Tracking the Global Spread of Vaccination: An Analysis of Vaccine Sales Trends
According to a recent report released by the World Health Organization, the global vaccine market expanded dramatically in 2021, with more than double the number of doses distributed compared to 2019. The vaccine market, however, is still heavily dependent on the small number of producers, placing people in developing nations out of their reach and putting numerous frequently used, and emergency-critical vaccines at risk of shortages.
The most efficient and economical method for safeguarding billions of people across the globe is vaccination. The development of vaccines has the power to revolutionize health by removing the burden of infectious diseases that are fatal to people living in affluent countries. According to the World Health Organization (WHO), public health campaigns and vaccine laws have helped prevent 2–3 million deaths annually.
The production and sales of products are rising globally as a result of increased investments, corporate mergers, and joint ventures. The market for vaccines is expected to grow at a CAGR of 10.85% from 2021 to 2028. The market was valued at USD 61.04 Bn in 2021 and is projected to reach USD 125.5 Bn by 2028.
How is the Market for Vaccines Structured?
The vaccine market differs from other industries in a number of ways that are unusual. Some of the key aspects that
First, the development of vaccinations depends on a combination of publicly supported universities, pharmaceutical laboratories, and for-profit pharmaceutical giants, just like the development of many other pharmaceutical products. Although universities conduct a sizable amount of the initial research, pharmaceutical companies have the resources, expertise, and ability to take medical innovations from the lab through development, clinical trials, regulatory approval, and ultimately to doctors or pharmacists who can administer them.
Second, national governments quite often participate in the process at different stages. They are usually the last purchasers of the vaccinations (known as "pull-funding") and can offer initial financing for basic research (known as "push-funding"). Governments act as both investors and buyers in a way.
Third, the vaccination market is distinct in that it is heavily concentrated on both sides of the market. In other words, there are not many companies that make vaccinations and not many people purchase them. 90% of the world's vaccine sales were made by four companies in 2019, but COVID-19 has changed this.
The majority of the buyers are national governments, national health services, and coalitions of buyers that participate in pooled procurement. For instance, every year UNICEF purchases vaccines for between 80 and 100 nations. The 27 members of the European Union (EU) have also chosen to combine their vaccination purchases for COVID-19.
The vaccine market differs from others due to these aforementioned features.
Vaccine Supplier Base Increasing as Number of Manufacturers Rises
According to statistics provided by WHO, more than 90 manufacturers provided WHO Member States with vaccinations, 10 of which were introduced to the market in response to the COVID-19 pandemic. The manufacturing base is expanding as a result of investments in new vaccines, the expansion of the WHO prequalification program, strategic procurement by the Pan American Health Organization (PAHO) and the United Nations Children's Fund (UNICEF), as well as national manufacturers for large nations such as Brazil, China, India, and the Russian Federation looking outside of domestic markets. Manufacturing capacity has increased in China and India, which hosted 31% of the world's manufacturers in 2021.
Advance Purchases Assist Vaccine Manufacturers In Overcoming Three Major Challenges- A Commercial Perspective
Inventory risk is the first challenge faced by the key players operating in the global market. Increased inventory reduces the return on capital when vaccinations are produced but not sold. As their ability to balance capacity among customers is a source of income, manufacturers frequently refuse to reserve capacity for clients in advance. This works when demand is steady, and they can have just the right amount of products in order to meet demand. Advance purchases are used to activate more capacity, though, when demand increases.
Credit access is the second challenge. Even with a valid purchase agreement, a company might not have the working capital to purchase inputs. Giving money up front for advance purchases can address this issue. Banks are more likely to lend when companies have purchasing agreements, even if money is not paid upfront.
The identification and removal of supply bottlenecks is the third challenge. Once vaccine manufacturers have made purchases, they can make similar purchases from suppliers, and so on. For instance, businesses won't find out where to find more bioreactor bags until they start looking for them.
The Bottom Line
New vaccinations have been developed and distributed globally during the past 20 years, saving millions of lives and preventing disease. These advancements in access to vaccines have a significant impact on global public health. A thorough analysis of the dynamics of the global vaccination industry, however, reveals that there are still many challenges to overcome, including regulatory obstacles, production restrictions, inequitable access, and unpredictable and fragmented country demand.
Despite the challenges the industry is facing, the increasing prevalence of chronic and infectious diseases, along with several initiatives taken by governments globally are expected to contribute to a surge in demand for vaccines.