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Chiron blamed for vaccine shortfall
California drug company acknowledges 2005 holdup, but says worst of its troubles are in the past.
October 28, 2005: 2:36 PM EDT
By Aaron Smith, CNN/Money staff writer

NEW YORK (CNN/Money) - Chiron, one of the lead manufacturers of flu shots, said the worst of its production problems are resolved, but family doctors are fuming that they're not getting enough flu shots now.

"We are producing fewer [flu shots] than we had originally hoped this season," said Chiron Corp. (up $0.82 to $43.48, Research) spokeswoman Alison Marquiss, who did not provide a tally. "We are behind on some flu shot deliveries. Effectively, our production season was truncated. We got a late start."

Marquiss said that flu shot deliveries "will reach customers but I can certainly understand they're impatient, frustrated and skeptical after last year." But Marquiss added, "We're very much looking forward to next year, when we'll be back to full production."

Chiron, health officials and family doctors say there's a hold-up, but not a shortage, because everyone who needs a shot will eventually get it.

British regulators and the Food and Drug Administration forced Chiron to shut down its vaccine factory in Liverpool, England in 2004 after Chiron detected that a small batch of flu shots was not sterile, said Marquiss. Those issues have been resolved with the regulatory agencies and the company plans to be up to full capacity next year, projecting 40 million doses for the 2006 season.

"It's a shame they're being blamed, because they are really are producing product and we think they're on track," said FDA spokeswoman Julie Zawisza, referring to Chiron.

Alex Hittle, analyst for A.G. Edwards, said that Chiron seems to have resolved its "very unfortunate" regulatory problems.

"They bought an old facility that was known to have problems," said Hittle, referring to the Liverpool factory. "Their claim that this is probably the most scrutinized flu facility in the world rings true. So I would be quite surprised if they would be unhorsed by something similar to what happened last year."

However, Chiron corrected its guidance for flu shot production for the current season, from the original projection of 18 to 26 million doses, to an unspecified number below 18 million. Hittle projects that Chiron will produce between 5 million and 18 million flu shots this season, and shaved 10 cents off EPS projections, down to $1.05 for 2005. But Hittle's EPS projection for 2006 is much higher: $1.85.

SG Cowen analyst Eric Schmidt projects that Chiron will produce between 13 million and 18 million flu shots this season and that other drug makers will pick up the slack.

"A shortfall of a few million doses from Chiron might be made up by some of the other players," said Schmidt. "That's why the Department of Health and Human Services is saying we can all get flu shots now."

French drug giant Sanofi-Aventis (up $0.06 to $39.55, Research) is expected to produce 60 million flu shots, according to Centers for Disease Control spokesman Von Roebuck, while British drug giant GlaxoSmithKline (up $0.98 to $52.32, Research) is expected to produce at least 7.5 million shots and Maryland-based biotech MedImmune (up $0.30 to $34.07, Research) will produce 3 million doses of its nasally-administered FluMist.

GlaxoSmithKline produced 4 million doses of flu shots last year for the U.S. government as an emergency measure, but this season is the first time they've produced vaccines for the U.S. market through the typical regulatory channels, said company spokesman Michael Fleming.

Family doctors fuming over flu shots

Family doctors who find themselves without flu shots this season are not ready to forgive and forget.

"We're getting calls from other flu clinics that are saying that they don't have enough flu vaccines and are referring people to us," said Robert Smith, spokesman for the Visiting Nurse Association of Texas. "We've had to cancel clinics and had to allocate our resources to those sights [like nursing homes and senior centers] that only have the highest risk."

Chiron isn't the only culprit, said doctors who criticized a system that they say favors large drugstore chains over physicians.

"It's outrageous when family physicians are last in line to get their flu shots," said Peter Graber, spokesman for the North Carolina Academy of Family Physicians.

Dr. Larry Fields, president of the American Academy of Family Physicians, said his organization would evaluate the nationwide flu shot distribution process to try and avoid further problems next year.

"It creates a public health problem in the U.S. when physicians are not given the tools they need to administer effective preventative modalities such as the influenza vaccine to the patients who need it most in a timely manner," said Dr. Fields. "Family physicians are the ones who know best who needs the vaccine and it should be in our hands better than anyone else's."

To read about Chiron and GlaxoSmithKline's work on the bird flu vaccine, click here.  Top of page

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