Wednesday, October 26, 2005

Chiron expects market share boost

Posted on Wed, Oct. 26, 2005

Chiron expects market share boost

By Judy Silber

Note: Chiron has a production facility in Vacaville, CA located in Solano County.
Despite a difficult year, executives from Chiron Corp. said they are looking to expand flu vaccine production and be a significant player in that market.

The Emeryville-based company said on Tuesday that it has begun an early-stage clinical trial for a cell culture-based method of making flu vaccine, a technique that will provide greater flexibility for manufacturing than current technology. In addition, it is discussing production of a vaccine for the deadly avian flu with the U.S. and European governments.

The company reported in a third-quarter earnings conference call with investors that it will have shipped only 5 million doses of flu vaccine by the end of this week. Because of production delays and lower outputs than usual, Chiron said it will not meet the total of 18 million doses predicted earlier this year.

"It is the price we pay in order to maximize our confidence that this return to the United States supply will be sustainable," said Howard Pien, chief executive officer of Chiron.

After losing its flu vaccine manufacturing license one year ago, Chiron implemented a 2,000-step overhaul of its Liverpool, England, facility to clean up severe bacterial contamination. The company received clearance to ship the first doses of finished vaccine earlier this month.

Chiron's production season was about one-third of the usual length, Pien said. There were "challenges associated with new equipment and processes," he added. The company was also extra careful about installation so that the facility would run smoothly and sustainably once back online, Pien said.

Pien refused to predict how many doses Chiron will deliver this year. Chiron has already twice changed projections for the 2005-06 flu season. "If we were wrong, someone will say that Chiron is shooting itself in the foot again and again," he said.

Compared to one year ago, when Chiron was forced to write off sales of its flu vaccine, third-quarter profits nearly doubled for 2005. The company reported net income of $51.3 million dollars, or 27 cents per share for the quarter ended Sept. 30, compared to $27 million, or 14 cents per share, for the same period in 2004.

In addition to depressed sales of flu vaccine in the U.S. market, Chiron took a $41 million hit for the shut-down of its plant in Marburg, Germany. The company said the clean-up is much easier than what was needed in Liverpool, and expects that facility will be producing vaccine again in 2006.

Though this year's flu season is a disappointment for the company, Pien stressed that the company is looking ahead.

The cell culture technique for flu vaccine production is faster and more adaptable than the current method of using chicken eggs. Since last year's debacle with Chiron, health officials have stressed the importance of getting cell culture systems up and running because they offer greater flexibility.

Though the U.S. trials are only just beginning, Chiron is in late stage clinical trials in Europe and expects to file for approval there in 2006.

Planning for a pandemic outbreak of the avian flu virus has also become a top priority for Chiron. Chiron scientists began working on an avian flu vaccine in 1997. Pien said the company is discussing the prospect of making a vaccine for the federal stockpile with health officials.

Judy Silber covers biotechnology and the business of health care. Reach her at 925-977-8507 or


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