Glaxo, Novartis risk millions on flu shots
GlaxoSmithKline PLC and Novartis AG, two of the world's biggest vaccine makers, may have bet on the wrong technology in the race to develop a better flu shot.
The drug makers are building US factories to grow influenza virus in animal cells as an advance over the decades-old technique of using chicken eggs. Now a small, privately held biotechnology company may leapfrog ahead of them with a more advanced method using DNA.
Losing the flu-shot race may be the latest in a series of setbacks to hurt the world's second- and fourth-biggest drug makers. The Glaxo and Novartis plants are part of a $1 billion US initiative to produce millions of inoculations within six months of an outbreak of a deadly flu. Closely held Protein Sciences Corp., of Meriden, Conn., with 40 employees, is close to winning approval for a method that would cut the time at least in half.
"The advantages of recombinant DNA are speed of production and volume of production," said David Fedson, a former director of medical affairs for Paris-based Sanofi-Aventis SA, the world's biggest vaccine producer.
Basel, Switzerland-based Novartis, which bought US vaccine maker Chiron Corp. last year, has lost 9.5 percent of its market value in 12 months. Its diabetes pill Galvus was delayed by US regulators and its painkiller Prexige was withdrawn in Australia on concern it may cause liver damage.
London-based GlaxoSmithKline, which began selling its shots in the United States during a vaccine shortage, has lost 12 percent of its value since May 18, when its top-selling diabetes drug Avandia was linked to elevated risks of heart attacks.
Investing in flu vaccine is a gamble for drug makers as big as Glaxo and Novartis. The world market for seasonal influenza vaccines amounts to $2 billion a year, a third as much as the asthma drug Advair/Seretide generated last year for Glaxo and half as much as Novartis's sales of the blood-pressure medicine Diovan. The United States has stepped in with research grants, supply contracts, and higher payments to encourage suppliers.
Governments are trying to reduce the threat to public health that may be posed by a global pandemic of a deadly virus such as the H5N1 strain, known as bird flu, that has spread across Asia to Africa, the Middle East, and Europe since 2003. Health officials say a worldwide outbreak among humans is inevitable. Fifty million people died in a 1918 influenza pandemic.
Novartis is investing $600 million to build a cell-based flu-shot plant in Holly Springs, N.C. The company won a $221 million grant from the US government for clinical trials of the vaccines. Glaxo is creating a similar factory in Marietta, Pa., in a facility acquired in 2005 from Wyeth for an undisclosed sum. Glaxo is getting $275 million in US funding.
