Report on the United States Vaccine Industry

ndustry Overview
Worldwide Vaccine Market
The worldwide vaccine market generates approximately $3 billion in sales, of which basic
pediatric vaccines accounts for about 35 percent. Exhibit 2 segments the revenues into five
categories. Mercer's charter was to focus on children's vaccines sold in the U.S. market.
Therefore, we concentrated our efforts on the pediatric vaccines listed on the U.S.
immunization schedule which we subdivided into basic products (MMR, DTP and Polio) and
proprietary products (Hib and Hep B).
Exhibit 2
1992 Worldwide Vaccine Market
- Adult/Pediatric Vaccines -

Adult Vaccine Market
Flu
Other

$820 MM 23%

New Pediatric Vaccines
Hib
Hep A
Hep B
UNICEF,
S LocaI froauctIon
Home and Export Basic
Pediatric Vaccines
Measles/MMR
DTP
Polio
BCG
TT

* High growth
* Products protected by patent
$1,110 MM 41% * Generally high prices
* Mostly global players
$60 MM 2% * Very low prices/very high volumes
$110 MM 4% * Very low prices/very high volumes
* Tiered pricing (public vs. private)
$832 MM 30% * Little or no Intellectual property
* 'National' suppliers

$2,732 MM

Basic pediatric vaccines account of the largest share of vaccines administered around the
world. Prices paid vary widely depending upon the market in which they are sold. In most
cases, the technology for making the product is well known and there are multiple suppliers of
the vaccine. The exception is MMR. Although not patent protected, Merck's mumps vaccine
is widely recognized as the most safe and effective in the world. Consequently, Merck enjoys
a monopoly on MMR in the U.S. and has built a strong market share around the world.
All of the basic pediatric vaccines were developed more than 20 years ago and have changed
little in the interim. Most of these products are now commodities and no longer need to carry a
Mercer Management Consulting Page 7