Report on the United States Vaccine Industry

US Market Overview
Overview
The U.S. market for childhood vaccines is dominated by four major suppliers, all which have
grown significantly over the last five years. While pricing was the major driver of growth in
the 1970s and 1980s, increases in volume of doses from new vaccines and extensions to the
schedule fueled growth in the 1990s. These additions to the vaccine schedule have
significantly raised the total cost per child of immunization, but they have also provided
valuable health benefits to the public. To better understand the set of market forces behind
these trends, this study first looks at vaccine pricing and then examines growth in dosage
volume.
Exhibit 9
Major U.S. Vaccine Suppliers Revenue Trends
(MM)
1989 1990 1991 1992 1993 CAGR*
1989-1993
Merck 271 353 375 485 523 18%
Lederle 148 202 315 322 380 27%
Connaught 125 135 140 170 180 10%
SmithKline - 50 90 210 320 86%
Beecham ('90-'93)
*Compound annual growth rate
Vaccine Pricing
Private market vaccine prices grew rapidly in the 1980s, but this growth has slowed
considerably in the 1990s. In fact, the prices of most vaccines have been relatively flat in
recent years and the DTP price has actually fallen. Exhibit 10 shows the list price in the private
market for each of the major vaccines from 1982 to 1993. Over the entire period, vaccines
prices grew, on average, at an annual rate faster than inflation, as measured by the Consumer
Price Index (CPI). MMR grew at about six and a half percent per year; OPV was double that at
13 percent annually (albeit off a much lower base in 1982); and DTP increased 57 percent per
year (but off an extremely low base in 1982), even after adjustments for the NVICP Act. (The
NVICP Act addressed the burgeoning product liability issue which was threatening to drive
vaccine suppliers out of the business.) Since 1988, however, all vaccines have grown slower
than the CPI (with the exception of OPV), and the price of DTP has continued to fall.

Mercer Management Consulting Page 15