Potential business model for a European vaccine R&D infrastructure and its estimated socio-economic impact

Development of business model

Four different business model options were developed using the procedure described below, one of the models was a combination of two individual models developed. In the present article, we only describe the details and expected impacts for the business model option that was prioritized for further development (“hybrid model”) following the assessment of all models using the evaluation framework developed (see below). The working steps in the overall process were the following ones:

Evaluation and selection of the different business model options were carried out using the evaluation framework described.

The entire process as outlined above, including the overall suggested positioning of the sustainable vaccine infrastructure, was performed keeping in mind the gaps and needs previously identified as part of the TRANSVAC project, as well as the objectives, scope and missions of other (European) Ris already existing.

Definition of impact dimensions

To select impact categories for analysis, a literature review on the socio-economic impact assessment practices was made first, followed by a benchmarking of different practices and information (Reid et al., 2015; ESFRI, 2019). Multiple key impact indicators emerged, with three main impact categories aligned with the literature and taking into consideration the following standard metrics:

Applied to the vaccine research infrastructure case, these three dimensions draw a picture of how such an infrastructure would deliver socio-economic impacts, locally, regionally, and globally, and help to better understand how it could fulfil its long-term objectives. Moreover, these categories have in common that they capture general issues having a fundamental impact on a vaccine infrastructure, represent a systematic approach for quantification, and are widely applicable.

The three main dimensions of socio-economic impact that were analysed reflect the impact of vaccines which is broad and far-reaching, though not consistently quantifiable, analysed or communicated. Traditionally, the perceived benefits of vaccinations are to reduce morbidity and mortality from infections, and those remain the drivers for the innovation of new vaccines. However, an increasing appreciation for the economic and societal impact of vaccines is being included in the development and assessment of vaccine programmes, as they potentially deliver greater benefits to society (Rodrigues and Plotkin, 2020; Beck et al., 2022). In the assessment we have undertaken, the impacts across the three different dimensions have been estimated for the first 10 years of the RI’s period of operation.

Key performance indicators (KPIs)

A series of KPIs was developed that was subsequently used for assessing the ex ante impact of the vaccine RI along the different dimensions described above (Table 1). Eventually, once the vaccine RI is established and operational, the same KPIs could be used for the actual performance monitoring of the venture, as well as for a potential ex post impact assessment. For the actual performance monitoring of the vaccine RI once it is up and running, each KPI would need to be assessed with a specific frequency (quarterly or annually) and using a specific way of data collection (e.g. via operational and economic performance indicators, surveys, interviews, or from other external sources).

For performance monitoring, three categories of key performance indicators (i.e., short-term impact, long-term cumulative impact, and operational metrics) were selected to mirror the progress of the RI in achieving established objectives and goals. With operational metrics, the functioning of infrastructure can be monitored, whereas the short-term impact and long-term cumulative impact indicators enable actual measurement of achievements over time and their communication to key stakeholders. Performance measures include the tracking of economic, societal and other health indicators of impact. These dimensions were chosen as they are also relevant for the mission we propose for a vaccine RI to accelerate vaccine development in the interest of public health and societal benefits.

Initially a larger list of approximately 30 KPIs was drawn up that subsequently was down-selected based on their relevance, credibility, quality as indicators and direct linkage to proposed vaccine R&D RI’s objectives. The KPIs have two major functions: firstly, they should quantify generated impact on a higher level to enable addressing a broader set of audiences and secondly, they should enable management of the specific areas on a more granular level.

Impact assessment: Data sources and assumptions

Table 2 summarises the data sources and assumptions that were used for the estimation linked to the KPIs selected. For a complete list containing all KPIs please see Table 1.

(i) Proposed business model for a European vaccine R&D infrastructure

The gaps-and-needs assessment of vaccine R&D in Europe we conducted previously had identified several opportunities for the conceptual design of a sustainable vaccine R&D infrastructure. These include general gaps and needs in the vaccine R&D field such as lack of expertise in transitioning vaccine candidates from preclinical research to clinical testing, as well as specific aspects including the lack of access to value chain services, such as vaccine formulation expertise, pre-clinical testing, small-scale manufacturing according to good manufacturing practices (GMP), regulatory support. Moreover, our analysis revealed the difficulty of securing funding or financing for late-stage preclinical vaccine development, vaccine GMP manufacturing and early clinical testing (for details, see Jungbluth et al., 2022). Keeping in mind these and other findings from the gaps-and-needs analysis, according to our vision a future sustainable vaccine infrastructure should ideally address the following aspects:

Based on these expectations defined, amongst the different business model options we developed, the one we selected for further consideration is described below.

The option we are proposing is a combination of two different business models -namely a contract development partnership model and a bio-holding model- that are outlined below. This hybrid model was selected as it has the advantage of offering two different and independent types of revenue streams. Moreover, regarding the establishment of the RI, this hybrid model would facilitate the initial setting up of the infrastructure by starting with one of the models first (the contract development partnership) and subsequently implement the establishment of the other (the bio-holding model), which is the more challenging model to build.

Under this business model option (Figure 1), the RI will offer to its customers a full suite of tailored value-chain and transversal scientific-technical and other services related to vaccine development and business building. This model assumes no access to (cash) funding. However, funding may potentially be provided to customers through in-kind contributions by the RI providing free or discounted services to customers in exchange for a small stake in the customers’ vaccine assets. Target customers are primarily early-stage vaccine developers and start-ups in need of specific services and expertise in early-to mid-stage vaccine development.

Figure 1. Overview of the functioning of the contract development partnership model within the vaccine RI based on the hybrid business model.

Blue arrows indicate financial flows, grey arrows scientific-technical or other types of participation and contribution.

The particular value proposition of the contract development partnership model consists in the RI functioning as a product development partner for public and private institutions/vaccine developers, including academia, to which an RI and critical high-value services will be provided either free of charge or at a significantly discounted rate.

The monetization model of this business model (Figure 2) consists in revenues related to the provision of commercial services for which different payment options can be foreseen, such as upfront or milestone payments, royalties, or fees for services, and which will be negotiated on a case-by-case basis.

Figure 2. Monetisation model for the contract development partnership.

The most important key steps related to the implementation of the contract development partnership model would mainly involve the definition and establishment of professionalized services/service portfolio, including, for example, the setting up of platforms and operational and managerial procedures, the strengthening of the RI member network to ensure the availability of critical scientific-technical capacities, as well as building project management expertise.

Under this model (Figure 3), the RI will function as an incubator for early-stage vaccine developers by providing funding and active business-building support, including value chain and transversal services. Selected vaccine candidates considered of interest (e.g. due to their indication, market potential, etc) will be in-licensed by the RI. Subsequently, using the financing, scientific-technical expertise and capacities available, the vaccine RI will continue the further development of the in-licensed vaccine candidates down to early- to mid-stage clinical development.

Figure 3. Overview of the functioning of the bio-holding model within the vaccine RI based on the hybrid business model.

Blue arrows indicate financial flows, grey arrows scientific-technical or other types of participation and contribution.

For this model, the RI will be established as a -biotech- holding legal entity that over time will build multiple subsidiaries. The holding company will be constituted by different research organizations (for example, members of the TRANSVAC infrastructure project and other organizations) that thereby will become members or partners in this venture. Each of the subsidiary companies will focus on one individual vaccine candidate (“asset”) that will be in-licensed at late discovery or preclinical development stages and subsequently be further developed in-house, using financing of the bio-holding and the scientific-technical capabilities and expertise of its member organizations. The development of vaccine candidates within the subsidiaries will thus allow them to draw on resources from and to share vaccine development risks with the parent holding company. Target organizations (“target customers”) for the in-licensing of vaccine candidates are small to medium-sized vaccine developers (public and private) with vaccine candidates for further development that require additional external R&D capacities, expertise and financing. The particular value proposition of this model is that the RI will become a business partner for pharma companies and as an RI will conduct R&D to support vaccine assets from discovery/preclinical stages until early-to-mid stage clinical development. Importantly, in addition to scientific-technical support, other value chain services provided by the RI under this model would include the provision of (seed) investments early in vaccine R&D projects, using financial resources from the RI’s own balance sheet.

The monetization model under the bio-holding model option is mainly related to the equity deal under which the RI will own a minority stake in the subsidiary companies established which advance the development of the in-licensed vaccine candidates. If and once the vaccine development has successfully completed phase I or phase II clinical testing, the vaccine candidates will be sold to a larger pharmaceutical company such that the equity value growth of the asset will be turned into cash upon exit (Figure 4). Moreover, the RI will receive a management fee from the investments allocated to it by the external investors to build its portfolio.

Figure 4. Monetisation model for the bio-holding.

The key steps required to implement the bio-holding business model include the need to secure funding/financing (investments) from external investors, such as private equity or venture capital funds, investment banks or others whose financing will be used to cover the costs of the further clinical development of the in-licensed vaccine candidates as well as other operational costs of the RI. An additional requirement will be to build the critical fund management and business building expertise and capabilities within the management team of the RI.

Table 3 provides an integrated summary of the major characteristics of the different model options described above.

(ii) Socio-economic impact analysis

Subsequently, in order to establish a series of explicit, measurable levels of output across a range of activities and to indicate the scale of value creation that is at stake, we undertook an ex ante assessment of the socio-economic impact that might be expected from a stable and sustainable European vaccine RI based on the hybrid business model outlined above. The period covered by this assessment includes the first ten years of operations of a vaccine RI based on the business model proposed. The assessment used the KPIs and methodology described in the Methods section in terms of three broad types of dimensions: (i) health impact, (ii) societal impact and (iii) economic impact (Figure 5).

Figure 5. Socio-economic impact of the vaccine RI.

The ex ante socio-economic impact of the vaccine RI with the proposed hybrid business model was assessed along the three dimensions indicated.

The health impact dimension refers to innovations in vaccine R&D (such as in terms of tools/technologies/solutions developed, vaccines developed and vaccine-related impacts, e.g. numbers of future deaths prevented and quality of life improvements); the societal impact dimension refers to dissemination activities and new publications, human resources activity, education and training and the value of new vaccines brought to the market; and finally, the economic impact refers to vaccine industry, expected numbers of new jobs created, business and related outputs, impact on SMEs, impact on research institutes and networking activities. Apart from these dimensions, the KPIs were split across three categories in order to indicate the time horizon of their measurement, selected to best mirror the progress of the RI, namely (i) short-term, (ii) long-term cumulative impacts, and (iii) an operational metrics to be used for monitoring of the RI execution. The estimated impacts for all three dimensions are summarized in Table 4.

The ultimate objective of this initiative is to support and enhance the vaccine R&D ecosystem in order to address both the financial ‘translational valley of death’ (the funding gap between early research and clinical trials that makes the translation of basic science into clinical candidates so challenging) and a more general capabilities gap in early development stages. This will be realized over a longer period of time, and as a result is expected to produce more novel vaccine candidates that successfully advance through clinical trials and into medical practice.

The expected number of new vaccines in development will reflect candidates whose origination and development have been supported by the vaccine infrastructure activities. This requires tracking vaccines through each stage of their development – in other words, the number of candidates that have reached key successive milestones (i.e. the number of new vaccines proceeding to first-in-human trials, reaching proof-of-concept stage and entering the market). According to an analysis of annual trends data⁵, the average length of the development cycle from phase 1 to market is ~7.5 years (outside of pandemic and seasonal situations). This has therefore to be a long-term metric and one which encompasses the entirety of the first ten years of the initial RI operation. Our expectation of one novel in-market project being enabled in ten years is consistent with the vaccine infrastructure producing one late-stage novel project over its first five years of operation. This is also consistent with 15 new early-stage vaccines being supported throughout this time period. Considering the average length of vaccine development (for complex projects it can take 12 years or more from preclinical to end of phase 3), the majority of these projects will not have reached clinical adoption by the end of that first decade (Terry et al., 2018). For projects that would progress to the mid-late stage clinical testing of vaccines, industry-average success rates are applied to account for inevitable attrition to arrive at approximately one novel infrastructure-supported vaccine reaching approval within the first decade.

Such a vaccine would likely be followed by other candidates, so impact could scale up beyond that first decade as more projects progress through clinical trials. If we consider the range of vaccine-specific probabilities of success and likely development cycle time, between 2 and 4 of the 15 supported assets would be expected to reach successful launch. This impact could be further expanded by improvements to existing licensed vaccines (e.g., other routes of administration or to make production more cost-effective). Such incremental changes typically do not require a full development process and hence such new products can be adopted more quickly and at a lower risk. Several such products could thus reasonably be anticipated over the following 10-20 years (even though the prospective health impact of vaccine improvement is more variable and harder to estimate given that it would depend on the needs left unmet by current vaccines).

The true impact of novel vaccines reaching market is their actual benefit for patients and health systems. This can be expressed as the expected number of future deaths, severe cases prevented and the expected disability-adjusted life year (DALY) improvement. For one new vaccine estimated to be introduced to market after the first ten years (accounting for the aforementioned time and risk), the actual impact on population health may be estimated. The accuracy of such an estimate is subject to significant uncertainty given variations in the prevalence, virulence, mutation rates and severity of the kinds of disease that might be targeted by such a vaccine – each of which affect burden, mortality, achievable vaccine effectiveness and adoption rate.

Several approaches exist for modelling the impact achieved by recently-introduced vaccines. Based on models published in the medical literature, we suggest two scenarios may be helpful to consider in arriving at an understanding of the scale of health impact achievable for a single new vaccine: a COVID-19-based case to illustrate the potential benefits of a novel vaccine in a pandemic setting, and an influenza vaccine efficacy improvement scenario to illustrate the benefits achievable for common endemic diseases (even ones already treated with vaccines that are not yet fully optimized).

The real-world impact of a novel product might fall somewhere between these low and high outcomes, whereas potentially being further enhanced by more of the 15 novel vaccine candidates supported by this effort reaching market over a longer time period. Other, smaller incremental projects might be supported that in turn might reach market sooner (and with lower risk), but in turn their potential health impact could be expected to be more incremental -typically only improving upon existing vaccines- and as a result too elusive to model separately.

High-impact scenario (pandemic vaccine)

Based on recent assessments made with respect to COVID-19, the introduction of vaccines prevented approximately 4.3 million deaths (from 8 December 2020 to 8 December 2021) in the European region alone (Watson et al., 2022)⁶. Acknowledging that within the assessment timeframe there were in total four novel SARS-CoV-2 vaccines approved for use across the European region, we estimate that on average, the annual impact of a single vaccine in this case was over a million lives saved in Europe.

In parallel and considering the overall effect of COVID-19 in terms of DALYs, a recent estimate concluded the DALY impact of COVID-19 in just Scotland and only in 2020 was 102,350 (Wyper et al., 2022). This calculation reflects the specific demographic and healthcare characteristics of just one region of the UK but considering the size of the population of Scotland in relation to that of the entire WHO European region (approximately 0.6% of the total), an equivalent effect for the region might be very approximately estimated as being more than 150 times as great, or over 15 million DALYs.

The DALY decrease linked to vaccination can be anticipated to be in proportion to the ratio of deaths prevented to total projected deaths as modelled (Watson et al., 2022) (72% in first year of vaccination accounting for vaccination coverage and efficacy). Applying this to our approximate estimate of 15 million for the DALY effect of a new pathogen resembling SARS-CoV-2 implies a vaccine impact in excess of 10 million DALYs in the region, and if four vaccines were again to be introduced and with approximately equal effect, an impact for a single vaccine on the order of 2.5 million DALYs (Table 4). The conversion of deaths to DALYs may vary for different infections, for example SARS-CoV-2 resulted in large numbers of individuals with Long COVID.

Low-impact scenario (influenza vaccine efficacy improvement)

The second scenario assumes an efficacy improvement and administration optimization for an existing (but not optimized) vaccine against a common but-usually-less severe endemic disease. It is based on modelling influenza and its seasonal vaccine of 2017-18 (characterized by lower than usual efficacy) compared to a more optimized variant (Sah et al., 2018). Compared to no vaccination, a low-efficacy vaccine already drives significant health benefit -for instance, a 20% efficacy flu vaccine administered at ~40% coverage is projected to avert more than 21 million infections, ~130,000 hospitalizations, 61,812 deaths, and 2.2 million DALYs in the US (Sah et al., 2018). With efficacy increased to 40%, the scale of health benefit can be doubled. Scaled for Europe (based on the total population of Europe and the USA as of 2020), this would imply approximately 28 million infections, 175 thousand hospitalizations, more than 80,000 deaths, and 3 million additional life years saved.

The health benefits represented by DALYs and deaths averted are further strengthened by the economic impact on the health systems. This is evidenced by the cost-effectiveness of vaccination programs, with most costing less than $50 per life gained and thus orders of magnitude cheaper than the prevention of many non-infectious diseases such as diabetes or hypertension (Bloom, 2011; Ehreth, 2003) (Table 4).

The vaccine infrastructure can deliver positive societal impact both directly and indirectly. The indirect societal consequences of a successful vaccine deployed at scale are potentially enormous. This set of indirect impacts has not been assessed.

In terms of direct impact, it is possible to anticipate the number of new jobs created. By attributing new jobs solely to those in new SMEs as a consequence of a more assured pathway between innovation and clinical trials, and assuming an average of 5-10 employees for each, this would imply 100-150 new positions over ten years. The broader perception of the European vaccine development industry can be enhanced by a vigorous publication record and effective communications (see below). Further, a target can be set for the percentage of researchers undergoing training who experience an improvement in their knowledge base/knowledge capital, as quantified by post-course surveys. These targets are set as 75% of trainees reporting at least a ‘good’ level of improvement in their knowledge base in post-course surveys, and 50% of trainees reporting ‘excellent’ improvement, based on historical feedback from previous training courses organized in the context of the TRANSVAC project⁷ (unpublished data).

More broadly, a target may be reasonably set for media appearances at 30 separate appearances a year, based on past TRANSVAC dissemination rates (this including press releases, website launches and social media campaigns; and also a target for the number of research partners trained through the vaccine infrastructure (assuming nine training courses in total with an average of 15 attendees per course, this can be set at 135 over the ten-year period in question). All these activities help ensuring a positive momentum for the sector by building awareness, disseminating findings and contributing to reputation building for the sector (Table 4). This is particularly critical for the introduction of new vaccines whose benefits could be undermined by false information on social media, supported by the increase in vaccine hesitancy in some communities.

Any vaccine that is successful in preventing or ameliorating serious disease is likely to have a significant and sometimes very substantial indirect economic impact (see, for example, Atkins et al., 2018; Sandmann et al., 2022; Portnoy et al., 2023). Positive effects are also going to be observed for the local life science innovation ecosystem and industry – those effects being achieved even before any successful products reach the market and contribute to increased competitiveness and economic health. For the purposes of this socio-economic assessment analysis, however, only direct economic impact is considered.

The KPIs selected for measuring economic impact would likely require observation and targeting in respect to expected revenue generated. Our business plan modelling suggests total revenue on successful exits after ten years amounting to €159 million, but given the long-term nature of vaccine development, these revenues would be most likely to accrue towards the end of the period. To put this value in context, average annual European sales of novel non-COVID vaccine products were €175 million in 2021⁸. The expected value of funding attracted is assumed to be €100 million over ten years. The expected value of licensing deals is aggregated with an expected revenue generation of €159 million over ten years (i.e. much or all of the revenues obtained from the initiative will be realized in the form of licensing deals).

These are not formal targets but rather reasonable estimates of what could be expected based on the extrapolation into the future of the activities conducted under the TRANSVAC project. Revenue and investment values contribute directly to the reinvigoration of local R&D ecosystems. Moreover, it is assumed the vaccine infrastructure’s activity may also lead directly to SME creation by facilitating access to funding and capabilities – with the target for the number of SMEs created being 15 over the first ten years of the initiative.

In addition to large deals and the birth of new SMEs, the vaccine infrastructure can also provide a range of scientific services. These may vary significantly in scope from technical capabilities and execution of experiments to more comprehensive offerings including study design and a more complex execution capability. The precise services offered will be finalized in the future with consideration for the demand for specific services during the past TRANSVAC projects as well as stakeholder surveys we conducted. The most popular services have included antigen expression/production, adjuvant formulation testing, animal models for infectious diseases, immunocorrelates analysis, and regulatory support.

Within the ten-year period, a contract development partnership model could be expected to support a total of 33 projects, with 50 instances of services provided. The predicted revenue stream generated by these services is small, estimated at ~€0.2 million per year (in line with currently observed inflow from ongoing projects), contributing an additional €2 million to the overall consortium revenue over ten years. The main economic value, however, is in the invigoration of the ecosystem and enabling academic and industry innovators to access capabilities they usually would be unable to maintain in-house (and that might otherwise be inaccessible, considering the limited scope of contract research organisations (CROs) services offered within early-stage vaccine R&D).

In addition to financial metrics, the vaccine infrastructure can also make a direct contribution to the generation of new innovations and intellectual property by supporting vaccine R&D. As part of this, the number of new patents issued would be expected to equal TRANSVAC’s historic performance (i.e., one approximately every four years). Such patents represent meaningful improvements in R&D processes (e.g., formulation or technical methods) and thus facilitate development of novel products across the ecosystem (Table 4).

The most important consequences of the vaccine infrastructure are only fully measurable over the long term due to the characteristics and length of the vaccine development process, which must account for manufacturing, rigorous clinical trials and regulatory evaluations. It is therefore especially important to identify operational activity variables which can be reported on a more frequent basis, but which can be reasonably associated with long-term success. The expected number of publications may be observed and targeted (five a year on a two-year time lag to allow for the process of paper preparation, submission, review and acceptance based on TRANSVAC’s historic experience) and the expected number of new scientific services established as an offering to researchers (one new service offered every two years, coming to a total of five over the ten-year period). The number of vaccine projects supported at any one time can be tracked (five to ten projects, as mentioned above). Finally, a robust level of engagement can be targeted in terms of the organization of stakeholder and investor meetings (12 a year, to cover a variety of combinations of stakeholders and/or investors) (Table 4).