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There's more to Merck's Ebola vaccine than money
The world is on the verge of an effective Ebola vaccine, the World Health Organization declared Friday. A vaccine being developed by Merck (NYSE: MRK) and NewLink Genetics (NASDAQ: NLNK) was shown to be 100 percent effective in preventing Ebola, according to an interim look from a late-stage study in Guinea.
The results need to be confirmed, but WHO Director-General Margaret Chan called them "an extremely promising development."
Does this mean Merck and NewLink are going to make big bucks? Not necessarily. And Merck says that wasn't its aim in the first place.
"Our motivation to pursue this opportunity was to address a public health need," Merck Vaccines' Mark Feinberg said in a telephone interview. "We did not believe this was a commercial opportunity."
It's a cynical question, but one that's asked frequently: then why would Merck, a profit-seeking enterprise with shareholders to answer to, do it?
It's a question that was posed to GlaxoSmithKline (London Stock Exchange: GSK-GB) last week as well, when the British drugmaker received a positive opinion from European regulators on its vaccine for malaria, a project 30 years in the making.
The answer: first, drug companies do recognize a responsibility to use their capabilities for global public health, particularly in emergency situations. This outbreak of Ebola was the biggest ever recorded.
While the peak has passed, it still simmers in the three hardest-hit countries of West Africa: Liberia, Guinea and Sierra Leone. More than 27,000 people there were infected, and more than 11,000 died.
"When the Ebola outbreak severity was more widely recognized, we undertook a very active effort to try to identify what are the ways our experience and expertise could potentially help," Merck's Feinberg said.
In striking the deal with NewLink, "it seemed that we had something real and substantive to hopefully contribute."
GlaxoSmithKline's Moncef Slaoui, in an interview with CNBC last week about the company's malaria vaccine, expressed a similar sentiment.
"We committed for a long time that if and when we'll have it, we'll make it available at cost plus a 5 percent profit margin that we committed to reinvest in discovering other vaccines or medicines against neglected tropical diseases," Slaoui said. "The reason for that is, first, we are committed to our social responsibility and saving people's lives for the haves and have nots."
But both also argued it's not an entirely altruistic enterprise.
"From a business perspective, the technology that we have discovered and validated through the malaria vaccine work is also very relevant to other vaccines," Slaoui said, pointing to a shingles vaccine that uses the same technology and which could be, in his words, more "economically impactful."
Projects like this, Slaoui and Feinberg said, also engender a sense of purpose and pride among employees.
"The opportunity to attract the best talent and retain them and inspire them is certainly something that is a core value at Merck," Feinberg said. "People at Merck genuinely identify with that and are proud their company pursues projects like that."
Merck said in November it would pay NewLink $50 million, plus potential royalties, for exclusive rights to the vaccine.
The company, Feinberg said, also invested "very significant resources of the time and effort of a large number of Merck staff who have worked tirelessly on this program." He pointed out a lot of funding came from external sources and governments.
The vaccine, which was originally developed by the Canadian government, continues in testing. The WHO said timing for potential licensing is uncertain, and noted there may be the possibility for stockpiling after that.
Feinberg said that could potentially generate a profit, though he added that it was too early to speculate further.
Meanwhile, GSK and Johnson & Johnson (NYSE: JNJ) continue their work developing Ebola vaccines, with the hope that when the virus pops up again-which all public health experts say is likely-we'll have something in the arsenal to fight it.
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