Not many pharmaceutical executives can say with a straight face that if they are successful, they will really help millions of people live significantly longer and healthier lives around the world.
Julie Gerberding, the former director of the U.S. Centers for Disease Control and Prevention, has been in one of those rare positions for about the past 18 months as president of Merck’s vaccine unit. At Merck (NYSE: [[ticker:MRK]]), she has been learning the ins and outs of a $5-billion-a-year operation that makes 14 of the 17 vaccines the CDC recommends for children, and nine of the 10 recommended for adults. It would be an understatement to say this job carries a huge social responsibility, both to insure steady supplies of vaccines already on the market, and to develop new ones.
I met with Gerberding earlier this week while she was in Seattle for the Pacific Health Summit, an invitation-only gathering of health leaders in academia, industry, and government. She was there to discuss the next big challenges in the field of vaccines. Part of what brings Merck, Pfizer, GlaxoSmithKline, and other major vaccine companies into the conversation is the realization that vaccines are no longer just a low-margin, high-liability corporate backwater. New technologies propelled the vaccine market to more than $22 billion in sales in 2009, and projections are that it will keep growing by 10 percent a year over the next five years, according to Kalorama Information, a market research firm. For a diversified company like Merck, with $46 billion in total sales in 2010, vaccines are a sizable business segment.
Here’s what Gerberding had to say about the opportunities she sees in the vaccine business, plus a bit about what she’s learned in making the switch from the public sector to the private sector. The interview is edited for length and clarity as always.
Xconomy: Can you talk a little about what kind of scope you have in Merck Vaccines, in terms of people, facilities, and the R&D portfolio?
Julie Gerberding: Vaccines have been in Merck’s DNA forever. We have a tradition of being the scientific source of many of today’s modern vaccines. It’s been a core part of the company, and it will remain a core part of the company. It’s just one of those things Merck has been committed to, and it’s one of the ways we bring value to people. We have a very strong pediatric portfolio, and one of our unique strengths is our adult portfolio. We have a very broad spectrum of vaccines available for adults, either manufactured by Merck or licensed for sale by Merck.
Where we haven’t traditionally focused is in the global environment. The company was very focused in the U.S. and Europe, and now in the last few years has initiated a very broad expansion into new markets. I don’t refer to them as emerging markets. They are new markets that have certainly emerged. We see tremendous unmet need, and tremendous opportunity for Merck to leverage our innovations in ways that bring these products to the kids who need them most.
X: You occasionally hear market research reports say the vaccine market is poised to grow, and build on the success of Gardasil and Pfizer’s pneumococcal vaccine (Prevnar). Do you see that phenomenon happening? Are vaccines taking on increasing importance, or a higher priority, within Merck? And if so, is there a tension between building up a market with high-value vaccines, and some of what these people here [health officials] are looking for, which is low-priced vaccines that are used for a lot of people in the developing world?
JG: It’s very synergistic. No matter what market you are in, we want to deliver value at the best possible price. The fastest way to achieve a price improvement is through volume. So, the more
