Report on the United States Vaccine Industry

Exhibit 29
MMRIOPV Vaccine Value-Added Chain
- Public vs. Private -
Private
$14.$13.98
$12.00
$12.00
Blended Contrbution to R&D,
$10.00 $9.91 terest, Taxes, and
Earninge
40
$8.00
Contribution to R&D, Public
$6.00 ar,, and $5.65
$5A.0 Contribution to R&D,
Adflin W$0l.0ostTaesan
$4.00 s,5a. m In Ers, and
$2.00 Ob it SO.34
$0.00
U.S. Revenue $321 M $232 M $89 M
U.S. Doses 32.4 M 16.6 M 15.8 M
The vaccine industry's contributions to R&D, interest, taxes, and earnings are similar to the
pharmaceutical industry, albeit with major differences on key components. The cost of goods
in the vaccine business is usually considerably higher than in the pharmaceutical business.
With vaccines, the manufacturing of biological substances in injectable forms requires much
more costly process control and sterilization standards than does pill production, a large part of
the pharmaceutical business.
Vaccine distribution costs are higher as well. Most vaccines are shipped through overnight
services to manage the "cold chain" for these heat sensitive products. Also raising these costs
is the large amount of product shipped in small orders directly to individual physicians; in the
pharmaceutical business, on the other hand, most product is shipped through large
pharmaceutical wholesalers.
Vaccine industry sales and marketing costs, however, tend to be much lower than in the
pharmaceutical business. Certainly, the fact that a much higher portion of vaccine sales are
made to the government and that, to some extent, vaccine suppliers have a defined children's
market (all children must be immunized by age five to attend school) are relevant factors.
However, vaccine supplier sales and marketing investments are also likely limited by the profit
expectations of their large pharmaceutical parents, who expect "pharmaceutical-like" returns.

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