Pfizer was on its third straight year of static revenue by the end of 2008. Key franchises had lost patent protection, while a multi-billion charge to resolve allegations of off-label promotion weighed heavily on the company's income.

It was against this backdrop that the drugmaker entered one of the biggest pharmaceutical transactions ever, handing over $68 billion to acquire rival Wyeth. The deal launched Pfizer into the upper echelon of vaccine making, a therapeutic area that would bring the company around $40 billion over the next decade.

Yet vaccines have proven tricky, illustrated by the fact that just four companies — GlaxoSmithKline, Merck & Co., Sanofi and Pfizer — control nearly the entire space. Unlike most drugs, vaccines are typically meant to prevent disease rather than treat it, and that presents unique challenges in the clinic. They also require large-scale manufacturing capabilities, something that is regularly out of reach for smaller biotechs, in turn compelling them to seek partnerships with the big four.

Those firms don't have the science perfected, though. Pfizer, for one, set aside vaccine programs for enteroccoccus and respiratory syncytial virus (RSV) because they just weren't working, despite considerable time and investment.

"That's the decision-making that literally we make almost every day," said Kathrin Jansen, head of Pfizer's vaccine R&D, in an interview with BioPharma Dive.

Even with the pratfalls, vaccines continue to attract attention from industry, government and investment groups. There are 327 anti-infective vaccines in preclinical testing and 282 more in Phase 1 through pre-registration, according to business intelligence provider Informa. To manufacturers, these medicines can offer a more consistent stream of revenue, albeit with lower margins, than other categories of drug development. And with only a handful of competitors, it can be a much less obstructed path to sitting atop a market.

Barriers to entry

For the big four, vaccines became part of their businesses through M&A. Pfizer and Wyeth, Sanofi and Aventis — these types of deals handed their respective buyers years of vaccine development experience. Over time the know-how transformed into billions in annual sales for each company.

They also benefited from having products in a variety of therapeutic areas, such as cancer and neuroscience, that helped ensure bottom lines would be insulated if a vaccine failed in the clinic or suffered a bad quarter.

Biotechs rarely enjoy such advantages. They have less money, less clout and less leeway to prove themselves to investors. That's all the more daunting for those interested in vaccines given the lower margins compared to, again, therapeutic areas like cancer and neuroscience.

Technology, however, can validate the decision to forge ahead. Through its proprietary Toll-like Receptor platform, Dynavax last year secured Food and Drug Administration approval for Heplisav-B, the first new hepatitis B vaccine in the U.S. in more than 25 years. Maryland-based Novavax, which touts a recombinant nanoparticle vaccine technology, is looking to get its first FDA thumbs up as well, and has a late-stage asset for RSV.

The main draws for Heplisav-B and Novavax's drug are their disease targets. RSV is the leading cause of hospitalization for children under the age of one, yet a vaccine for the influenza-like infection has eluded scientists for more than 50 years. Vaccine makers large and small note that targeting unmet opportunities is a paramount consideration when selecting a program.

"You have to assess whether your technology gives you a good opportunity to make a vaccine," Novavax CEO Stan Erck told BioPharma Dive. "So you look at the unmet medical need, and therefore the size of the market, and then you look at who else is doing it and what's your competitive advantage."

Research and decisions

The target also shapes how R&D plays out.

With some conditions, a drugmaker can get a vaccine licensed by showing it is safe and sparks an immunogenicity, or number of functional antibodies created via immune response, that regulators think will kill the pathogen.

Other diseases don't have an agreed upon immunogenicity threshold, so efficacy testing has to happen before the FDA clears a corresponding vaccine.

To be sure, all vaccines need to clear high safety and efficacy standards to gain the backing of regulators. But those that require pre-market efficacy tests can be particularly pricey: Pfizer recently kicked off a three-and-a-half-year study of 16,000 healthy patients to evaluate the potency of its investigational vaccine for Clostridium difficile.

"We're basically collecting specimens to try and see who got C. diff and who didn't," Susan Silbermann, president and general manager of Pfizer Vaccines, told BioPharma Dive.

If the majority of the people who get C. diff come from the placebo group, "we'll then be able to prove that our vaccine is not just immunogenic ... but those antibodies actually do what we think they're going to do, which is keep you from getting sick."

Pfizer does benefit from C. diff being widespread, much like the flu and RSV. That quality offers a surfeit of locations and patients for conducting vaccine clinical trials.

Diseases that are more isolated may demand far-away testing that adds to the already high R&D price tag. New Jersey-based Merck, for example, is currently testing its Ebola vaccine in Geneva, Switzerland, and Kilifi, Kenya.

Most companies, though, don't have the kind of budget Merck does. Identifying where to get adequate funding is a common issue, especially for smaller developers.

One workaround is outside funding. The U.S. government has pledged millions of dollars to Johnson & Johnson and Merck for their respective Ebola vaccine programs. Third party organizations have provided capital as well. A few years ago, the Bill and Melinda Gates Foundation — which also supports Novavax's RSV vaccine research — committed $50 million to containing the Ebola outbreak in West Africa. The money went to various initiatives, including the development of vaccines.

Profits and people

Such large figures underscore just how extensive an operation vaccine making is. One 2016 journal article pointed to the "mammoth effort" manufacturers take on to produce the more than 150 million flu vaccines needed in the U.S. each year.

Above all else, it's this capacity hurdle that can constrain biotechs from bringing vaccines to market on their own.

"You do need to kind of have this critical mass in place in order to do it, and that's very hard for biotechs," said Michael Haydock, therapeutic area director for infectious diseases at Informa Pharma Intelligence, in an interview with BioPharma Dive.

"They don't have the capability to commercialize them, so they often get to Phase 2, maybe they demonstrate a proof of concept, and then all of them look for larger partners, the GSKs, the Sanofis, to actually then manufacture and commercialize that product."

Still, the concessions, partnerships and arduous development process haven't deterred all biotechs. In fact, the clear majority of vaccines in the global pipeline belong to companies outside the big four.

Vaccine makers often extol that their investments reflect a desire to serve patients. Whether or not that's true, bringing vaccines to market, and particularly those for diseases that devastate some of the world's poorest populations, comes too with good will from the public and authorities. GSK, which fielded criticism not too long ago for the price of its pneumococcal vaccine, plans to offer a malaria vaccine it's working on at a not-for-profit price if approved.

Manufacturers also talk up how vaccines drive down overall healthcare spending. To their point, the Centers for Disease Control and Prevention estimates that vaccination programs will save the U.S. almost $300 billion in direct costs.

Yet vaccine making, like any business, survives on returns — and vaccines can bring them.

Sure, there are the lower margins. But vaccines also provide reliable, long-term revenues: Pfizer's pneumococcal vaccines Prevnar 7 and Prevnar 13 have together fetched around $4 billion or more annually since the latter came to market in 2010; Merck's human papillomavirus vaccine Gardasil took in between $1.6 billion and $2.3 billion every year for the past six years.

Therein lies another perk: successful vaccines frequently stay that way for an extended period of time.

"Once you have one, then it becomes like a mainstay," Rahul Singhvi, chief operating officer of Takeda Pharmaceutical's vaccine business, told BioPharma Dive. "It's hard to create a generic, and so it's somewhat immune — no pun intended — from generic competition."

Merck's work in measles, mumps and rubella is a testament to that trend. The big pharma introduced its M-M-R II vaccine in the late 1970s, and it's still contributing to the pharma's bottom line. Last year, the vaccine trio of ProQuad, M-M-R II and Varivax garnered $1.68 billion.

Takeda has been in the vaccine business for decades too, but hasn't achieved the same standing as its big four rivals. While the Japanese pharma expects oncology, gastroenterology and neurology to be key areas of growth moving forward, Singhvi explained that cases like Prevnar and M-M-R showcase to investors the promising potential of sticking with vaccines.

"We really don't have to worry about margins or our profitability, because if you have a good product ... they will do well from a business standpoint and they will then make the business sustainable," he said.