Glaxo gets ready for next pandemic after hiccups in Covid vaccine

Pharma giant is talking with the UK and other governments about building facilities to bring vaccine development onshore before the next crisis.

GlaxoSmithKline Plc fell behind in the Covid-19 vaccine race, but now the drugmaker is working to make sure it’s on the front lines of the next pandemic.

The British pharma giant is talking with the U.K. and other governments about building facilities to bring vaccine development and production onshore before the next crisis, said Roger Connor, its vaccines chief. The labs would offer a range of vaccine technologies to tackle deadly viruses of the future, he said in an interview.

“When every government does their after-action review from this pandemic, they’ll start to think about manufacturing within their own boundary, or within their own region at least,” said Connor. We want to “create in-country manufacturing and vaccine development capability for the future.”

Glaxo’s main R&D vaccine hubs currently are based in Belgium, Italy and the U.S., with manufacturing capacity globally, including the U.K.

Despite being one of the world’s largest vaccine companies by revenue, Glaxo wasn’t among the frontrunners in developing a Covid-19 shot. Its sluggish effort disappointed some shareholders, and a decision by activist investor Elliott Management Corp. to buy a significant stake in the company has increased scrutiny of its strategy.

Crown jewel
 

Still, positive data from two vaccine trials last week -- with partners Sanofi and Medicago Inc. -- suggest Glaxo may yet play a role in the pandemic effort.

The company is about to undertake a huge restructuring, spinning off its consumer health division next year and leaving the biopharma and vaccines arms together. Connor describes the vaccines business as a “crown jewel” that has been undervalued, and its pandemic preparedness plans are one of the ways it can prove this.

“We’ve got one of the widest range of technology platforms of any vaccine company,” he said. To prepare for a future pandemic, “you need to have fill-finish, you need to have bulk, you need to have technology choice, you need to have an R&D engine that connects very well to academia, to government monitoring of virus evolution, and GSK brings all of those things.”

Many countries were caught flat-footed last year when the coronavirus swept across the globe, leading to tensions over supplies and even export bans to keep shots and their ingredients at home. That’s contributed to vast disparities in immunization rates between rich and poor nations around the globe.

A dosing error in Glaxo’s trials with Sanofi last year set the drugmakers back by six months. Moreover, Glaxo’s decision early in the pandemic to use its adjuvant technology -- substances that enhance the immune response to vaccines -- to partner with other drugmakers rather than creating its own shot has drawn criticism. The company is now on track to have both the Sanofi and Medicago vaccines cleared for use by year-end, if the final trials are successful.

Glaxo and Sanofi plan to start advanced trials with more than 37,000 people in coming weeks, with multiple formulations of the vaccine to better protect against variants such as those first found in South Africa and India. The studies will predominantly be outside the U.S. and focused on geographies with higher infection rates to give “every chance of making the trial successful,” Connor said.

Revenue Growth

Its Covid-19 stumbles notwithstanding, revenues at Glaxo’s vaccines business have increased by about 50% over the past four years. Shingles vaccine Shingrix is one of the company’s biggest products and Connor says there are other blockbusters in the pipeline, including its Respiratory Syncytial Virus shots for older adults and pregnant mothers, both in advanced trials.

Glaxo has never considered spinning off the vaccines business, according to Connor, and he doesn’t see that changing.

Still, Pfizer Inc. and Moderna Inc. are expecting to see annual sales of $26 billion and $19 billion from their Covid-19 vaccines, double the sales of Glaxo’s entire vaccine portfolio last year. If successful, sales of between $5 billion and $10 billion are possible for the Glaxo-Sanofi vaccine in 2022, according to Bloomberg Intelligence analyst Sam Fazeli, but the companies must avoid any further delays.

“Yes, there are others making more from Covid in the short term,” said Connor. “However, when we look at the overall portfolio, innovation and current assets that we have, we think it’s stronger than anyone’s and slightly under-appreciated at the moment.”