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1 October 29, 2014 Dr. Tabassum Khan Global Market Potential for Halal Vaccines.

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1 1 October 29, 2014 Dr. Tabassum Khan Global Market Potential for Halal Vaccines

2 As the Muslim population continues to grow (estimated at 1.6 billion people in 2014), demand for halal alternatives is increasing, driving investments in this area. Therefore, it has become strategically essential to know about the potential for halal vaccines covering financial, medical and social aspects. The Million Dollar Question: Will Halal Vaccines have a negative impact on the current immunization goals? Will the arrival of halal vaccines in immunization coverage lead to disease prevention in larger segments of the populations through increased acceptability? 2 Halal Vaccines- An Introduction

3 Global Potential for Halal Vaccines It is extremely important to comprehend that studying the potential for halal vaccines does not undermine the importance of current vaccines nor does it entail that the unavailability of halal vaccines should jeopardize the current immunization goals On the contrary it creates a larger canvas where the current immunization coverage could be improved by removing the mental blockade in certain segments of the population It should also be well understood that development of halal vaccines should not in any way compromise on the quality and should not be inferior in any aspect to the existing vaccines. The development of halal vaccines should be based on two principles; first and foremost they should exhibit at least non-inferiority to the existing vaccines and secondly they should be acceptable from a social Muslim perspective. 3

4 4 Halal pharmaceuticals are drug products that do not contain any parts or products of animals that are regarded as non-halal by Sharia law (dogs, pigs, and their descendants) or any parts or products of animals that are not slaughtered according to Sharia law During their preparation, processing, handling, packaging, storage, and distribution, halal pharmaceutical products need to be physically separated from other pharmaceutical products that do not meet the requirements for halal products, or any other items that have been regarded as non-halal by Sharia law As with other pharmaceutical products, halal pharmaceuticals are also safe for consumption, non-poisonous, non-intoxicating, and non-hazardous to health according to prescribed dosage Halal Pharmaceuticals: A Definition

5 In the current scenario, in some Muslim populated countries pork-free and alcohol free vaccines are regarded as halal, though not certified as halal In most Islamic countries, authorities did not have a clear cut definition of halal vaccines based on Shariah law Malaysia, and to a lesser extent India, had a more clear cut approach towards halal certification of vaccines It was a common perception that Islamic religious leaders would play a key role in defining Halal vaccine standards All the countries across APAC, North Africa, and GCC region follow similar definition for halal vaccines in compliance with the Shariah law Islamic leaders in the region play a key role in defining acceptance of a given vaccine as halal 5 Perceived definitions of Halal vaccines in key markets Through interviews with a cross-section of the population in the Islamic world, where they were asked how they perceive halal vaccines, the following points emerged:

6 Perceived definition contd. The vaccine does not contain any parts or products of animals that are non- halal by Shariah law or any parts or products of animals that are not slaughtered according to Shariah law Entire production line and manufacturing facility, including devices, machines, and processing aides deployed at a manufacturing facility must be used for production of halal vaccines or halal pharmaceutical products only Sufficient measures should be taken to prevent contamination of vaccine at all stages of production Processing, handling, packaging, storage, and transportation should be physically separated from any other non-halal product or najs 6 However according to experts in the field, any vaccine can be certified as halal ONLY if it complies with following guidelines:

7 Guidelines for Halal Pharmaceuticals MS

8 Global Pharmaceutical Market Sales and Dynamics by Segment (2013) 8

9 9 Global Vaccine Market Performance World Vaccine Market as a fraction of the Global Pharmaceutical Market: 2.8 percent

10 10

11 Source: “State of the global Islamic economy”, Thomson Reuters, Malaysia is a global hub of halal industry and can become the world's first halal vaccine hub Global Potential for Halal Vaccines- Introduction The potential for Halal vaccines  It was estimated that Muslim consumers globally spent USD 70 billion on pharmaceuticals in 2012, which was 6.6% of global pharmaceuticals expenditure  Vaccines can be controversial: – Many Muslims refuse to vaccinate their children due to various reasons, including the belief of the presence of porcine elements in the manufacturing process in some vaccines The meningitis vaccine is required for hajj pilgrims but the halal status of the variants that are available in the market have been contested – Etc.  The Organization of the Islamic Conference (OIC) is emphasizing a push to make vaccines that conform to religious dietary restrictions in an effort to increase their use and improve public health  According to several specialists, Malaysia has potential to position itself as the leader in the production of halal vaccines and medicines

12 Source: "Muslim Population by Country". The Future of the Global Muslim Population. Pew Research Center. Retrieved 22 December "Region: Middle East-North Africa". The Future of the Global Muslim Population. Pew Research Center. Retrieved 22 December Pew Research Center Most attractive countries Muslim population - Top 20 countries Muslim population (million) Muslim percentage of total population Total Muslim population 2014: Billion Top 20 countries = 82% of Muslims 14.4% 86.1%96.4%90.4%94.7%47.9%99.6%98.6%98.2%99.9%98.9%71.4%99.8%33.8%96.5%97.1% %92.8%61.4% Percentage of World Muslim population 13.4%12.7%10.9%9.2%4.9%4.7%4.6% 2.1%2.0%1.9% 1.8% 1.6% 1.5%1.4%1.3%1.1% The first Muslim population is in India even if they represent a minority, while in Indonesia and Pakistan, the 2 nd and 3 rd countries, they count for more than 80%

13 Source: 13 * South Sudan not included Most attractive countries Organization of the Islamic Conference (OIC) countries The Organization of the Islamic Conference counts 57 countries, mainly localized in the Middle- East, Africa and South Asia and does not count India Islamic Republic of AfghanistanRepublic of GabonRepublic of MaldivesRepublic of The Sudan* Republic of AlbaniaRepublic of The GambiaRepublic of MaliRepublic of Suriname People’s Democratic Republic of Algeria Republic of Guinea Islamic Republic of Mauritania Syrian Arab Republic Republic of AzerbaijanRepublic of Guinea-BissauKingdom of MoroccoRepublic of Tajikistan Kingdom of BahrainRepublic of GuyanaRepublic of MozambiqueRepublic of Togo People’s Republic of BangladeshRepublic of IndonesiaRepublic of NigerRepublic of Tunisia Republic of BeninIslamic Republic of Iran Federal Republic of Nigeria Republic of Turkey Brunei-DarussalamRepublic of IraqSultanate of OmanRepublic of Turkmenistan Burkina-FasoHashemite Kingdom of Jordan Islamic Republic of Pakistan Republic of Uganda Republic of CameroonRepublic of KazakhstanState of Palestine State of The United Arab Emirates Republic of ChadState of KuwaitState of QatarRepublic of Uzbekistan Union of The ComorosKyrgyz RepublicKingdom of Saudi ArabiaRepublic of Yemen Republic of Côte d’IvoireRepublic of LebanonRepublic of Senegal Republic of Djibouti Great Socialist People’s Libyan Arab Jamahiriya Republic of Sierra Leone Arab Republic of EgyptMalaysiaRepublic of Somalia

14 Source: “State of the global Islamic economy”, Thomson Reuters, In 2012, the first country in terms of pharmaceutical Muslim consumers was Turkey, followed by Saudi Arabia and Indonesia Muslim pharmaceutical expenditures Top 5 countries (2012) Top 20 countries (2012) Most attractive countries

15 Source: State of the Global Islamic Economy Report Turkey is the only country belonging to both top 5 medicines importers and top 5 exporters to the Organization of the Islamic Conference (OIC) countries Most attractive countries Top medicines importers and exporters to the OIC countries USD B Top 5 countries (2012) Top importing countries Top exporting countries USD B

16 Source: UNICEF Procurement Advancements, October UNICEF procures vaccines and immunization supplies on behalf of around 100 countries annually Most attractive countries Overview of UNICEF procurement  Vaccines: BCG, DTP, TT/Td/DT, Measles containing, OPV, HepB, YF, DTP-HepB, DTP-HepB/Hib, DTP/Hib, Hib, MR, Meningitis, MMR, PCV, RV, HPV, IPV, etc.  Safe Injection equipment  Cold Chain Equipment Immunization Supplies Countries UNICEF procures on behalf of Full schedule Partial schedule 2012 Vaccines Supplies  USD 1,053m  1.89 B doses  1,946 shipments

17 Sources: UNICEF, GAVI, OIC OIC countries are eligible for GAVI or UNICEF or both supports; the majority of these counties are located on the African continent Most attractive countries Overview of both UNICEF / GAVI and OIC countries OIC + UNICEF full or partial schedule procurement OIC + eligible for GAVI support OIC + UNICEF + GAVI support  South America: 1 country  Africa: 24 countries  Middle-east: 7 countries  Asia: 2 countries Number of countries eligible for GAVI and/or UNICEF support

18 Sources: United Nations, Department of Economic and Social Affairs, Population Division – WHO immunization summary, 2014 edition – PEW Research on religion and public life – Smart Pharma Consulting analyses 18 ¹Bacillus Calmette-Guérin (BCG), diphtheria-tetanus-pertussis (DTP), oral polio, measles, hepatitis B (HepB), yellow fever in countries endemic for the disease, and Haemophilus influenzae meningitis (Hib) conjugate vaccine in countries with high burden of disease Indonesia is a secular state with a high percentage of Muslims; it’s the 2 nd biggest market in terms of target population but suffers from low immunization coverage Most attractive countries Top 10 most attractive countries for halal vaccines (2/10)  Total population (2015):  Muslim population (2015): (86.1%)  Births / year (2012):  Surviving infants (2012):  Infants mortality rate (per 1000 live birth, 2012): 26  Under-five mortality rate (per 1000 live birth, 2012): 31  Gross national income/capita (USD, 2012):  Percentage of routine EPI¹ vaccines financed by government (2012): No data Population data Immunization data Place of Islam Islamic republicState religionSecular state Indonesia Immunization coverage (2012) Corresponding population / year (2015) hab hab hab hab hab.  BCG: 1 month  DT: 6 years  DTwPHep: 2, 3, 4 months  Hep. B: 0-7 days  Polio: 2, 3, 4 months  Oral polio: 1, 2, 3, 4 months  Measles: 9 month, 6 years  Tetanus, diphteria: 7-8 years  Vitamin A: 6-59 months Immunization schedules (2012)

19 Sources: United Nations, Department of Economic and Social Affairs, Population Division – WHO immunization summary, 2014 edition – PEW Research on religion and public life – Smart Pharma Consulting analyses 19 ¹ Expanded Program on Immunization: Bacillus Calmette-Guérin (BCG), diphtheria-tetanus-pertussis (DTP), oral polio, measles, hepatitis B (HepB), yellow fever in countries endemic for the disease, and Haemophilus influenzae meningitis (Hib) conjugate vaccine in countries with high burden of disease The Islamic republic of Pakistan is an important market in terms of target population but has low immunization coverage and is relatively poor Most attractive countries Top 10 most attractive countries for halal vaccines (3/10)  Total population (2015):  Muslim population (2015): (96.4%)  Births / year (2012):  Surviving infants (2012):  Infants mortality rate (per 1000 live birth, 2012): 69  Under-five mortality rate (per 1000 live birth, 2012): 86  Gross national income/capita (USD, 2012):  Percentage of routine EPI¹ vaccines financed by government (2012): No data Population data Immunization data Place of Islam Islamic republicState religionSecular state Pakistan Immunization coverage (2012) Corresponding population / year (2015) hab hab hab hab hab.  BCG: birth  DT: 6 years  DTwPHibHep: 6, 10, 14 weeks  Measles: 9, 15 months  Oral polio: birth, 6, 10, 14 weeks  Pneumo. conjugate: 6, 10, 14 weeks  Tetanus: 1 st contact or pregnancy, +1 month, +6 months, +1 year, +1 year Immunization schedules (2012)

20 Sources: United Nations, Department of Economic and Social Affairs, Population Division – WHO immunization summary, 2014 edition – PEW Research on religion and public life – Smart Pharma Consulting analyses 20 ¹ Expanded Program on Immunization: Bacillus Calmette-Guérin (BCG), diphtheria-tetanus-pertussis (DTP), oral polio, measles, hepatitis B (HepB), yellow fever in countries endemic for the disease, and Haemophilus influenzae meningitis (Hib) conjugate vaccine in countries with high burden of disease Malaysia’s high vaccination coverage and extensive immunization schedule make this relatively rich country an attractive market for halal vaccines Most attractive countries 20 th most attractive country for halal vaccines - Malaysia  Total population (2015):  Muslim population (2015): (61.4%)  Births / year (2012):  Surviving infants (2012):  Infants mortality rate (per 1000 live birth, 2012): 7  Under-five mortality rate (per 1000 live birth, 2012): 9  Gross national income/capita (USD, 2012):  Percentage of routine EPI¹ vaccines financed by government (2012): No data Population data Immunization data Place of Islam Islamic republicState religionSecular state Malaysia Immunization coverage (2012) Corresponding population / year (2015) hab hab hab hab hab.  BCG: birth  DT: 7 years  DTwPHibPolio: 2, 3, 5, 18 months  Hep. B: birth, 1, 6 month, health workers  HPV: 13 years  Jap. E: 9, 10, 18 months, 5, 8, 11 years  Measles: 6 months  MMR: 1 year  MR: 7 years  Oral polio: 7 years  Tdap: 15 years  Tetanus: 15 years, pregnancy  Typhoid: food handlers  Yellow fever: travelers to endemic countries Immunization schedules (2012)

21 Source: “State of the global Islamic economy”, Thomson Reuters, Factors driving halal pharma market, Ecron Acunova – Smart Pharma Consulting analyses 21 Pharmaceutical companies involved in halal medicines and/or vaccines should help the public understand that halal products are not necessarily just food and drinks Key success factors on the halal vaccines market Drivers and limiters in the Halal pharmaceutical market  Increasing population of Muslims  Rising income among Muslim consumers  Increasing demand for Halal pharmaceuticals and vaccines, thus, huge opportunities for global suppliers as well as niche producers in the pharmaceutical value chain (e.g. companies that produce halal adjuvants)  OIC exporters/producers: many large pharmaceutical companies (eg. Julphar, Eczacıbaşı’s, Hikma, Kalbe Farma, etc.) from OIC countries have the infrastructure and resources to boost the market  Both authorities and NGOs are working to deliver universal access to immunization  Regulations/certifications: – Difference in certification standards and regulations (e.g. in Indonesia, making mandatory halal regulations for pharmaceuticals is getting industry pushback) – Certification process and standard may differ from country to country and one certification body to another  Long product development cycles  Controversy on vaccine usage that might be palliated through education, transparency and regulation/compliance  Lack of education and awareness: majority of the consumers (especially in Muslim majority markets) are ambivalent or unaware of non-allowed ingredients in medicine or cosmetics  Emerging competition on the halal vaccines market : Novartis MenA- CWY135 is the first quadrivalent conjugate vaccine and Global Vacc al- shifa’s HiB vaccine have received a halal certification DRIVERSLIMITERS

22  Measles containing vaccines  Hepatitis B vaccines  DTP vaccines  Hib vaccines  BCG vaccines  Pneumococcal vaccines  Rotavirus vaccines Sources: Annual reports 2013 – Evaluate Pharma World Preview 2018 (2013) – Smart Pharma Consulting analyses 22 EPI: Expanded Program on Immunization: Bacillus Calmette-Guérin (BCG), diphtheria-tetanus-pertussis (DTP), oral polio, measles, hepatitis B (HepB), yellow fever in countries endemic for the disease, and Haemophilus influenzae meningitis (Hib) conjugate vaccine in countries with high burden of disease Expanded Program on Immunization, pneumococcal and rotavirus vaccines account for USD 14.9 B and 62% of the vaccines market among the top 4 companies Market sales potential by 2030 Methodology – Analyzed vaccines Non-WHO EPI or pneumococcal or rotavirus USD M (38%) WHO EPI + pneumococcal + rotavirus USD M (62%) EPI + pneumococcal + rotavirus vaccines global market: USD 17.5 B Non-EPI & non-pneumococcal & non-rotavirus vaccines global market: USD 10.5 B Estimated split after the 2013 sales of top 4 manufacturers Value of the global market by vaccine category in 2013 Analyzed vaccines Total = USD 28 B EPI + pneumococcal + rotavirus vaccines global market: USD 50.2 B Non-EPI & non-pneumococcal & non-rotavirus vaccines global market: USD 30.8 B Value of the global market by vaccine category in 2030 Total = USD 81 B EPI  Meningococcal vaccines  Influenza vaccines  Human papillomavirus vaccines  Herpes zoster vaccines  Adult booster vaccines  Travel or endemics vaccines  Others

23 Sources: PEW research – United Nations – UNICEF/WHO immunization summary report 2014 – WHO immunization coverage – Smart Pharma Consulting analyses 23 The estimate of the number of doses per year takes into account the % of newborn Muslims p.a., the immunization coverage and the received number of doses Market sales potential by 2030 Methodology – Number of doses Immunization coverage for each vaccine in each country (according to WHO data) Illustrative Recommended number of doses for each vaccine in each country (according to UNICEF & WHO data) Potential number of doses per year of halal vaccines in the top 20 Muslim countries Number of Muslim infants

24 Sources: World Bank – GAVI – PAHO – GERS – Smart Pharma Consulting analyses 24 ¹ According to PAHO revolving fund director "A country that purchases through the Revolving Fund can save at least 11% in comparison to direct purchases from the producers” Three price categories were chosen to cover the analyzed countries and penetrations rates have been set according to the place of Islam and the % of Muslim in the country Market sales potential by 2030 Methodology – Prices & penetration rates Pharmaceutical expenditures per capita LowMediumHigh UNICEF / GAVI procurement prices PAHO procurement prices + 11%¹ European prices based on the French case PricesPenetration rates Place of Islam in the country % of Muslim in the country Secular country State religion Islamic republic Low Medium Saudi Arabia Turkey Algeria China Egypt Indonesia Iraq Iran Malaysia Morocco Sudan Syria Afghanistan Bangladesh Ethiopia India Nigeria Pakistan Uzbekistan Yemen High Very high penetration Very low penetration Medium penetration N/A Low penetration High penetration Medium penetration

25 Sources: Smart Pharma Consulting analyses 25 In 2020, 2 years after the estimated arrival of the first halal vaccines, the considered market is expected to be worth USD 96 million in the top 20 Muslim countries Market sales potential by 2030 Halal vaccines market in the top 20 Muslim countries Halal vaccines market in selected countries: USD ≈ 96 M  BCG  DTP & combinations  Hepatitis B & combinations  Haemophilus influenzae & combinations  Measles containing vaccines  Polio  Pneumococcal  Rotavirus Vaccines considered Market in USD, million

26 Sources: Smart Pharma Consulting analyses 26 In 2030, the considered halal vaccines market is estimated to be worth USD 1.1 billion in the top 20 countries in terms of Muslim population Market sales potential by 2030 Halal vaccines market in the top 20 Muslim countries  BCG  DTP & combinations  Hepatitis B & combinations  Haemophilus influenzae & combinations  Measles containing vaccines  Polio  Pneumococcal  Rotavirus Vaccines considered Market in USD, million Halal vaccines market in selected countries: USD ≈ 1,144 M

27 Sources: Smart Pharma Consulting analyses 27 The two countries (Turkey & Saudi Arabia) showing the highest pharmaceutical expenditures count for almost half of the selected halal vaccines market in 2030 Market sales potential by 2030 Halal vaccines market in the top 20 Muslim countries – 2020 / 2030 High pharmaceutical expenditures Middle pharmaceutical expenditures Low pharmaceutical expenditures USD m USD 96 M Market in USD m

28 Sources: Smart Pharma Consulting analyses 28 The extrapolated halal vaccines market could reach USD 188 m in 2020 and USD 2.2 B in 2030 Market sales potential by 2030 Extrapolated halal vaccines market – 2020 / 2030  Considering that the top 20 countries analyzed account for 82% of the Muslims, the halal market among the total Muslim population is estimated to be worth:  Considering that the analyzed vaccines account for 62% of the total vaccines market, the total halal vaccines market is worth : USD 188 mUSD m USD 116 mUSD m Market in USD m

29 Source: Smart Pharma Consulting 29 There is a huge opportunity as the halal vaccines market could reach 2.2 B in 2030 but they would face several hurdles Conclusion Key Learning & Recommendations  There is an opportunity to develop halal vaccines as the Muslim population is increasing and so is the demand for halal pharmaceuticals, including vaccines  Both authorities and NGOs are working to deliver universal access to immunization and the halal vaccine could touch population that are under vaccinated or not vaccinated  In 2030, the Halal market could reach approximately USD 2.2 billion, representing a niche on the global preventive vaccines market (approximately 3%) estimated at USD 84 billion

30 Conclusion 30 There is a huge opportunity as the halal vaccines market could reach 2.2 B in 2030 but they would face several hurdles Key Learning & Recommendations  Nevertheless, there would be several hurdles: – In terms of regulations and certifications complexity – Due to the long cycle development (10-15 years) – Due to production and distribution constraints – And high associated costs (investment required to launch a new vaccine is approximately USD 700 million)


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