Report on the United States Vaccine Industry

Exhibit 30
Major U.S. Vaccine Suppliers Value-Added Chain
- Versus Pharmaceutical Industry Averages -

Vaccine industry Pharmaceutical Industry

Contribution to
R&D, Interest,
Taxes, and
Earnings
44%
Administration 7%
Sales and Marketing
17%
Distribution 9%
Production
21%

Contribution to
R&D, Interest,
Taxes, and
Earnings
46%

Comments
* Similar contribution to R&D, interest, taxes,
earnings, which funds:
- Capital expenditures
- Dividend payments to investors
* Lower sales and marketing expense
- Significant government business
- Defined market
- Profit pressure
* Higher cost of goods sold
- Greater process controls
- Higher sterilization requirements
- Higher vaccine distribution costs
- Direct shipments to physicians

Returns
2%

S,G,&A
35%
1i
COGS
19%

I 1

While vaccine and pharmaceutical industry contributions to R&D, interest, taxes, and earnings
are similar, we believe vaccines have lower returns on capital. Because of the reliance on
injectable delivery forms and dedicated manufacturing facilities, vaccine production is more
capital intensive than pharmaceutical production. And while this report does not address R&D
investment, these costs are likely more capital intensive as well -- both because of the reasons
stated above and because of the ELA process, which requires a vaccine to be validated in the
plant that will be used for commercial production. Because the "scaling-up process" can
change the nature of the vaccine, which can require additional clinical trials, most companies
chose to build commercial-scale plants to produce small clinical trial quantities, often waiting
years to commercialize those investments.
Summary
Aggregate U.S. vaccine industry contribution to R&D, interest, taxes, and earnings (which
fund capital investments and dividends) is similar to the pharmaceutical industry, although
return on assets is probably lower. Individual product contribution, however, varies depending
on the competitive environment, the product complexity and scale, and the stage of the product
life cycle. Royalties are a major cost of many of the new vaccines and, in some ways, may
change the core economics of the business. And "contribution" is significantly higher for
private versus public sectors sales.

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