented disease burden and the possibility to leverage the expertise of the local medical community to facilitate registration and promote adoption and usage.
People: build the “mission impossible” team
Due to the scientific nature of the vaccine market, the foundational layer is to find people with existing and proven technical competences. It is also pivotal to select staff with a taste for a lot of autonomy in daily tasks and the willingness to go beyond the strict scope of their function to contribute to the setup of the company and more broadly to seamless teamwork.
Hurdles include the management of people who joined the organization prior to having true vaccine expertise on board and the handling of the preexisting perception that board members have of their earlier hires, requiring progressive repositioning of their mandates and the intervention of external experts to ensure acceptability and impact of change recommendations.
CEO, AJ Biologics, Kuala Lumpur, Malaysia
Regional Partner Switzerland, Merieux Developpement, Lyon, France
Non Executive Director Theradiag, Croissy-Beaubourg, France
Non Executive Director Eurocine Vaccines, Solna, Sweden
Founder MRGN Advisors, Lausanne, Switzerland
Shareholders and board: crystallize a vision (and some dreams) into a tangible and achievable reality
The vaccine market requires massive research and development investment to generate new products as it is the case for therapeutic products. It also requires very large capital investment to build the manufacturing capacity required to ensure the availability of the products at the required level of quality. The innovation cycle is notoriously long, but it takes firsthand
experience to understand the equally long nature of manufacturing cycles, in terms of the setup of facilities as well as of production lead-times. Investing in this field is not for the impatient nor for the faint-hearted: most of the leading vaccine companies are backed by large healthcare conglomerates, and state-operated players are struggling or being divested. Consequently, internal communications must be crafted with an educational perspective so as to better align expectations and reality and to ensure that shareholders have their eyes wide open when they opt to stay the course.
External stakeholders and company positioning: navigate a complex maze of partially overlapping agendas
The aftermath of the influenza pandemics has underscored the value of self-sufficiency in terms of vaccine supply and the contribution of a vibrant biologics industry to the country image and regional influence. Thus, the topic has gained higher attention in the political agenda, further reinforced in Malaysia by previous unsuccessful attempts to setup such a vaccine manufacturing capability, resulting in an array of monitoring processes. Moreover and linked to the chronically limited availability of some vaccines, an emerging player is positioning itself in the vaccine landscape through its portfolio of products, its price band and the resulting targeted countries and segments.