Highly publicized vaccine products not only boost the bottom lines of pharmaceutical companies, but also benefit insurance companies, doctors and retailers, according to an analysis of the flu vaccine season by Kalorama Information.
The New York-based life sciences publisher estimates a multi-billion dollar market from ancillary products sold as a result of vaccines – from office visit co-pays to retail clinic fees and indirect shopping revenue.
“Among the reasons vaccines are a popular play now in pharma is that makers can count on many partners in the distribution process,” said Bruce Carlson, publisher of Kalorama Information. “The flu vaccine had demonstrated that retailers, providers and insurance companies all have incentives to piggyback off of the focus on vaccine products, and we expect that to be the same with new products.”
Kalorama estimates an ancillary services and products market of nearly $5 billion in the United States from this year’s seasonal flu vaccine – likely more than any firm will earn from the products themselves. These revenues could be seen again if H1N1 vaccines meet demand and are received as well as makers indicate they will be, based on early orders.
Walgreen’s, the nation’s largest drugstore chain, administered 2.5 million seasonal flu shots by the end of September, according to media outlets. Rite Aid, CVS, Kroger, Target Pharmacy and other chains also held flu clinics. Kalorama estimates that drug chains earned at least $200 million from direct fees, but also an estimated $250 million in indirect revenues in the form of purchases by customers who came to the store to obtain a shot who would not have visited otherwise.
Kalorama’s estimate of an ancillary services and products market assumes that most U.S. physicians saw at least one extra patient visit due to the vaccine. While most doctors depend on co-pay revenue to finance office operations, Kalorama notes that this doesn't mean doctors are profiting from vaccine co-pays.
“Doctor visits were down as a result of the recession, according to several surveys, and in general Americans do not follow the most advisable schedule of doctor visits, so if anything it is making up for unrealized revenue," Carlson said. "It’s fair to say that anything that gets a patient into a doctor’s office – where there could be consultation about weight, blood sugar or other issues – can be viewed as a good thing.”