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Tuesday, October 19, 2004

Flu Vaccine: "A Very Attractive Business"


Via Political Animal and Denise Gellene of the LA Times, I learn that two new companies hope to enter the US flu vaccine market. Apparently they see great profit opportunities in the US.
GlaxoSmithKline, the largest vaccine maker in the world, and ID Biomedical, a small Canadian company, have announced plans to sell flu shots in the U.S. ID Biomedical could enter the market as soon as next year.

That would reduce the nation's reliance on two vaccine makers — and the odds of another massive shortage.

The competitive interest in making flu vaccines could dispel the notion that there is no money to be made in the business. In fact, over the last five to six years, the wholesale price of a flu shot has jumped to more than $8 from less than $2, far outpacing increases in production costs. What's more, the market is growing. Demand has risen to about 80 million doses annually from half that in the mid-1990s. U.S. public health authorities aim to vaccinate 150 million Americans annually by 2010.

"It is a very attractive business," said Anthony Holler, ID Biomedical's chief executive.
A very attractive business? No doubt that will come as a big surprise to readers of the mainstream media or conservative blogs, which have subjected us to an endless stream of nonsense like the following:

[Wyeth's] exit is part of a long, slow industry-wide flight away from flu vaccine, which has simply become more trouble than it's worth...Even under the best circumstances, vaccines have never been very attractive investments. [David Brown, "How U.S. Got Down to Two Makers Of Flu Vaccine."]
Readers of Ragout, of course, have known all along just how dubious these claims about unprofitability really were. Two weeks ago I cited flu vaccine maker Chiron's pre-contamination optimism:
[The newpaper article's] claim that it's hard to make money selling vaccines is also disputed by a surprising source: Chiron, which says that flu vaccine prices have risen enough to justify substantial investment in the U.S. market. Chiron's president testified before Congress earlier this year, "Pricing of influenza vaccines has reached a level that allows manufacturers to invest in maintaining facilities to meet FDA standards and in expanding manufacturing capacity in order to meet the increased demand." Prices have risen in the past few years because 3 of the 5 former manufacturers have left the U.S. market.
Perhaps the mainstream reporters can be forgiven for not uncovering these facts. After all, I relied on hard-to-find, almost secret sources of information.

 
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