Feds award bird flu vaccine contracts to Novartis, Glaxo

NEW YORK (CNNMoney.com) -- The U.S. government awarded Novartis and GlaxoSmithKline contracts worth more than $100 million to develop vaccines to protect against the possibility of a bird flu pandemic, the drug companies said.

The Department of Health and Human Services awarded a $63 million contract to British drugmaker GlaxoSmithKline (up $0.63 to $55.17, Charts) to develop vaccines against H5N1, or avian flu. Glaxo said the purpose of the five-year contract is for the company to develop ways for the U.S. government to expand its vaccine supply in the event of a pandemic.

The government also awarded a $55 million grant to Novartis (up $0.54 to $59.44, Charts), the Swiss drug giant, to develop an adjuvant called MF-59 that would strengthen vaccines for bird flu, the company said. Part of the contract would go toward developing and designing a plant to manufacture vaccines at Holly Springs, North Carolina.

The deadly H5N1 virus emerges in birds but can spread to people who live or work in close conditions with them. Bird flu has killed more than 160 people worldwide since 2003, according to the World Health Organization.

But H5N1 has not yet been identified as a virus that can spread from human to human, except in some rare and unusual circumstances. Governments around the world are preparing for the full-blown transmission of H5N1 between humans, even though it might never happen. Some experts believe that an H5N1 pandemic could be as bad as the flu pandemic of 1918, which killed tens of millions of people and is believed by some scientists to have originated in birds.

Other companies that are producing or developing bird flu-related products include Sanofi-Aventis (up $0.12 to $45.79, Charts), MedImmune (down $0.20 to $35.00, Charts), BioCryst Pharmaceuticals (down $0.13 to $10.92, Charts) and Roche Holding (up $2.30 to $188.03, Charts), maker of the anti-viral Tamiflu.

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