Building healthy vaccine markets is critical to the long-term success of the Gavi mission.
“Gavi’s market shaping activities aim to balance supply with demand as well as secure sustainable, affordable vaccine prices for appropriate products that meet country preferences – all in a marketplace that is competitive and fosters innovation.”
Mid-Term Review report, page 14
When Gavi was founded in 2000, vaccines were not reaching the world’s poorest children at the extent to which they were needed. Vaccine prices were not sufficiently affordable for developing countries to introduce and expand immunisation programmes.
The issue was compounded by a notable lack of diversity in the range of available suppliers. At the time, the Alliance bought vaccines from five manufacturers based in five countries, three of which were located in Europe. Today, Gavi procures vaccines from 17 manufacturers in 11 countries of production across Europe, the United States of America, Africa, Asia, and Latin America.
GAVI’S MARKET SHAPING APPROACH
Gavi’s market shaping efforts aim to make life-saving vaccines and other immunisation products more accessible and affordable for lower-income countries. Its market shaping model pools demand from lower-income countries to ensure predictable, long-term demand for vaccine manufacturers, as well as ensure long-term sustainable financing. By making up 60% of the global birth cohort, Gavi-supported countries represent the most significant, consolidated market for manufacturers of essential childhood vaccines.
The vaccine market landscape has evolved significantly since Gavi’s foundation in 2000. The success of the Alliance’s market-shaping model has allowed Gavi to expand its vaccine portfolio from three to 14 vaccines . The Alliance has been able to procure vaccines from a more diverse set of manufacturers, thus mitigating procurement risks, securing lower costs and catalysing an increase in global vaccine production – including in developing counties.
Innovative finance mechanisms: the Advance Market Commitment
By putting in place innovative financing mechanisms, such as the International Finance Facility for Immunisation (IFFIm) and the Advance Market Commitment (AMC), Gavi has helped to bring predictable funding and greater liquidity to the vaccine marketplace. In addition, this has contributed to creating new vaccine markets and bringing them to scale.
The AMC has accelerated the production and roll-out of pneumococcal vaccines that meet developing country needs. It has done this by guaranteeing the initial purchase price for a limited quantity of new vaccines, incentivising manufacturers to invest in scaling up production capacity to meet demand. To date, 114 million children have been protected against pneumococcal disease thanks to the AMC.
Scaling up vaccine programmes and stockpiles
Efforts to shape vaccine markets have laid the foundations for the creation of meningitis, cholera, yellow fever and measles vaccine stockpiles – thereby significantly contributing to global health security. More recently, this work has played a key role in ensuring the availability of investigational doses of the Ebola vaccine, ready to mitigate new outbreaks. At the same time, Gavi’s market shaping drives the acceleration of new vaccine introductions. Since Gavi’s inception, the Alliance has supported more than 400 introductions and campaigns.
Low and sustainable prices
Consistent price reductions for developing countries across a range of vaccines are a key success parameter of Gavi’s market shaping strategy. At the same time, the Alliance is working to ensure that prices remain at appropriate and sustainable levels over the long term. For example, the Alliance pays US$ 28 for the vaccines recommended by WHO for children in all countries, over US$ 1,000 below the US public price.
These price reductions have allowed Gavi-supported countries to significantly scale up their immunisation programmes.
In 2000, when Gavi started supporting vaccines against hepatitis B and Haemophilus influenzae type b, only 5% of low-income countries had introduced them nationally, compared with 72% of high-income countries. Today, all lower-income countries have introduced the two vaccines into their national programmes – in large part due to Gavi’s funding support and market shaping.
The increase in country introductions of pneumococcal vaccine (see AMC above) is even more striking. Since 2008, the proportion of low-income countries that have added the vaccine to their routine schedules has increased from none to 77%.
Healthy vaccine markets
The ultimate goal of the Alliance’s market-shaping work is to create healthy vaccine markets to meet the immunisation needs of Gavi-supported countries. To ensure this encompasses more than just narrow objectives, such as the number of suppliers or vaccine prices, Gavi has developed the Healthy Markets Framework. This focuses on the following core attributes of any healthy market:
- adequate supply that meets demand (see orange box in flow diagram);
- vaccines that meet country preferences such as presentation, schedule of doses etc. (dark blue box);
- supply security including buffer capacity, individual supplier risk and National Regulatory Authority risk (light blue boxes); and
- supply efficiency as measured through total system effectiveness, long-term competition and product innovations (green boxes).
MARKET SHAPING CASE STUDY no.1: TRANSFORMING THE CHOLERA VACCINE MARKET
When Gavi first started supporting the oral cholera vaccine (OCV) stockpile in 2014, it did so with the aim of correcting a market that was not serving the poorest countries. The stockpile was developed by the Alliance in partnership with WHO’s International Coordinating Group on Vaccine Provision, the Global Task Force on Cholera Control, UNICEF’s Supply Division and vaccine manufacturers.
At that time, only two manufacturers were producing prequalified cholera vaccines: Crucell of Sweden manufacturing the Dukoral vaccine, and Shantha Biotechnics of India manufacturing Shanchol. One of these, Dukoral, was programmatically unsuitable for Gavi-supported countries as well as an expensive vaccine, costing US$ 4.70-9.40 per dose, which was mainly sold to tourists travelling from high-income countries.
Both demand and supply were low, and, as a result, the global stockpile for oral cholera vaccine provided just 300,000 doses to countries.
More suitable vaccine for emergencies
Technology transfers from the International Vaccine Institute to manufacturers in Bangladesh, India, the Republic of Korea and Vietnam were key to the development of a vaccine more suitable for use in emergency conditions – Euvichol. In August 2014, the Global Health Investment Fund joined with other investors to provide additional funding to EuBiologics to support completion of their cholera vaccine efforts. Supply of Euvichol to Gavi-supported countries started in 2016, significantly reducing supply constraints.
As opposed to previous products, which were stored in glass vials and difficult to open, an updated version of this new vaccine, called Euvichol+, also made by EuBiologics in the Republic of Korea, became prequalified in 2017. The improved vaccine comes in a plastic tube with a pull tab mechanism. This not only makes it easier and safer to open, but also 25% less expensive and more practical to store and transport.
In addition, the ShanChol vaccine received prequalification for its control temperature chain qualities in 2017. This allows it to be kept outside of traditional cold chain temperatures for a limited period of time.
Breaking the cycle of low supply and demand
By funding the procurement of cholera vaccines, Gavi has been instrumental in breaking the cycle of low supply and low demand. In the 15 years between 1997 and 2012, just 1.5 million doses of OCV were used worldwide. In 2017 alone, almost 11 million doses were distributed to countries ranging from Sierra Leone and Somalia to Bangladesh. In the first 10 months of 2018, over 24 million doses were approved for global use.
MARKET SHAPING CASE STUDY no.2: HUMAN PAPILLOMAVIRUS VACCINE
Human papillomavirus (HPV) is the main cause of cervical cancer, which claims the lives of 266,000 women each year, mainly in developing countries. The HPV vaccine is one of the highest impact vaccines across Gavi’s entire portfolio, averting 1,500 deaths for every 100,000 girls vaccinated.
The lowest-income countries now have access to HPV vaccines at US$ 4.50 per dose, compared with approximately US$ 100 per dose in high-income countries. The Alliance’s support has allowed developing countries to vaccinate 1.6 million girls against cervical cancer. Nine countries have introduced the HPV vaccine into their immunisation programmes – Bolivia, Guyana, Honduras, Rwanda, Senegal, Sri Lanka, Tanzania, Uganda, Zimbabwe – while 30 have conducted HPV vaccine demonstration programmes. Gavi has approved applications from another 15 countries while three more have applied for support.
However, the sudden rise in country demand – the result of a shift in focus from pilot projects to routine introductions covering several age cohorts – is outpacing supply, jeopardising Gavi’s 2020 goal of immunising 40 million girls. Although this dramatic increase in demand had been forecasted and shared in advance with the primary supplier, it could not be met by the manufacturer. This highlights the needs for transparent communications to ensure that demand can be met by supply.
At current rates of supply, there is a risk that just 25 million girls will be protected by 2020, averting an estimated half a million future deaths. To address the supply shortages, the Alliance is working on two fronts: with countries to adjust the timing of their HPV vaccine introductions, and with manufacturers to scale up production capacity and bring new products to market.
Gavi’s market shaping strategy for the 2016–2020 period is guided by an overarching goal to improve healthy market dynamics through three specific objectives.
- The supply objective: ensuring adequate and secure supply.
- The cost objective: reducing prices to an appropriate and sustainable level.
- The innovation objective: incentivising development of suitable and quality products.
The Alliance is on track to meet its market shaping goals for 2020, as illustrated in figure X
below. Key developments in 2017 included:
- a significant decrease in vaccine prices;
- an increase in the number of innovative vaccine products procured;
- an inadequate supply in some markets, with targeted interventions undertaken to minimise impact on country immunisation programmes; and
- an increase in number of markets with moderate to high healthy market dynamics, including for yellow fever vaccines despite challenging outbreaks.
 Vaccines supported include: pentavalent (diphtheria, tetanus, pertussis, hepatitis B, Haemophilus influenzae type B), pneumococcal conjugate, rotavirus, human papillomavirus, inactivated polio, meningococcal A conjugate, meningococcal ACYW (stockpile), Japanese encephalitis, measles, measles-rubella, yellow fever, oral cholera (stockpile), Ebola virus (stockpile) vaccines, typhoid.