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Novartis wins $220 million US flu contract

Novartis has been awarded a $220 million flu vaccine contract by the United States. Novartis

Swiss pharmaceuticals giant Novartis has been awarded a $220 million (SFr270 million) contract by the United States Department of Health to develop a flu vaccine.

This content was published on May 5, 2006 - 11:11

It is the first major order for Novartis since it took over California-based Chiron, the world's fifth-biggest vaccine maker, last month.

The order for a cell culture-derived vaccine was part of $1 billion handed out in research contracts to drugmakers.

The US government is trying to encourage development of quicker and more efficient modes of vaccine production in case of a flu pandemic.

US health authorities are aiming to be able to produce 600 million doses of flu vaccine within six months of a pandemic being declared – 150 million doses coming from a planned Novartis facility.

"Novartis is pleased to be working with the US government to provide a reliable vaccine supply for US citizens and to further strengthen pandemic preparedness," said Daniel Vasella, chief executive of Novartis.

Product development

The $220 million earmarked for the Basel-based company will be committed over five years to support product development as well as the design of a new facility and equipment.

Vasella said Novartis would also be investing additional resources in "highly skilled researchers to set up one of the first flu cell culture manufacturing sites in the US".

At present the antigen – (active ingredient) in flu shots is made using chicken eggs, a time-consuming process ranging from six to nine months – a painfully long time when facing a pandemic – that limits manufacturers' ability to scale up production.

Cultivating antigen in stainless steel vats of cell culture is widely seen as the way of the future, although experts say it will take several years to develop and test the technology.

Takeover

Last month Novartis acquired the remaining stake in the world's fifth-biggest vaccine maker, Chiron, for $48 a share, or $5.4 billion. Novartis had already owned 44 per cent of Chiron's shares.

After shareholder approval, Chiron said more than 85 per cent of its outstanding shares were cast in favour of the agreement, which followed strong opposition from some of Chiron's largest shareholders to Novartis's previous offer of $45 a share.

When Novartis sweetened its bid to $48 a share at the beginning of April, CAM North America and ValueAct, Chiron's second- and third-largest shareholders respectively, said they would vote in favour of the transaction.

swissinfo with agencies

In brief

The US Department of Health has awarded a total of $1 billion in research contracts to drugmakers to encourage development of more efficient modes of vaccine production in case of an avian flu pandemic.

Belgium-based chemicals conglomerate Solvay SA received $299 million, British drugmaker GlaxoSmithKline received $275 million, Novartis $220 million, US-based vaccine maker MedImmune. $170 million and US-based DynPort Vaccine $41 million.

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Key facts

Influenza is a contagious, potentially serious respiratory illness caused by flu viruses that attack the upper respiratory tract.
Flu epidemics are thought to cause three to five million cases of severe illness and 250,000-500,000 deaths a year around the world.
Novartis turned in a record profit of SFr7.8 billion ($6.1 billion) with net sales of SFr41.7 billion in 2005.

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