Hello, everyone. You're very welcome to Belgium. My name is Roger Connor. It's my privilege to be the head of the GSK Vaccines Business. I've been in this company just over 20 years. I have worked in manufacturing and supply most of my career, actually. I led our global manufacturing and supply organization for a number of years, sitting on the corporate executive team. It was just a year ago that Emma asked me to become the President of our Global Vaccines Business. I have to say, I love my job. I think it's incredible the difference that we get to make to people's lives. We are the world's largest vaccines company. We estimate that 40% of the world's children receive a GSK vaccine. That's something we are incredibly proud of, and we can't wait today to bring to life for you this business.
I wanted to start with the normal cautionary statement that we'd share, and then move on to the agenda. We have got 2 hours planned. 2 fun-filled hours, I hope. I know you've had a busy morning having a look around this amazing facility. 2 hours. First hour, we're going to do some presentation. I'm going to hopefully set the scene on the market, talk a little bit about why GSK is positioned well within that market. Then Manu, who's the head of research, is going to come up and talk about our pipeline and our technology and our science. Because manufacturing is such a critical part, we believe, of this business, Russell Thirsk, who is the head of our Belgium operations, who's a world-leading vaccines manufacturing expert, is going to come and talk a little bit about that.
Some of my team are going to come up and join us for the Q&A. We've got an hour of Q&A, so hopefully plenty of time. I'm going to be joined by Jay, who's the CFO of the vaccines business, Patrick, who's the head of the commercial side of things, and Thomas, who's my Chief Medical Officer as well. I'm going to dive in and get started. I talk about this being an attractive business to be in. Two words really spring to mind for me when I think about vaccines and the marketplace. First of all, growth and durability. From a growth perspective, it's pretty obvious, but it's worth stating. We put vaccines into a lot of healthy people, and the bigger the population in the world, the bigger the marketplace gets.
The world's population is due to increase, predicted to increase by 25% between now and 2050. There are 130 million babies born every single year. From a market perspective, it's growing, and that's an opportunity for us. In terms of durability, what has amazed me is when you find a vaccine, you're going to have a vaccine for a very long time. Unlike pharmaceuticals, you don't see the same patent cliff. You don't see the same generic competition. A vaccine's more actually like a consumer healthcare product. You keep investing in its life cycle management, and it can be around for a very long time to come. The one thing that can really disrupt you, though, and remove that business for a vaccine, will be a disruptive technology play. An innovation.
An innovation that raises the bar in the therapeutic area in which you are in and changes that standard of treatment. That's exactly what happened in Shingrix, which I am going to come on and talk about later on. Again, expanding market, durable. The term barriers to entry is used a lot in vaccines. High capital intensity to start up. I don't think we could be in a better place to bring to life the barriers to entry from a capital investment perspective than this facility, Wavre in Belgium. You can nearly see this place from space. It's that big in terms of its operation. You can't just suddenly decide you're going to make vaccines and start making them in your garage tomorrow. This takes a massive investment.
It takes focus on science and expertise, and we have that here in GSK, and we're making sure that we exploit that as we push our strategy forward. It's not just the capital to manufacture and develop vaccines that is a barrier. If you look at the clinical trial approach, I'm used to pharmaceuticals where we set a clinical trial, we set an endpoint, and we're looking for the disease to get better through some sort of measurement. In vaccines, we are typically putting our vaccines into healthy people, looking and waiting to see if the disease does or does not arrive. That takes longer. That takes more time. That takes more money in terms of investment. I think the net position here is that this is a very attractive business. Between now and 2024, predicted to grow by around 7% per annum.
We really believe it has pharma-like margins and pharma-like cash conversion. It's a market that is evolving. It's not standing still. If you go back to 2000, you think about vaccines, people would talk about kids. Kids vaccination. To be honest, limited sort of clinical differentiation between the competitors in that space. Look at where we are now. We have high-value vaccines that are being used to treat adolescents and older adults. Through innovation. Look at where we're going to go next, though. That's the exciting bit. Through disruptive technology, more therapeutic vaccination. Having vaccines that aren't just there to prevent the disease, but actually to treat it as well. Then on the slide, we've tried to show, well, that means that the population of people that we're looking to treat with vaccines going forward has to change.
What we call life course immunization. What we want to show today is that in GSK, we really think we've set a strategy, we're optimized to absolutely make the most of this opportunity, both through our innovation and through our science. Some of you may know GSK quite well. Some of you may not know GSK Vaccines very well. I thought I'd just double-click on our performance for a second just to bring that to life for you. We're very proud of what we've achieved as a vaccines business. Between 2015 and 2018, our growth rate on an average basis is 12% compound annual growth rate. Our margin continuing to expand. We integrated Novartis very effectively. We've launched two key products in BEXSERO and SHINGRIX, both of which I'll touch on later on.
We're very pleased with the launch of those high-value differentiated vaccines. In the U.S., really worth a specific mention from a performance perspective. Rewind to 2015, GSK Vaccines in the U.S., there's four players. We were number 4, 14% share. 2018, fast-forward, we are now sitting at 24% share, and we're number 2 in that marketplace. We're proud of this performance, but within GSK, our importance is growing as well. When you look at the first half results, if you just take the pharma and Vaccines business, the Vaccines business was 27% of that total, and we're growing. When the consumer healthcare JV within GSK does separate, and that will happen at some stage in the future, we're going to be playing a bigger role within GSK, logically. Hopefully you get a sense.
It's a very exciting time to be working in GSK, and we think it's a very cool place to work within GSK right now because of this opportunity. Strategically, I wanted to just let you know what our priorities are. Completely aligned to what Emma's laid out at the group level. Innovation, performance, trust, underpinned by an incredible culture. From an innovation perspective, it's really key. Simple. Accelerate our vaccines and the delivery of our disruptive new technology platforms. From a performance perspective, four words: Shingrix, Bexsero, U.S., China. We're going to stay completely focused on that. We're really pleased with the way Shingrix has gone. Bexsero continuing to grow that market. U.S. I've referenced in terms of our share growth and our opportunity. China, big opportunity for GSK, particularly with the Shingrix approval, and I will come onto it as well. Trust is fundamental in this sector.
Again, we see it as pretty simple. Our customers want their product when they need it. That means brilliant, reliable manufacturing and supply, and it is a real core competence of ours that we continue to invest in. The key to this is you have to be relentless about your product quality, ensuring you always hit those highest quality standards. On global health, making a contribution to society. We think there isn't a better example than vaccines in GSK of us making a significant contribution to the world, and we remain completely committed to our global health agenda. Now if I double-click on innovation and talk about our pipeline. Manu is going to come up and spend a little bit longer on this and go into more detail and do it much more eloquently than I could ever do.
If you look at this, what I see in our pipeline is breadth. I see a transition into therapeutic vaccines, like I mentioned, and also we're making the most of our platform technology. Adjuvants. In SHINGRIX, a key part of our SHINGRIX success, let's call the thing that really makes the magic happen is our adjuvant. We call it adjuvant system number 1. AS01, you'll hear us say. That is what has made SHINGRIX so successful from a clinical performance. In our pipeline, we are going to ensure that we maximize our adjuvant technology in future assets as well. What am I most excited about in this pipeline? Life cycle management of vaccines is so key. SHINGRIX, from a geographic expansion perspective, will be key. Also, taking SHINGRIX into other indications. We're in the clinic currently looking at immunocompromised patients. RSV.
Not just one vaccine, but three vaccines, again, for a great unmet need. Chronic obstructive pulmonary disease. I think it's very fitting that GSK is working on a vaccine in this space to fully complement our respiratory competence and excellence as the world-leading respiratory company. I mentioned the need to continue to invest in technology and disruptive technology within vaccines going forward. On this slide, you'll see reference to our messenger RNA program. This is a self-amplifying messenger RNA platform, affectionately called SAM within GSK. Manu will go into it in more detail, but the words to remember with SAM are pretty simple in my mind. Faster for development, more efficient in our manufacturing, and more effective as a vaccine. That's the talk about and excitement from a pipeline perspective in GSK. From a commercialized product perspective, two products that we're working on at the moment.
You may have heard of this one, SHINGRIX. I'm going to come to questions on capacity and supply and ramp up. I'm sure there's a number here of questions that you'd like answered. I'm just going to go through this in terms of our current plans. From a SHINGRIX perspective, we are delighted with the way the product has launched. Trust me, this is a devastating, horrible condition. Nearly everyone in this room will have been exposed to the herpes zoster virus. As we get older, and I'm approaching a big birthday this year, our immune systems start to decline, and that virus can reactivate. When it reactivates, shingles can appear. One in three of us in this room will get shingles. When we launched this product back in the back end of 2017, we knew we were making a bold, scientific, innovative move.
The clinical efficacy of this vaccine is incredibly high, greater than 90%. When we went to ACIP, we got an amazing outcome, an unprecedented outcome. First of all, we got the preferential recommendation. We got the recommendation for 50 years and above. We also got the recommendation that anybody who'd been previously vaccinated with the previous vaccine should get vaccinated with SHINGRIX. This was big news. Follow-on approvals followed. We had approval in Canada, approval in Europe, Australia, Japan, China. A very exciting time for this vaccine. In terms of the U.S. launch, this is a slide I put in front of my boss quite frequently just to show the launch success in the U.S. We really believe that when you look at this launch against the other portfolio of biopharm launches in the last 10 years, it is a standout launch.
Where are we in terms of opportunity, I think we are just getting started. There's 115 million people who are 50 or over in the U.S. We have vaccinated with at least one dose of vaccine, we estimate nine million people. You get a sense of the opportunity that there is still to go. Roger, what about the geographic rollout? What about your manufacturing plans? Can you keep up? We have a phased geographical rollout plan for Shingrix, and it is completely supported by a very robust manufacturing expansion plan which is on track. In fact, we're accelerating. As we've said recently, in 2020, we expect to be supplying high teens millions of doses. It doesn't stop there. We have an extensive program of capacity expansion. Over 20 projects running around the supply chain. After 2020, there'll be steady progression in capacity.
You won't see that step change in terms of capacity, that sort of tens of millions of doses, not before 2024, when our new facility will come online. I mentioned China. The approval was a big day for us for this vaccine. There's a massive opportunity in China from a disease burden perspective. It's significant. The challenge with China is that we're going to have to take a phased approach to that launch. It has to be phased. Unlike the U.S., this did not have or does not have a market for a shingles vaccine currently. We have to build that. We have to build with the market, we have to build disease awareness, and we're investing in that right now to make sure that we continue and are ready to supply into that market going forward with a phased launch from next year.
I mentioned the clinical expansion opportunity on SHINGRIX as well. We are in the clinic, and we are looking at immunocompromised below 50 as well, and that could be an exciting opportunity for us in the future. I hope you get a sense of the opportunity around this vaccine. You get a sense that we're really only getting started. We're off to a great start, but this will be a growth driver for GSK for many years to come. I have to talk BEXSERO and meningitis B, it's an infectious disease that doesn't have a very high occurrence rate, but when it does, its outcome is devastating. The regional variations are quite high in terms of its incidence rate. In the main, this is a disease that hits infants and teenagers. Now BEXSERO is the world's leading meningitis B vaccine.
We acquired this came in as part of the Novartis integration. We spent the first bit of time working on capacity security and making sure we could supply. That's solved. Now this is all about market growth for BEXSERO. It is a vaccine that we are, again, incredibly proud of. It's differentiated. It's differentiated in Europe, first of all. We have a label and an indication for infants that no one else has. That's key because the disease burden of this particular area is 10 times higher in infants than it is anywhere else. Then in the U.S., it's different again because the ACIP recommendation is for adolescents in the U.S. Now we're differentiated again here, most importantly by our dosing schedule.
Because when you have an outbreak in a college, which is what we've seen in the U.S. recently, you want to be able to get as much coverage as you can fast. We're the only vaccine that can be given after one month of the first dose. That means we can get faster coverage, which again, is important for differentiation, particularly in that market. Another exciting point coming out about BEXSERO soon. Soon we're going to publish the real world data from the U.K. where there's been a program vaccinating infants and children, and we'll see the real-world impact data of a significant reduction of disease burden as a result of this vaccine. That, for me, emphasizes just how important BEXSERO is going forward in the future, and a MenB vaccine is as well. BEXSERO will be a growth pillar for GSK Vaccines going forward.
They're not our only vaccines. Obviously, we have 40 in our portfolio. The graph on the left shows our split by categories. Established vaccines are there. They stand out 60% of our business. There are some vaccines in there that completely show that durability point that I mentioned at the start. On the right-hand side, you look at our regional split. 50% of our business is in the U.S., 50% in international and Europe. The big opportunity on that chart is China and what we can do in international as a result of that focus that I mentioned earlier. You might look at that chart and say, "Roger, what's going on with the shape of it?" Many of you may know this already, that the quarterly phasing in vaccines can be a bit funny. Q3 is typically our biggest quarter for a couple of reasons.
Obviously, flu comes in at that time. Particularly in the U.S., you get some back-to-school vaccination initiatives as well that cause that spike. Something else you'll hear us reference in our quarterly calls as well will be phasing when we compare to previous quarters. It can be a bit lumpy in vaccines because a lot of our competitors, from a government point of view, can be stockpiling or running down stocks. We get these timing differences as well, which we reference when we talk about our performance. Again, we feel that we are geographically well spread and we are diversified from a product perspective. If I go into established vaccines, I'm not going to go through all of our established vaccines. Maybe two that I would really focus in on as families. Our hepatitis family, over GBP 800 million of sales last year.
In the U.S., I'd specifically reference our hepatitis A vaccine, where we've seen outbreaks recently, and this is where manufacturing flexibility can come in. You can react to that flexibility when you have outbreaks of that kind, and that's what we've done within hep A. In hep B, Engerix-B, amazing vaccine. It's 30 years old. It's been on the market for 30 years, last year sold GBP 300 million. We know that we had to step in because one of our competitors had some challenges, I'm sure they will come back at some stage. It shows you again the importance of that flexibility. I don't think you can talk established vaccines without going into the diphtheria, tetanus, and pertussis family. If you drop into the pediatric section within that, be honest, that is a tough segment to be in right now, particularly in Europe.
There's a lot of competitive pressures, and our Infanrix Hexa has to compete with other vaccines in that space. In the U.S., PEDIARIX, a very well-respected vaccine and doing well, but we know in the next two years we're going to face some pressure there. A hexa is coming. A hexavalent vaccine will come into the U.S. in those next couple of years, and I'm sure we know that will have some impact on PEDIARIX in the future. You can't forget in DTP the growth engine that is hidden in there a little bit. It's called Boostrix. This is our Tdap vaccine. In the U.S., we are the only vaccine that has an indication in older adults. Again, it's part of that life course immunization I mentioned, a growth area for us and a growth opportunity given that differentiation as well.
We call these vaccines the backbone of our business. Many still growing profitable and generating cash for the business. Just moving on to the trust agenda. Russell's going to come on and talk about this in more detail. I just wanted to say, this is a real area of focus. We think it is a competitive advantage, and we allocate capital strategically to our manufacturing space. In the last 10 years, we have invested £4 billion in our manufacturing capacity. We take it that seriously, and we're going to continue to ensure that this is protected. Lots of numbers on this particular slide around our impact on public health for trust and on our impact for global health. 2 million doses leave GSK every day and go out into the world and make a difference to people.
As I said at the start, 40% of the world's children get a GSK vaccine. We make a unique contribution to society. On global health, we work with very well-established trusted partners together to make a difference to the world on specific vaccines like malaria and shigella. Again, a key part of our strategy. I'm going to wrap up. I hope you get a sense of how excited we are about this business and the opportunity that there is within it. We are the world's largest vaccines company. We are very experienced and capable in this space, hopefully as many of you will have seen today. We've a broad portfolio of 40 vaccines, including, we believe, some really special vaccines in BEXSERO and SHINGRIX.
We are geographically spread in over 160 countries with a focus on the U.S. and a real opportunity to continue to grow in China. We have a pipeline that's broad and also is moving into therapeutic treatment, making the most of our adjuvant technology. We really believe we're performing with growth, margin expansion, and cash generation as well. Before I hand off to Manu, I just wanted to show you one slide which summarizes it all for me. Back in 2000, GSK was and had a turnover of less than GBP 1 billion in its vaccines business. Last year, we were almost at GBP 6 billion. What I've done is I've put on this slide all the launches and key assets and innovations that delivered that profile.
Now, I'm going to hand over to Manu. He's going to take us through the pipeline of vaccines and technologies that are going to ensure that that line in the future keeps going in that trajectory. Thanks very much.
Thanks. Thanks a lot, Roger. Good afternoon, everybody. Yeah, it has been said several times. My name is Manu. I've been with GSK since 2001, and I've been leading vaccine research and development since 2014. I hold a PhD postdoc in the field of microbiology, immunology, vaccinology, and it's really a great pleasure for me to be here with you and present you what is the research and development strategy at GSK Vaccines. The science behind vaccinology has only been introduced a few hundred years ago, but actually a lot has been done, and this place actually has made several major scientific breakthrough. Don't try to read all the slides. I'm going to cite a few of them, really selected out of a long list. We did the first ever, in 1986, hepatitis B vaccine out of recombinant DNA technology.
We actually more recently delivered a proven, highly effective meningitis B vaccine using the reverse vaccinology technology. We have been also working really hard to take and actually master really the adjuvant field, take the leadership into that, making really possible the delivery of vaccine like SHINGRIX with efficacy level that were believed to be impossible to reach in specific age segments. I can tell you this place know how to innovate in the field of vaccinology, and the field is moving really, really fast. It's very, very exciting times. Vaccine have been used up to now mainly to prevent disease caused by infection, and we are convinced that we are taking a new direction where vaccine will be used with the intent to treat as therapeutic vaccine in addition to their prophylactic use. Why do we believe that?
We believe that because life science are really exploding. It is now possible to predict your future health condition or an ongoing chronic condition out of big data analysis, opening the door for new intervention, prophylactic or therapeutic. There are many new technologies to simply make vaccines better, there are novel partnership ahead of us because there is a lot of new players with new technologies and going after new fields. I'm really convinced that there is a universe of opportunity in vaccinology, and not only in the classical field of pediatric segment as we used to do, but Across all age with prophylactic intervention as well as therapeutic intervention. My objective today is to take you on this exciting journey. What is our strategy at GSK?
At GSK, we are taking the best science with the most impactful technologies and combining it with a special mindset of culture. It is really the three together that we are trying to get, because that's the moment where you have the magic of innovation. That's what we are really looking for. We are definitely pushing ahead groundbreaking vaccines, whether it's through life cycle management, it was mentioned SHINGRIX meningitis, by introducing new product or by entering into new fields like therapeutic or antimicrobial resistance. We do that by investing strategically in technology platforms that allows us to go faster in research and development, to get better vaccines or to get manufacturing more efficient.
All that combined with that special mindset, a mindset where actually we put the right talent in the great position, where basically, we are taking smart risk, where priority is the most important aspect, prioritization and focus in the management of our pipeline. I can tell you this is really my daily priority. The most obvious deliverable of a vaccine research and development organization is obviously a pipeline of new product, be it commercial asset or global health asset. There is an incremental value in doing vaccine research and development, and it's what we call strategic life cycle management. We can invest into that field by either improving the presentation of a product, moving from a multi-vial presentation to single prefilled syringe.
We can invest to expand the use of a vaccine for a new population or against a new disease, or actually invest to conquer new geographies. The approval of Shingrix in China, I can tell you, is going to be like launching a new product. Now, I think it's really important for you to know that delivering a new product in vaccine research and development, the probability of success flies around 30%, which is three times higher than what you usually see for pharmaceutical industry. When speaking about life cycle management, it's even higher. This is why our pipeline is actually a balanced combination of these two area, the life cycle management in orange and the new product development in green and in blue. For life cycle management, I'm not going to describe everything. I'm going to focus on the two mainstream investment.
The first one is definitely Shingrix. It's approved in Europe, U.S., Japan, Australia, recently approved in China. We want an incremental opportunity. We believe there is an incremental opportunity as we already generated phase III efficacy data in immunocompromised individuals. It's really about using Shingrix in people age 18 and above that suffer from a chronic condition or actually are treated in a way that their immune system is weaker, and they are prone to reactivate the virus. That's an incremental opportunity, and it's one of our top priority. The second mainstream investment that we are doing is on the meningitis franchise. We are leading the market. We are market leader on the MenB vaccine, 70% market share.
Our ambition is to become the leader in the meningitis franchise, and we want to do that by delivering a highly convenient pentavalent meningitis vaccine, combining A, C, W, Y, and B valencies. We have invested heavily. We have reached end of phase II stage. Now we are looking forward to align with FDA for the next phase III development plan that will roll out soon. Now, on the new product, I'm not going to cover actually the global health asset that have been briefly mentioned by Roger. I really want to focus on the blue commercial asset, which express really the ambition that we have. Going after major medical needs, entering new field like therapeutic, antimicrobial resistance, or investing in new technologies. You will understand why this is strategically important to invest in new technologies. Let me start with respiratory syncytial virus.
This virus is still causing actually a big burden of disease. In children, this disease cause acute bronchiolitis, and that can lead to respiratory distress and hospitalization. Please note that actually the rate of hospitalization due to that virus is sometimes 10 times higher than the one caused by influenza. In older adult, that infection also cause pneumonia, leading to hospitalization and unfortunately, also death. Simply in the U.S., you have 16,000 people every year that die from that infection. In response to that big medical need, GSK wants to be bold, and we have actually designed three individual needs that actually aims to achieve protection during the first six months of life of the children. Which cover half of the burden that will be used for individuals age 60 years and beyond. Now, designing and developing a vaccine against RSV has been really tricky.
There has been actually 50 years of research and development that today needs to be included into the maternal vaccine. It is the F, the fusion protein of the virus. That protein needs to be in a very specific conformation, the prefusion, and it has to be locked. You can imagine there is really a lot of science to achieve that in the vaccine. That's exactly what we have been able to do here at GSK, and that's fundamentally different from all the other failed efficacy trial that have been reported in the field. For the pediatric vaccine, again, following this tailored approach, we use an adenovirus platform technology that, out of our research, has been the only one able to teach really the immune system of the baby to actually provide protection for years.
We have an older adult vaccine that capitalize on the prefusion antigen, and we combine it with the AS01 adjuvant, exactly the same as the one for SHINGRIX. It's really important for two reasons. First of all, because that adjuvant really address the very specific immunological status of older adults. It has been beautifully shown with the SHINGRIX, but it also impacts quantitatively and qualitatively the immune response, including the persistence of the immune response. That allows us to entertain the ambition to deliver a supra-seasonal RSV older vaccine, a vaccine that will cover several season and that could be used whenever you want during the year. Okay. That's what I wanted to say about RSV. Let me take you into a new dimension, a new category of vaccine. A vaccine that targets the chronic obstructive pulmonary disease.
It's a condition of the respiratory tract that occurs into recurrent inflammation, leading to progressive loss of lung function. The burden is huge. 300 million people on the planet have the disease. Simply in the U.S., we speak about 60 million people. That will be the third leading cause of death on the planet by 2030. GSK is the only company that is moving ahead a vaccine against COPD to complement the existing drug treatment. How did we design that vaccine? On the pie chart, on the slide, you can see that we, and others basically, have confirmed that two bacteria, Haemophilus influenzae nontypeable and Moraxella catarrhalis, two bacteria are associated with this exacerbation, and it's close to 50%. For which we should have the result by the end of 2020. Now, we have an ambition to move into therapeutic vaccines.
Why is it so important for us? It is important for us because it is really a new set of opportunities in front of us. We have technologies that definitely allows us to entertain that ambition. Developing a therapeutic vaccine is different from a prophylactic vaccine. It actually, in some instance, can be much faster. There is a notion of acceleration in the R&D timelines. Consistency with that, we are investing in a chronic hepatitis B vaccine, aiming at curing actually that chronic infection. There is no need actually to describe the medical burden and the number of death every year, and we just started the first time in human recently. This technology, again, this vaccine capitalize really on our technology platform, including the AS01 adjuvant.
In the same direction, we also want to address another global burden of disease associated with the development of antimicrobial resistance. This is as worrying as global warming. Specific bacteria really acquire that capacity to resist against antibiotic. Clostridioides difficile is one of them. We isolated actually the toxin. We detoxified this toxin using a genetic methodology, combine it with the AS01 adjuvant. We also recently started a phase I. You can understand that the strategy of innovation at GSK is really focused in investing in technology platform. If there is really one thing that differentiate GSK vaccine from other companies, it's really the portfolio of technologies, of options that we have to design the vaccines of the future. We know that this is really making the difference.
We know that this is actually increasing our chance to be successful going after a new field. We have the reverse vaccinology. I mentioned BEXSERO, the adenoviral vector that we use for the pediatric RSV and the hepatitis B vaccine, the bioconjugation technology behind several discovery asset that I cannot speak today about it. I really want to focus on two technologies that are really, really important. The adjuvant system, definitely, the most advanced technology that we have. We have been spending decades to understand the molecular mechanism behind the mode of action. These adjuvants have been approved by the most stringent regulatory authorities. The factory are in place, and millions of people have already benefited from these adjuvants. The other technology that I want to mention is the SAM platform, the self-amplifying messenger RNA platform. There is a lot of buzz around the messenger RNA platform.
This one is the next generation. It is the one that has the self-amplification property, and I'm going to explain you why actually it makes a difference. The adjuvant are a substance that you mixed with the antigen, the active ingredient in the vaccine, and that really impact quantitatively and qualitatively the immune response. We have been working really hard to create this adjuvant system that really combines different biological molecules, and they are not all the same, to create this adjuvant system that have very specific, well-defined properties. The AS04 adjuvant that deliver the Fendrix and Cervarix vaccine impacting the antibody response of the immune system, including the persistence. The AS03 adjuvant used for influenza vaccine, specifically the pandemic vaccine, enabling antigen sparing, and the AS01 adjuvant, potentially, or I can tell you the most complex that we designed.
I can tell you, I remember 18 years ago, being a young scientist, trying to understand and read out the very first clinical trial where we were testing formulation like AS01, counting what we call the antigen specific T cells on the screen. I can tell you, we were blown away by the numbers that we were seeing. Yeah, it took a long time, but actually, this translated in two amazing products: SHINGRIX, malaria. We also got amazing results for tuberculosis vaccine, actually, the infectious disease that killed the most on the planet. This adjuvant is exceptional. It's basically a major technological advantage that we are leveraging across the pipeline, whether it's to go after very special populations that are immunocompromised. Again, I told you, we already have efficacy data of SHINGRIX in this population with efficacy levels that are close to 90%.
We also use the adjuvant to go after major remaining medical needs to enter the therapeutic universe, as well as the antimicrobial resistance. The last part of my presentation is really on the one that excites me the most. Basically, it is really the SAM platform technology. Let me tell you why it's so exciting. Up to now, vaccines have been made by using the pathogen, the microbe, inactivated or killed or trying to get fragment of it or identifying subunit of it or toxin. Each time, it's a very complex, slow, expensive, and unique methodology of production. Each time you need a different factory to make this vaccine.
That's a big difference here, because the only thing you know you need is the genetic code of the antigen that you put into the messenger RNA molecule that is packaged in a lipid nanoparticle. Once injected in the patient, this self-amplifies, produces the antigen, the body learns to react against the antigen. That's the vaccination process. That's really a revolution. For three reasons. First of all, is that the process of making the vaccine candidate using that technology, take only few months at maximum, while the conventional methodology take years. Using the technology is going to dramatically increase the productivity of a research and development organization. The second advantage comes from the self-amplification properties. You don't need to inject a lot because there is a lot of amplification later on.
That means basically that you don't need to put a lot in the vaccine dose, so the manufacturing footprint for this vaccine might be much smaller than what we used to see up to now. The third property, again, coming from the self-amplification, is really linked to the fact that as it self-amplify in the body, it triggers the same molecular mechanism as the adjuvant. We call that technology self-adjuvanted. It actually provide a very strong immune response against the antigen. Again, that's really consistent with our ambition to move into a new field like therapeutic and antimicrobial resistance. We just started a phase I using a model antigen, rabies, and we are really looking forward to see the results. Let me wrap up and summarize the key major data points that we have ahead of us.
Really, my objective, and that slide illustrate actually the properties of the SAM platform. My objective was really to review with you our intent to advance mid-stage asset, innovative mid-stage asset, invest in strategic life cycle management, go into new fields like therapeutic, antimicrobial resistance, invest in new technologies to actually increase our chance to deliver in this field, but also establish strategic partnership. We recently disclosed two of them, VBI, and Innovax. We can speak about it later on if you want to cover that at the Q&A. Over the last quarter, we started three new clinical trials. Actually, over the last 12 months, we started five new clinical trial, and behind that, innovative vaccine.
I didn't say it when I presented RSV, but it's really important for you to understand that for the RSV franchise, we got Fast Track designation by FDA, and the major set of data for the three program will be available by the end of next year, and that will really be conditioning the next step, the next late-stage phase development in that specific field. The COPD vaccine would also read out at that moment. Thanks very much. I'm going to leave the floor to Russell, that will speak more in details about the manufacturing.
Thank you, Manu. Great to see you all again. I hope you enjoyed the tour around our manufacturing facilities here in Wavre. Unfortunately, we only got to show you a small part of what we do here in Belgium. If we were to show you the whole thing, we'd have to have you here for a week at least. I hope you got a feel of the passion that we have around vaccine manufacturing and the efforts that we put in to ensure the very highest level of quality within our vaccine production. I'm incredibly proud to lead the operation here in Belgium, which is really leading the industry in vaccine manufacturing capability and supply. I want to start this section off by talking a little bit about what are the key differences between a vaccine and a traditional pharma product.
In the pharma business, there is two technologies that have a reputation of being difficult to master, steriles and biologics. That's what we do in vaccines because we like a challenge more than anything. A vaccine consists of multiple biological components, sometimes up to 10, each of which have to be individually manufactured. This, as you can imagine, significantly complexifies the manufacturing process. Perhaps even more importantly, it complexifies the analytical testing that needs to take place in order to show that those vaccines are truly safe and efficacious. Vaccine products are amongst the most regulated products in the world, That's hardly surprising given that they go into babies and healthy people. They are products that have to be distributed through a cold chain, which adds significant complexities to our distribution processes. It's a sophisticated, it's a complex business, vaccine manufacturing.
It's not complicated if you know how to do it, and we do know how to do it here at GSK. You heard Roger speak earlier about barriers to entry, this really is manufacturing multi-component biological products to the very highest quality standards in enormous volumes, is a capability which has taken us decades to master here at GSK. We have mastered it. In addition, the barrier to entry that we have to be aware of is the infrastructure. Here in Belgium, we have 13 different factories, which we're using to make individual components of our vaccines. Each one of those factories costs hundreds of millions to build, start up and license. That process can take anywhere from five to seven years. It's a huge investment that it takes to build a really strong vaccine manufacturing infrastructure.
When you have it, when you have the capability, when you have the infrastructure, you can start making vaccines. It's a process which starts off with sourcing thousands of raw materials, all of which have to be tested to the very highest quality standards. We then produce our biological products through a series of technologies from bacterial expression to cell culture, all the type of technologies that you typically see in biological pharmaceutical production. We combine those different biological components together into a vaccine product, and then we fill them into sterile containers and package them for the markets in which they're destined. That manufacturing process can take anything from nine to maybe 30 weeks, depending on the vaccine that we're talking about.
Really that's only the start of the journey, because once we've made the vaccine, we need to release it to the market, and that involves testing, and it requires a lot of actions with regulatory authorities. That release process can take anywhere from four to seven months for each batch of vaccine product. You can see why the lead time for vaccine production is so very long. Let's just look in a little bit more detail at the manufacturing process for our flagship vaccine, SHINGRIX. You've heard a lot today about the unprecedented demand, and we are incredibly proud of how we've been able to ramp up this supply chain over the last 18 months. We have a really exciting program to continue that expansion in the months and years ahead.
The manufacturing process for SHINGRIX starts with the manufacturing of the gE antigen. You saw the start of that manufacturing process today over in W26. That's a cell culture-based manufacturing process. We grow up cells, they express an antigen, we purify it. That's our antigen product. In parallel to that, we make the adjuvant, the famous AS01, which Manu has spoken about. AS01 is made from two separate biological components, MPL and QS-21, which are formulated together in a complex formulation process to produce our proprietary adjuvant product. Both of these separate components are filled into sterile containers and packaged for the market in which they're destined to be distributed. That's the SHINGRIX manufacturing process. Three biological components combined together to produce two sterile containers that go into one vaccine shot. As I said before, that's really only the start. That's making it.
We have to test and release the product as well. There's two things that need to happen to release a vaccine product to market. Number one, the manufacturing facility that you manufacture it in needs to be licensed, not just once, but in every single country in which that vaccine is sold. We have a real expertise in GSK in managing that regulatory process. Here in Belgium, I host 20-25 regulatory inspections every single year. Rarely a day goes by when we're not being inspected by some regulator here at GSK that is holding us to the very high standards of vaccine manufacturing which are expected.
In fact, we just said goodbye the other day to the Belgian authorities who are here to approve a new manufacturing facility, and in the coming week, we're going to welcome the U.S. authorities that are coming to approve another new manufacturing facility that we've got on the site. We need to have licensed factories to make our vaccines, and we need to test. How on earth does it take four to seven months to test a vaccine? It can't be that complicated, surely. Unfortunately, it is, because not only do we need to test that product here in GSK, where we have a whole battery of tests, hundreds of tests that are performed on every single vaccine batch, but that testing is repeated by regulators, sometimes in every country in which the product is distributed.
That adds significant lead time to our supply and impacts our ability to act quickly when we have sudden changes in demand. Just to conclude on this section on manufacturing and supply, the vaccine business is sophisticated, it's complex, but it's not complicated when you know how to do it, and we do. They are products which have long lead times. Right? There is complex, repetitive testing that needs to take place. Despite that, here at GSK, we've been able to increase the supply of our SHINGRIX vaccine, and we're now supplying more SHINGRIX vaccine than ever into the market. Our growth is going to continue in the months to come. We have a world-class capability here at GSK in manufacturing. Built up over decades, a global supply capability, which is really second to none within the industry. That's not something we're complacent about.
We continue to invest in it all the time with people and with technology, we continue that with the mission of becoming and remaining the world's most reliable vaccine manufacturer. On that note, I'll hand you back to Roger.
Russell, thank you.
The click.
Thank you very much. Great. Okay. Before we move into Q&A, I just wanted to wrap up one final slide. I hope you've heard us all and come across just how passionate we are about this business and how attractive this business actually is. Why I say that is just going back to what I said previously in terms of the durability of our products and the growth of the overall market. There are barriers to entry, which we've brought to life, and that means that there are a small number of players really competitively within the space. We truly believe in our strategy. From an innovation perspective, we are never going to be complacent. We have to continue to invest and continue to innovate both vaccines and the disruptive technologies that Manu talked through. From a performance perspective, key products, key markets.
Four words: BEXSERO, SHINGRIX, U.S., and China are our focus. From a trust point of view, we cannot lose the trust of our customer base. We have to ensure that we continue to protect the competitive advantage that Russell brought to life. We are relentlessly focused on the quality of our products. We truly believe you package that all up into GSK Vaccines and you execute brilliantly, that's where we deliver continued growth, we continue to expand strong margins, and we generate cash for many years to come in this business. With that, I'd just like to say thank you again for joining us today, and we can move to Q&A. Thanks very much. I'd like to invite up my team as well. We'll just introduce ourselves, and then we're going to have some microphones that go around the room as well. Great. Okay.
Shall we just run down and say who we are?
Yeah. Thomas Boyer, Chief Medical Officer of the company and lead physician.
Russell Thirsk, Head of Manufacturing Operations in Belgium.
Jay Green, I'm the CFO.
Hi. Patrick Gaillard. I'm the Head of Global Commercial. Perhaps it's worth mentioning that I've been in the role for six months. Prior to this, I was running the U.S. vaccines business, and this is not a New Jersey accent.
Manu, Head of Research and Development.
Fantastic. I should have mentioned, mine's not a Belgian accent.
We were debating that, actually.
Yeah. Okay. Graham, you're going to have my first question. Nice to see you. Thank you.
Hi. Thanks. It is Graham Perry from Bank of America Merrill Lynch. Got a couple on Shingrix and then one on RSV. Starting off with Shingrix, can you just help us understand where the bottleneck in manufacturing expansion is? We saw today your recombinant production, and presumably that doesn't take too much time to actually scale up. Is it case or is it just the amount of time, paperwork you get for regulatory inspection? Just help us understand that. Secondly, why can't you go for external manual approach? The nirsevimab that MedImmune and Sanofi are working on. Thanks.
Awesome. Thank you. Well, I tell you what, why don't we start with RSV with Manu?
Yeah.
Russell, you can take the bottleneck. Why not external and then talk through what has been seen in terms of labor usage as well. Is that okay?
Absolutely. First of all, on the strategy that we are pursuing on RSV, I want to insist again on the fact that it's really a portfolio of vaccine, that we are developing a maternal pediatric as well as the older adult. Specifically for the pediatric and let's say to protect the newborn, the strategy is really this notion of going on the maternal vaccine. It is important to mention that that vaccine will obviously confer protection to the baby for the first six months of life. A polyclonal type of protection. It also actually will confer some protection to the mother. That's really important as the mother plays a role in the transmission of the virus to the baby. I also think it is important to mention we have a lot of experience in maternal vaccination.
We have already two vaccines that are being used, millions of doses every year. Health authorities have a lot of experience with maternal vaccination, and we really speak about protecting the child. You need to protect it the days at day zero, because it actually can already develop the disease at that point. Concretely now about what are the reason, the scientific reason why we think this time is the right one, is that most of the a third site early next year. That part of the process is now debottlenecked. We move to a bottleneck within the adjuvant production, which we've now resolved, and we've got that part debottlenecked. We're now working on the antigen production. Two parts going on there, new facility, also process performance and yield.
Wonderful thing about biological manufacturing is you can really, really do great things with process performance and yield as you better understand the manufacturing platform. The bottleneck is moving. We've got projects working on each part of the manufacturing process to debottleneck it, including leveraging third party operations, especially for the secondary operations. Your point on visual inspection is a good one. We have recently licensed automated visual inspection for SHINGRIX globally. When we launched, we had some difficulties with getting that validated for the lyophilized presentation. Technology is advancing in that space, and it's quite a difficult technology to master. That's done now and licensed. We do have a fully automated visual inspection process now licensed for SHINGRIX across the globe. We do inspect small quantities of each batch by hand, just to make sure that the automated technology is working well.
Thanks, Russell.
Yeah.
Thank you. Next question please.
Thank you. James Gordon from JPMorgan. A couple of questions, please. Following up one of the answers to one of the previous questions. If I understood correctly, for SHINGRIX, is it the case that from 2020 to 2024, the constraint is just making more of the antigen, and that's just about high yield of the antigen where you're currently making it? If so, how phased will that be, please? Second question on SHINGRIX. Can you give us any hints about how the profitability compares to the rest of vaccines and how that might evolve over the next five years? Actually, just one other question, which would be you were talking about how great vaccines is, and it does look like a great business. What are the synergies between vaccines and pharma? It doesn't seem like you're very integrated with pharma.
In light of the Consumer spinoff as well, just could it ever make sense for Vaccines to actually be a different company?
Maybe I'll start with that last point in terms of the company shape. In terms of SHINGRIX, maybe Russell just give a 2020-2024 perspective as well. In terms of profitability of the vaccine, we wouldn't typically issue that or give guidance on it in terms of specific vaccine profitability. Just going back to your question on the vaccines business. We are actually quite integrated with the pharma space. Although we have research and development and manufacturing integrated in this business, from an LOC, the Local Operating Company commercial operation, we keep that as one group. That's commercially, we use that engine to commercialize vaccines going forward. We believe the real proximity and benefit is together. The connection is strong. The other synergy that I'd reference that is very strong, although not organizationally linked, is on the R&D space.
The scientific links and understanding of the immune system going into pharma R&D are key. Certainly with GSK's oncology focus on immuno-oncology, we're making sure that scientifically, we are strong. There are absolutely no plans to do anything with the GSK Vaccines group separating from GSK. We see it as a key part of that combined pharma and vaccines organization. Russell, do you want to-
Yeah. On the adjuvant manufacturing, yield is certainly an important part of that capacity expansion. We've also got other avenues to expand capacity for the antigen, including run rate, which is something we're working hard to increase, and also leveraging other manufacturing infrastructure that is already built and licensed here in GSK. As we get more experience with the technology, we can use our existing manufacturing infrastructure to further build out and expand that manufacturing capability. As Roger said, we have 20 different programs running to drive the expansion of this product that touches every single part of the manufacturing process, and we're really pleased with the progress that we're making in that regard. In fact, we're a little bit ahead of our plan.
Yes
excited.
We've accelerated to that high teens for next year that we talked about. That doesn't then just stay flat. There will be progression and steady progression in that capacity. It's just not suddenly going to jump in terms of numbers until we get that next facility online, and that's not before 2024, as we've said. Next question, please. Hi.
Thanks so much. It's Michael Leacock from MainFirst. Two questions, if I may. Firstly, it seems that C. diff is so difficult to produce as a vaccine. I think others have tried and failed, and it goes forwards and backwards. Could you sort of enlighten us as to why that's the case?
Yeah.
Secondly, we've not heard anything about AI or big data, and I just wondered how that impacts your business.
Yeah. Actually, Manu, why don't you take C. diff and give an R&D perspective on big data? Because that's one area where we've got a big play. We are doing stuff in manufacturing and on understanding our process, but maybe we'll bring it to life within the R&D space.
There are different methodologies actually, to make C. diff vaccine. As I said, you need to actually isolate the toxin of the bacteria, and one methodology is to inactivate the toxin with a chemical treatment. This is actually the complex aspect of it. That's not the methodology that we have been selecting at GSK. The way we inactivate the toxin is, as I said, changing the genetic code of the toxin to inactivate it. We don't actually have the same problematic in terms of production.
Big data, Manu, in terms of data and technology and how you're using that within R&D.
I don't understand your question, sorry.
Big data analytics.
Oh, sorry.
artificial intelligence.
Yeah. Look, this is definitely something that we are using across really the research and development, whether it's using big data in terms of understanding the process of a production of a specific antigen, whether it's using big data to get access to patient having a specific genetic profile or having a specific, let's say, a microbiome situation. This technology actually are used really across the development organization. For example, I spoke about the RSV F prefusion. We would not have been able to make that antigen without having actually very complex system that allows us to understand what is the structure of the protein and whether actually it was in the right conformation and kept across the whole production. For that, you need actually big data and artificial intelligence.
On Shingrix yield, just linking to that topic as well. One thing that we're doing using data analysis, multivariate analysis, is looking to understand of all the multiple inputs that go into an antigen manufacturing process, which ones truly impact the yield and therefore can ramp it up? We're using it very practically in our key priority areas at the moment as well. Please. I'll come back here.
Marbuzi, Pictet.
Hi.
You could argue that your successful integration of Novartis has shown that new entrants have a real problem doing it themselves, and that when you integrated it, you made the returns. My question is, going forward with these new technologies, and the self-amplifying RNA is one, will those barriers to entry still be there? Or does that changing manufacturing process allow other people to enter what is presently an oligopoly?
Yeah. I think, first of all, we completely get the importance of disrupting technology. Adjuvant, we think, is an example of that, and we're going to continue investing, as we mentioned. I do see vaccines manufacturing in particular transforming over time with that disruptive technology. The challenge will be that's going to take some time. It's not going to be tomorrow. We can imagine that in about 10 years' time, you could see those disruptive technologies come into the market. I have a lot of experience in converting API manufacturing to continuous, and there are parallels here as well. I can see that this will happen over time for new products. You could see that it will make sense to economically change to that new process as and when you have a new innovation or a new vaccine coming through.
The idea of retrofitting all your old products to the new technology, I just think the economics and the capital would not make sense. I do think that for that current portfolio, you're not going to see that same level of change. There's no doubt that in the future, disruptive technology will transform the way that we make. I do think that the barrier, though, can then move elsewhere. It doesn't change the R&D complexity and the size of the R&D investment that you have to make in this industry as well. As we described, those are very long trials and expensive trials as well. Thank you. Please.
Jeff Rogers, Leerink. A few questions. Manu, on the MenABCWY, great product concept. Could you give us a sense of what the scale of pivotal trials might be required there? Will you be able to get it approved on the basis of immunogenicity, or are you going to have to do some sort of a very large efficacy study? It's hard to imagine. Secondly, could you also address what's required to bring a measles vaccine to the market in the U.S.? Related to that, what you've achieved with QS21 with varicella is remarkable, and Shingrix. Is there the possibility to somehow transform other live viral vaccines where there's been a lot of negative resistance, measles outbreaks, et cetera? Can you not bring a Shingrix approach to other viral vaccines and transform the product in the market?
Yeah. Three questions. Manu, do you want to.
I've got them for you.
Yeah.
I think the first question was on ABCWY. First of all, meningitis vaccines from GSK and the competition have been approved based on immunological data, not efficacy trial. As Roger said, we have been doing post-marketing effectiveness assessment that actually runs really positively. The strategy on pentavalent ABCWY will be the same. It will be based on immunological non-inferiority. As I said, we are moving forward to align with FDA on what is exactly going to be the development plan. That was one question. Going to the last question around could we expand the use of the adjuvant to replace some live virus vaccine with, let's say, subunit adjuvanted. That's what we did, replacing Zostavax in a way with Shingrix. I don't think you can expand that, like it's going to be easy to do that for every single virus.
It's each time a different situation. Clearly, these are things that we investigate, and the self-amplification messenger RNA technology could also actually be an approach for that. The third question was about MMR. On that specific asset, yes, there is a need. We have completed the phase III, and so we are basically programming now the next step, which will be the submission of that asset to the regulators.
Maybe on measles, because I think it's a good example with the shingles vaccine, we did a leap in terms of efficacy. It really made sense to come with an alternative for a live viral vaccine. A measles vaccine has very high efficacy, so the finances also would never add up. Using this technology wisely where we can make innovative leaps.
Thank you. Next question.
Hi, it's Peter Welford at Jefferies. Three sort of broad questions. Firstly, just on the mRNA technology again. I get the fact you're using the rabies as a sort of model.
Yeah.
I guess longer term, do you see this as having obviously therapeutic uses? I mean, I guess I'm thinking oncology, et cetera, or also, I guess flu potentially beating others? I don't know how quick this could be. Are you looking as well at individualized, potentially vaccines, and is that even viable with this technology? I guess sort of related to that, have you already been investing in manufacturing to keep up with the science, should this work? Because presumably this is a different sort of manufacturing to what you normally do.
Yeah.
On RSV, are you confident a single F antigen is going to get you a broad enough particularly T-cell response, et cetera? I think other people with just 1 antigen have failed to get a sufficiently broad response. Are you confident you'll get that? Thirdly, just one for Jay, because I was sitting there like, just on maintenance CapEx. Can you give us an idea as to what the rough maintenance CapEx is for the vaccines division of GSK? I guess, just thinking about it's obvious that with cash flow conversion you've talked about, but what is the sort of beyond that GBP 4 billion you've spent, what does it actually cost roughly to keep this going?
Why don't we start with the capital J?
As Roger said, we've spent GBP 4 billion over the last 10 years. Obviously, we don't give specific forecasts, and it does vary year by year. We see that as a rough approximation of how you go forward. That would include the maintenance element of it. When we build up and do capital allocation for CapEx, we start with what is the requirement to make sure that we maintain quality supply capacity, and then we put products on top of that.
Thank you. In terms of Why don't you go into RSV.
Yeah
next, Manu?
Designing a vaccine, it is not always putting everything from the virus that will make it working. If you look at SHINGRIX, which is an herpes virus that has actually 10 different viral glycoprotein at the surface, we only put one. You need to put the right antigen. This is when I say the science has been exploding in the field over the last five years. It is very, very, very clear that it is against the RSV F that you need to actually induce that immune response. Most of what we call the neutralizing antibody, those that protect us, actually are targeting this RSV F protein. This is why we are optimistic on the approach that we have been selected. The other question related to the SAM platform. Basically, your question summarize the potential of the platform.
That platform has indeed the potential to make vaccines in a very completely different way, accelerate R&D timelines, but also get more potent vaccine. It's true that allows us to entertain the ambition to go into challenging fields like therapeutic or antimicrobial resistance. Indeed, the technology is compatible with the notion of personalization. Now, as for adjuvant, I had the chance to really see the evolution of the technology in the company. You need to go sequential. It's dangerous to go too much wide at the very beginning. You need to understand how the technology works, and even if it appears to be special to have a model antigen to test, that's exactly what made us discovering AS01, is to make an experiment to really understand the potential using a model antigen. That's what we want to do with the SAM platform.
Yeah. On that Sorry, go ahead, Thomas.
Maybe another aspect that this is a hot technology is clear because several other companies use similar technologies. I just mentioned two, CureVac and Moderna. I think what you really have to take back from here that GSK is one of the big four companies, and we have the technology in-house. If that works, which still has to be proven, we have a clear advantage because we have all the other elements, how to develop license and commercialize vaccine in-house and have the technology here and don't have to buy it somewhere else.
Thanks, Thomas. Please.
I'm from Goldman Sachs. I have four questions, please. They're separate ones. I think Shingrix has been a phenomenal success story for you guys, and congratulations on that. Preceding Shingrix, we also had Cervarix and Synflorix. Just help us understand, as an organization, what have been your learnings from those two not-so-great successes, and as you look at developing the next generation of vaccines, how is it influencing the way you're thinking about it? That's question number one. Question number two, apologies if I missed this earlier, Roger just said there were 20 programs ongoing currently to try and maximize what you can do with Shingrix in the near term before you get the step change. Can you help us understand what the boundaries of confidence or what the confidence intervals on those 20 programs are?
If everything works phenomenally well, does that high teens go to 25 million doses, 30 million doses? Kind of what is that? What if things don't work? Does it stay at 2021? Just help us understand what the width of that interval is. Thirdly, as you think about launching SHINGRIX in China, what is the risk that you upset a lot of the other regular customers that you have who also want SHINGRIX? You talk about using SHINGRIX as a commercial opportunity for rebuilding China, but what's the risk on the other side? The last question being, as you think about cash conversion and you think about profitability, in the near term, why shouldn't this be a business that is materially higher than your pharma business, especially as you're thinking about CapEx being flat, R&D being reasonably flat.
All the upside from SHINGRIX, why shouldn't that translate into meaningfully better margins?
Thank you. Maybe I'll just give people a warning as to which one. Jay, maybe if you start with the margin question and the opportunity. Thomas, would you take the Synflorix and Cervarix piece? In terms of China, Patrick, maybe have a discussion there around reputational risk, which no doubt raised in terms of what we do as well. The last one on programs, Russell, maybe we'll have a quick chat as well. Is that okay? Good. Let's start with Jay then.
Yeah. You want me to start? There was a bit of a margin piece and a cash conversion piece.
Yeah.
As you know, 2015, we talked about by 2020, we'd be 30-plus. Last year, as a result of our success in the U.S., which is obviously driven somewhat by SHINGRIX, I'll say, we then upgraded that till mid-30s. We actually think that that remains quite a reasonable number for this business going forward. This year, we've obviously been quite strong in the early part of the year, but we did also talk about for the first half. If you normalize for some one-offs, we're still about mid-30s. Q3 will always be bigger, and Q4 is normally one of our lower. One of the pieces that you talked about a bit was with CapEx flat and R&D flat. Actually, I think what we've talked about is we're going to increase the investment in R&D over time.
In addition, we are investing behind increasing the capacity for SHINGRIX, we want to make sure that our launches and our pipeline are very successful. Therefore, we need the flexibility in the P&L, therefore mid-30s we think is quite a good, strong delivery of margin, which is, as we've said, pharma-like against a broad pharma portfolio. We think about it from a cash perspective. Yes, we talked a lot about barriers to entry. As Russell said, once you have that base, then actually it is a quite cash generative business. In that respect, we do look at and generate cash, again, similar to a pharma-like cash conversion. The additional opportunity that we have that GSK has talked about broadly is in the management and perhaps further optimization of working capital
Okay. Thanks, Jay. Can we go, Thomas, do you want to take the next?
I hope this is the most challenging questions of the afternoon. What have we learned? First of all, we can't get it right all the time. I still know that Cervarix is the best cervical cancer vaccine, and when you see a recent data which came out of Scotland, it essentially wipes off HPV and therefore cervical cancer in women. However, from a commercial point of view, we have clearly lost out versus Merck. What have we learned? We still believe that an adjuvanted vaccine where you want to have really long-term protection over an entire life of women, is important.
What you also see when you see what the Gates Foundation, for example, is interested in, is they still believe, and we are confident this is actually true, that a one-dose vaccine, an adjuvanted one-dose vaccine is a real option, and this is currently tested with Gates' money in several countries. The Cervarix game is not yet over from that point of view. I would also like to highlight that China is the new market for HPV vaccine. The 4-valent and the 9-valent from Merck is licensed there. Cervarix is there. We are just starting and one difference for the time being, at least, and for several years to come, is that Cervarix is the only vaccine licensed in young women, which is the age group which can most benefit from cervical cancer vaccine.
Since it's currently a predominantly private market vaccine, most women who currently receive the vaccine are women who can afford it. They're not necessarily need it anymore, they can afford it. From a disease awareness point of view in the months and years to come, we will really focus to make sure that young women actually get the existing vaccine. You have heard that a few weeks ago, we announced a collaboration with the Chinese company, Innovax. They have a battery of antigens. We have the adjuvant and the commitment is to develop a next generation HPV vaccine with antigens from Innovax and our adjuvants. We will, in the years to come, run a big phase III trials to get it licensed all across the world, under the GSK leadership.
On Synflorix, if you know the incidence and the pathology, there's many serotypes. The question is always when you invest in the next generation pneumococcal vaccine, are you playing the number game? 13, 15, 20, 23, 30 or are you looking out for an innovative way to essentially get out of the number game? We tried already once. We failed to find another approach and rather than playing the number game, we are looking out for new technologies. That is the approach we want to take. Thank you.
Thanks, Thomas.
Perhaps it actually builds on SHINGRIX. Clearly these learnings we're applying on SHINGRIX and hopefully you will give us some feedback on how we've launched SHINGRIX so far. Obviously, we're just getting started. There's more marketing campaigns and more marketing approaches to deploy. We're definitely taking all the learnings here to make sure that we are very deliberate, really focused on differentiation for this vaccine, and really take a stepwise approach to our go-to market model, because we know we have something really special. I would say the marketing piece of it is really, really important. Now, to your question in terms of reputational risk as we're focusing on China. I think the reality of this marketplace, as you know, from a vaccine standpoint, the U.S. is the single largest market in terms of vaccine opportunity.
About 50% of the world's vaccine sales are in the U.S. The second largest market is China. China was heavily dominated by local companies. Now since 2017 actually, we've seen a real development of the private market and that market, actually, the private market from 2017 went from GBP 1.5 billion to now about GBP 3 billion in a couple of years. A real strong appetite in China to actually bring in innovation and hence our accelerated filing for Shingrix in China. A real, obviously a very, very important high-value opportunity for Shingrix for the years to come. We've got to make sure for the life cycle management of this brand to generate value for the years to come, really focus on the U.S., and then we've got to really succeed in terms of launching this product in China.
Yes, the other markets are important, but these two ones, in our views, are really the must-win markets. Now, does that mean we're not going to launch elsewhere? Of course, we will be launching elsewhere across the world in more traditional markets. These will be staggered over the course of this vaccine for as long as we can through the life course of this asset.
Thank you. Russell, do you want to take what's the probability of success on projects?
Scaling one manufacturing step here. We are scaling many different manufacturing steps. As I said, we've got three biological components, right? Two sterile containers for each vaccine dose that we produce. Even getting to high teens means producing 40 million sterile containers, which is not a small amount of sterile containers that we've got to ramp up. We're very confident with the initiatives we've got in place. This is technology that we understand. This is technology that we master. Therefore, we're confident in our success, we're not going to see the step change. We're not going to see going from high teens to 50s, without an additional bulk manufacturing capability in place.
Thank you.
Sorry, can I just follow up?
Certainly. Mm-hmm.
Do you mind reminding us what your pre-CapEx cash flow was last year?
We don't give specific cash flows by division.
How do we, when you talk about cash conversion equal to pharma, margins equal to pharma, how do we actually make any sense of those numbers?
Well, I think, look, in your models, we've given you sort of the margin range. Yeah. Then, obviously, estimates for what we think we'll do with working capital and CapEx, and give you a little bit of information on that. That's probably
Okay. Thank you. Next question, please. We've moved from three to four to five per person.
Yes. Your Group B streptococcus asset.
Yeah.
Just wondering if there's any update there and any lessons you've learned from that you could share. Thank you.
All right. Thank you. Manu, why don't you take the GBS?
Look, managing a portfolio means that you constantly need to evaluate the profile of the product you are pushing out in development. If the data are not supportive of moving ahead, you must actually stop the project. Specifically for GBS, at one point we realized that the project, in development, was not convincing enough, and it has been put back into discovery.
I think the one thing I'd add as well is that we are being completely focused on the prioritization within the pipeline, as Manu mentioned. Wherever we see a failure, I think it's important that you fail fast. Also, where you don't see a return or a significant enough impact, you make a call fast, as well. That's something which in vaccines we're completely focused on. We don't want to be distracted. We want to ensure our capital is allocated to the priority R&D assets. Thank you. Please.
Thanks. It's a follow-up from before, actually. Just on Shingrix, on the capacity and the bottleneck. It seems to me what you're saying is it's just the production of the antigen which is the rate limiting step, and that is something which presumably just recombinant protein production technology you could outsource, if that is the only bottleneck, and that's what you've worked through now. What is it that you don't want to outsource from something like that? Is there anything proprietary?
No.
In your antigen production which means you don't want to outsource? Why wouldn't you just go to a company that can give you that capacity tomorrow?
No, there isn't anything that we wouldn't look to outsource. We're clearly looking at all opportunities to expand the production of SHINGRIX. Of course, when we look at third-party options, we compare what it would take to do it internally compared to what it would take to tech transfer it and then license it at a third party. So far, we think we've got expansion opportunities internally with our existing manufacturing infrastructure that will provide quicker capacity expansion than going to third parties for cell culture, for example. If we get to the point where we need to do that, we'll certainly go down that road. Absolutely. The priority we've got is to expand the capacity of this vaccine as quickly as possible. It's a great asset for the company, and we've got a complete focus in making that expansion happen.
Having worked or led regulatory for a long time, this is simply the fastest way to get there. If we would now engage with external companies, they have to build the manufacturing. We have to transfer technology. From a regulatory point of view, we would land up beyond the timeframe we are currently giving you.
Okay. Just to follow up on the question previously on RSV, and the comparison of that versus the nirsevimab approach by Sanofi and MedImmune. They have a five-month monoclonal antibody, which just covers the.
kids for the first season. Could you just sort of compare and contrast why you think a vaccine might be better than that?
Yeah. Actually, I already briefly covered it. I'm going to repeat myself. First of all, the maternal vaccine will actually achieve this passive transfer of antibodies to the baby. The antibodies are polyclonal, and it's not a single specificity. It's important. The second point is that that vaccine being actually given to the mother, it also confers some protection to the mother. It's a different approach. We believe that actually also leveraging a channel of vaccination that is used already for different vaccines, like the pertussis booster and the influenza vaccine, is another advantage, as authorities are used to use it for millions of women every year.
Yes. I think if I could just add to translate that commercially. If you look at the U.S., just the U.S. cohort, there's 4 million pregnancies per year, right? 4 million pregnancies per year could potentially get the maternal vaccine, plus 4 million babies could get early immunizations.
We think commercially it's actually a very good proposition. From a market behaviors, there's already a large number of mothers that can immunize. You look at Tdap in U.S. or BOOSTRIX, about 50% of the mothers actually already get a Tdap shot. The practice is well embedded.
Yeah. Maybe let me add one additional thing. I said it, covering the first five or six months is only 50% of the burden in children. You still need to cover the up to two years. You cannot achieve that actually with the competitor technology as it is passive immunization. It fades away. With the adenovirus technology that we have been selecting for that approach, this is active immunization that confer the protection to the baby for actually several years. That's really the objective. Actually, GSK is the only company, to my knowledge, that is testing this approach in today, several naive children. Naive, so children that have not been exposed to RSV.
It's a really important step as there is a lot of history in testing RSV vaccine in children, and we are very hopeful that actually we will be moving positively on that program.
Thanks, Manu. Let's go to the next question. Thank you.
Follow-up question on your strategy, Roger. You highlighted the good features of the vaccine business and conveniently glossed over some of the bad features around commodity pricing and sort of intense competition. As you kind of scenario play out the future, we see manufacturers of commodity vaccines coming in from China, India, perhaps other places, is it ever possible that you would think about getting out of some of the commodity vaccines where prices have eroded? Conversely, would GSK be willing to have, for example, a GBP 1,000 vaccine that would have genuinely pharmaceutical-like margins? I mean, the benefit is pretty remarkable-
Yeah
Yet we don't.
I think it's a great portfolio question, really, and we do, in the strategy, look at what's the right portfolio going forward. We are certainly at the moment, we look at breadth, not portfolio being good, but I think we've got to continue to look at it. As we become more and more therapeutically focused in those higher value areas, do we want to deploy capital resources to the lower margin spaces? We didn't talk flu, for example, but that's commoditized, and the pricing is heading in one direction. We have a very strong flu business with a strong history of delivery. You look at, I mentioned DTP vaccines, again, driving pricing is in Europe, very, very tough. My answer is, we'll constantly look at it. It has to come down to where do we best allocate our capital.
Investments in manufacturing choices and looking ahead to what needs to be replaced is a key thing. Ensuring that we use that to trigger portfolio discussions is important. On the pricing side, it's the same as this industry. I think innovation and differentiation drives price, and people will pay for the differentiation and innovation that you provide. I think when you look at the mathematics and the health economics of vaccines, I think it's still a very strong case. If you've got a mathematical model that shows that will return on savings and healthcare provision, I would fully support that level of pricing if it's appropriate. Patrick, anything?
I think hopefully you've seen in some of the many assets that he's presented, RSV portfolio and COPD portfolio as SHINGRIX-like in terms of value, right? Clearly our direction of travel is in SHINGRIX-like type potential assets, which would be high impact, but also high value for the organization.
Thank you.
Hi, I'm still trying to reconcile the comment on pharma-like cash flow conversion, with the fact that we've heard that there's a 12-month production process, with lots and lots of hoops to go through, combined with the fact that you've been growing mid-teens over the last few years. There must be considerable working capital drag on cash conversion. Any color on numbers of what that is and just kind of what the puts and takes are versus pharma cash conversion?
Yeah, I mean, it's no doubt because of the lead times. Obviously, we don't talk about specifics when we disclose our results, but when you talk about the lead times that Russell was sharing in terms of the products, we do carry, relatively speaking, if you talk about days of inventory, more inventory than a pharma business would. We already have a lot of that actually in place, and therefore it really comes down to, as we continue to look at efficiency in manufacturing and lead times in particular, is there an opportunity to potentially get at that? That's when I talked about the opportunity that we have as part of the overall GSK to look at working capital. That's one of the key areas. Russ?
I was just going to add there from a cash conversion perspective. We've invested significantly in our capital infrastructure in terms of building facilities like this. There is a phase as well where you continue to exploit that infrastructure and is in place as well.
Right. Next question, please, and then we'll come up here. Sorry.
Hi. If we could just touch a little bit on pricing in China. Obviously you've just launched SHINGRIX. I'm wondering if there are any of the other sort of pediatric vaccines, and if you can give us any commentary on the price point for those pediatric vaccines in China versus other countries in the world. Thank you.
Maybe I'll make a comment then hand it to Patrick as well. Just on SHINGRIX, we haven't launched just yet. That starts next year. There'll be a 2023 is launched, as we mentioned. Our portfolio in China doesn't include pediatric vaccines at the minute. Has Cervarix and a hepatitis vaccine in ENGERIX-B is there as well. I'd say strategically, what we're looking at is are there other vaccines in our portfolio that should follow up and go into China going forward and expand that portfolio? Obviously, the pricing environment would be key. My point on my thoughts on pediatric vaccination in China is that's a very intense locally manufacturing-dominated space. We would see the private market probably being the most logical place for us to play going forward. Patrick, anything you'd build?
Yes, I think we're going to be looking at asset by asset. I mean, this is obviously a very long-term opportunity for us in China. In terms of your specific question on pricing, if we look at the newer vaccines that were launched in China, although I won't comment on SHINGRIX, but they're fairly close to U.S. level prices. I can leave it as that.
Thank you. Other question, please. We'll go here, Sorry, you were next. Sorry, apologies.
I guess just following up on that question on China, given your narrow portfolio there, what do you mean by long-term opportunity? When might you be able to re-enter with your broader portfolio? As you've discussed, faster innovation, faster time to market. For those key pipeline assets that you've discussed with us today, RSV and COPD, how should we be thinking about the length of the phase III clinical trial journey?
Yeah.
When could that materialize into a commercial opportunity?
Well, maybe on the last point on timeline, Manu referenced the key data readouts coming next year. Typically, in vaccines from that readout through a phase III and the regulatory approval, we wouldn't expect to see launch until five years and beyond for those products, just to help you with the timeline. Sorry.
Five years from when you get the.
Data. Yes.
Okay.
Correct. At least I'd say would be the way I'd position that. From a China perspective, the portfolio choices, again, we're going to be very disciplined in looking at where are we going to create the biggest return for our investment on our choices of what else goes into China. You can imagine we're looking across the portfolio, but again, looking at our established portfolio, looking at our meningitis portfolio, what would be the priorities and how would we work? We have to continue to build our capability on the ground in China, is what I'd say. From a infrastructural perspective, ensuring that we have the right regulatory, medical, and commercial activities there. We're building that now to ensure that we're ready to expand. Using SHINGRIX will be a key part of that as we continue to build.
Can I maybe?
Yeah, please.
I think we have to look at, if the outlook in China remains the same, what we've seen is a real change in terms of really valuing innovation in China, I think that's the agenda. If that remains the same for the next several years, looking at the portfolio we have, you may have seen COPD opportunity in terms of vaccine. There's 16 million Americans living with COPD. There's 100 million people in China living with COPD, right? That's what I mean by longer term, we have to be choiceful. If the environment continues in China, that can be a significant long-term opportunity as a marketplace.
I know Thomas mentioned our Innovax partnership as well. I think having a presence with a sophisticated player in China is important. Again, sending a signal in terms of our investment in that market and building capability, which is a very important part of our overall strategy. Please.
Just going back to the Shingrix capacity. You've referenced in the past, you won't have an uplift of 10s of millions of doses until Marburg comes on site. Online, you've said that you won't get to the 50s with the incremental ones. My first question is Marburg bigger than Wavre, and will it get you to the 50s? Finally, will that Marburg be phased or will that come on in one go in 2024?
I think I'm not going to get into specific phasing, you can understand. I think it's important to understand that when Marburg comes on, it is a significant volume. I won't say how much, that's really going to be needed to cause that step change that we referenced. From the high teens through to that point, that's where we're going to continue to exploit the projects that Russell has mentioned that continues to give that steady growth. I'm not going to give a specific number. Next question. Thanks.
Manu, you've kind of highlighted COPD and RSV. Is there a reason you chose those two over the kind of pentavalent serotype meningitis vaccine, given that might be kind of quicker, you should have proof of concept data in-house already. Why did you choose those two over kind of the ACWY, ACBWY there? That's one. Secondly, your C. diff program, how does it differentiate versus some of the other potential competition? I think Valneva has a phase III-ready asset there, just why you kind of going down that road as opposed to licensing that?
So, maybe I can-
Yeah, please.
start with on the C. diff. One of the major differentiations is that we combine the genetically detoxified toxin with AS01. AS01 being, again, the adjuvant that not only improved immune response in terms of amplitude, in terms of quality, but also in terms of persistence. Our ambition basically is to do what we did with SHINGRIX, even if we came years after the competition. If you come with the best in class, you can really position the vaccine very effectively. Maybe I wasn't clear, but actually we didn't choose between RSV, COPD and the pentavalent vaccine. We do the three together.
I think it was worth presenting today. Is that it? Honestly, we just have too many cool things to show you, I think. We had to make a choice. Again, we could talk for minutes on this. We are completely committed to meningitis. We think ABCWY is a really important program. We've got two great vaccines in BEXSERO and Menveo with a proven history. We are at an important point. We'll read out our data early next year. We're talking now with the regulator about that journey to phase III. We see that as a really important asset. We just wanted to talk about something that was maybe just in terms of excitement, we ran out of time. Don't interpret that as something that's not a priority for us. Thank you. Please. Sorry, I might have stopped you earlier when you were
Great. Thanks. Actually, just following up on C. diff. I think one of the reasons why C. diff has been quite hard to reach as well is the infections of the gut and the ileum. You can get very high levels of immunity systemically.
the actual infection itself is quite difficult.
I think whenever we've spoken to clinicians on any other projects that have been in development.
they've always been really skeptical about the ability to get that.
How do you overcome that part of the problem with a systemic vaccine?
I think basically, scientifically, that needs still to be unraveled out of clinical trials. First of all, there is another company that is a little bit more advanced in terms of a CD vaccine with a non-adjuvanted approach. I'm pretty sure we will learn a lot from that specific readout of the clinical trial. I want to remind you also that there is a monoclonal antibody that is used to treat chronic C. diff infection that is given in a systemic way and not in a local way. I don't think anybody can state today that actually inducing antibody in the blood are going to be useless in protecting against the gut infection.
Thank you. Another question, please.
Thank you. Just one on the flu business, actually. Just what you're doing in terms of a cell-based vaccine.
We've made a conscious decision not.
Why?
First of all, we think egg-based is very well established. I think it's going to be around for a long time to come. High level of safety, and also from a security supply perspective, very strong and proven through pandemic as well. When I look at the economics of it, I think the economics are challenging. We talked earlier about the commoditization, the pressure on pricing, profitability. We've just made a call that actually in terms of where would we allocate investment and cash to get a return, we don't think the conversion to a cell-based would be a priority in terms of capital allocation for us.
It's just the new technology. There's no innovation. The current flu vaccine suffer from mediocre efficacy, especially in the older patients. That is the leap. Using a different technology to reach the same result financially doesn't add up.
Thank you. Okay, we've got two minutes, maybe time for one more. Okay. Well, that's perfect timing. Maybe just on behalf of my team and behalf of the folks who hosted today, we just want to say a massive thank you for taking the time to travel and to see us and visit us. We really look forward to seeing you the next time and talking, I'm sure, on other occasions about our results and as we execute the strategy that we brought to life today. Thank you so much for joining us. Thank you.