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Pharma Companies Reap the Swine Flu Windfall

Topics:Pharmaceuticals

Sectors:Pharmaceuticals | Pharmaceuticals and Biotechnology

By: Reuters | 23 Oct 2009 | 02:57 PM ET

Text Size

Healthcare companies are reaping the benefits of a global swine flu pandemic, brightening what might otherwise have been a dismal third quarter and bringing new focus on the market for vaccines.

AP
Large European pharmaceutical companies are reporting windfall sales from flu drugs and H1N1 vaccines.

Small biotechs are winning fresh attention from investors and governments looking for quick, less expensive ways of making flu vaccines to protect their populations.

And diagnostic companies have been growing revenues as doctors order more flu tests.

"Pretty much everyone who does something in influenza in has gained from it," said Hedwig Kresse, an infectious diseases analyst at Datamonitor in London.

"From a sales perspective, the big players certainly will see a very significant windfall of this pandemic this year," Kresse said in a telephone interview.

Swiss drugmaker Novartis [NVS Loading... () ] said this week it expects the H1N1 flu vaccine to contribute about $400 million to $700 million of sales in the fourth quarter.

Vaccine makers GlaxoSmithKline [GSK Loading... () ], Sanofi-Aventis [SNY Loading... () ] and AstraZeneca [AZN Loading... () ] are all expected to get a lift from swine flu-related sales when they report fourth-quarter results next week.

Roche Holding [RHHBY Loading... () ] last week raised its full-year estimates on higher sales of its flu drug Tamiflu, which also lifted forecasts at U.S. biotech Gilead Sciences [GILD Loading... () ], which collects royalties on the pills.

Baxter International [BAX Loading... () ], which makes a cell culture-based flu vaccine, expects as much as $40 million in H1N1 vaccine sales in the fourth quarter.

David Kagi, a healthcare analyst at Swiss-based Bank Sarasin & Co estimates pandemic vaccine sales will be worth a total of $7.6 billion, even with a mild pandemic.

A severe pandemic would result in total vaccine sales of $18 billion.

But both Kagi and Kresse said the pandemic effect would more likely be a blip than a lasting boost to sales.

"It will last this year, and if they are very lucky, it will last next year also," Kresse said.

U.s. Pharma on Sidelines?

With the exception of Baxter and Gilead, most other U.S.-based pharmaceutical makers have not benefited much directly from the swine flu bonanza, but a round of acquisition activity last month suggests U.S. big pharma may not be happy sitting on the sidelines.

Johnson & Johnson [JNJ Loading... () ] spent $444 million to buy a stake in Dutch biotech Crucell [CRXL Loading... () ] as part of a new push into influenza vaccine and drug development.

Abbott Laboratories [ABT Loading... () ] spent $6.6 billion on the drugs unit of Belgium's Solvay, including Solvay's Dutch cell-based flu vaccine production facility.

And Merck [MRK Loading... () ], already a vaccine powerhouse with its shingles and cervical cancer vaccines, got back into the U.S. flu market with a deal to distribute seasonal flu vaccine made by Australia's CSL.

"I think it's certainly a big driver at the moment for pharma strategy," Kresse said.

Although smaller vaccine companies with new technologies are not likely to produce H1N1 vaccines in time for the current pandemic, the global influenza threat has awakened governments from Egypt to India to the need for flu vaccines.

Novavax [NVAX Loading... () ] this week launched a 4,000-patient clinical trial in Mexico of its H1N1 vaccine, which is grown in caterpillar cells rather than the conventional chicken eggs.

While Kresse thinks biotechs had hoped to benefit more, the pandemic has brought new attention to their technologies.

Demand for an intravenous flu drug may mean earlier approval of Biocryst Pharmaceuticals [BCRX Loading... () ] and Shionogi's peramivir.

U.S. Health and Human Services Secretary Kathleen Sebelius said this week government scientists would soon decide whether to approve emergency use for people too sick to take existing antiviral medications by either pill or inhaler.

In the United States, the biggest early impact from the H1N1 flu will be on companies that make flu tests, said John Sullivan, director of research and Healthcare Strategist at Leerink Swann.

Sullivan said flu-related sales boosted earnings at Thermo Fisher Scientific [TMO Loading... () ], a scientific instruments maker.