The announcement by the Bill and Melinda Gates Foundation late last week at the World Economic Forum in Davos, Switzerland, that the foundation will commit $10 billion during the next 10 years to help research, develop, and deliver vaccines in poor and developing countries is an important pledge for global public health, a commitment that the foundation is also hoping that governments and the private sector will participate in as well.

The 10-year, $10-billion funding is in addition to the $4.5 billion that the foundation has committed to vaccine research, development, and delivery since the inception of the foundation. “We must make this the decade of vaccines,” said Bill Gates, in a press release by his foundation. “Vaccines already save and improve millions of lives in developing countries. Innovation will make it possible to save more children than before.” The Gateses said that the increased investment in vaccines by governments and the private sector could help decrease child mortality by the end of the decade, and they called for these entities to fill funding gaps.

The large funding provided by the Gates Foundation to increase access to existing vaccines as well as to support development for new vaccines for diseases such as malaria and tuberculosis, public-private partnerships such as the Global Alliance for Vaccines and Immunization, which is developing vaccines for diarrhea and pneumonia, as well as high-profile government intervention into vaccine development such as in the case of pandemic flu have helped to transform the vaccine sector into what traditionally had been a low-margin sector in the pharmaceutical industry to a more value-added one. In fact, Gates acknowledged that public–private partnerships “are transforming the business of vaccines.”

Although vaccines still represent a relatively small part of the overall pharmaceutical market, they represent a part of the growth strategy of certain pharmaceutical majors such as sanofi-aventis, GlaxoSmithKline, Novartis, Pfizer (through its recent acquisition of Wyeth), and Merck & Co. In an investor-relations presentation on vaccines in December 2009, sanofi aventis estimated the vaccine market at EUR 15 billion ($21 billion) in 2008 and projected that the market would reach EUR 23 billion ($32 billion) by 2013. When you consider that the global pharmaceutical market as a whole is estimated at $825 billion in 2010, according to IMS, vaccines are still a niche business, but can potentially represent one segment of growth for select drug companies.

As sanofi aventis pointed out in its vaccines seminar, vaccines can benefit from a much longer product lifespan than traditional drug products. Moreover, the unique requirements of vaccine development and manufacturing, namely biological competencies, more complex manufacturing processes, and high upfront capital requirements, raise the barriers to market entry and therefore, if executed successfully, one pillar of growth for individual companies. Vaccines for meeting unmet medical needs commonly found in developing nations as well as prophylactic vaccines such as cancer vaccines are important areas of innovation.

As the pharmaceutical industry struggles as a whole to build its revenue sources in the wake of increased generic-drug incursion and fewer new products, vaccines truly have the potential to live up to the axiom, “an ounce of prevention is worth a pound of cure.”