Flu shot boom a boon for many, as industry continues to grow
By Adam Smeltz
Published: Tuesday, Oct. 9, 2012
For tens of millions of Americans, the promise of a flu-free winter begins a few miles off Interstate 80 in the Poconos.
A $150 million vaccine plant in Monroe County, just 3 years old, will produce more than 60 million influenza shots this year for distribution across the country, supplying nearly half a market that has roughly tripled since the mid-1990s.
Owner Sanofi Pasteur has doubled the factory's work force and invested about $1 billion, a brick-and-mortar testament to the decade-long boom in flu shots.
“This is one of our most important vaccines from a volume standpoint,” said Philip Hosbach, vice president of immunization policy. He would not say how profitable the vaccine is but said its revenue is critical to investments in future vaccines at the French company, the world's largest maker of the shots.
Flu season usually begins in October and can run through May, with viruses striking as many as one in five Americans. Flu shots have become a $3 billion annual enterprise in the United States, accounting for about 1 percent of pharmaceutical industry revenue, according to Temple University professor Eric Keuffel.
“It's certainly profitable for the manufacturers,” he said.
The Centers for Disease Control and Prevention in Atlanta estimates the vaccine is 60 percent to 70 percent effective in preventing flu, though doctors said its success in reducing overall fatalities isn't as clearly defined.
Annual flu-associated deaths fluctuated widely between the mid-1970s and 2007, dipping to as low as 4,300 and peaking at about 63,000, CDC data show.
Meanwhile, increases in vaccine manufacturing and a 12-year awareness campaign by the CDC and the American Medical Association have helped drive inoculation rates to new highs, medical and business scholars said. They note that the swine-flu scare in 2009 and a recommendation from the CDC in 2010 helped fuel the boom.
The CDC now suggests that nearly everyone older than 6 months get an annual flu shot, once reserved for the elderly and high-risk populations. An estimated 42 percent of Americans, or 132 million people, received flu shots in 2011, up from 25 percent in 2000 and 11 percent in 1990.
That growth has generated traffic not just for traditional providers such as physicians and hospitals, but for relative newcomers such as drug stores and other retailers. Rewritten state laws allow qualified pharmacists nationwide to administer vaccinations in drug stores and elsewhere, enabling a distribution network that would be instrumental during a pandemic, independent experts said.
The CDC does not recommend one vaccination venue over another. Nor does Sanofi Pasteur.
“Convenience is certainly a big benefit,” said Keuffel, a health economist in Temple's Fox School of Business. During the 2011-12 flu season, drug stores and retailers sold more than 20 percent of flu shots in the United States, up from 12 percent the year before, according to the CDC.
Physicians' offices, hospitals and other medical clinics account for about 60 percent. Workplace programs make up the rest, Keuffel said.
“Certainly, (drug stores) like it whenever people go into the store, get a flu vaccine, take a peek around and fill up on groceries and other things you might need,” he said. “I think there's a stronger motivation for them to market it and get people into the drug stores. Physicians aren't usually selling other things when they deliver the vaccine.”
For the Walgreens chain, based outside Chicago, flu shots represent a key strategy “to help folks get and stay well,” Vice President Jack Cantlin said. The company administered 5.5 million flu shots last season, placing it second only to the federal government, according to Walgreens.
About 90 percent of its flu-shot customers have insurance coverage for the inoculations, up from 25 percent about four years ago. The new health care law will mandate insurance coverage of vaccinations and may boost sales in the coming years, industry observers said.
Price lists point to a mark-up at retail outlets, which often sell flu shots for as much as $30. Manufacturers charge retailers closer to $15 apiece, according to the CDC. Keuffel said some lower-income consumers may save money at public entities that can offer price breaks.
“Everyone makes something on the immunizations,” said Dr. Joel Shalowitz, director of the health-industry management program at Northwestern University. He said competition among manufacturers tends to keep prices reasonable for flu shots, which can be a “loss leader” at some retailers.
At UPMC Senior Communities and its customer facilities, flu mortality rates have dipped from as high as 20 percent in the 1990s to nearly zero, according to Dr. David A. Nace, chief of medical affairs.
“I look at (providing the vaccine) as a public-service function. ... It really is safer than your blood-pressure medicine,” he said.
Adam Smeltz is a staff writer for Trib Total Media. He can be reached at 412-380-5676 or firstname.lastname@example.org.
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