GSK continues apace with flu vaccine empire building

The move follows the company's decision to buy a facility from Wyeth in the US that will be turned over to flu vaccine production, as well as its announcement that it will double production at a flu vaccine facility in Dresden, Germany,

Until last year, the flu vaccine market was split mainly between two players - Chiron and Sanofi Pasteur - with other players lagging well behind the leaders. Now, the manufacturing problems that have beset Chiron and led to vaccine shortages in the 2004/5 flu season have opened up the market, and GSK itself has benefited with approval of its own Fluarix vaccine by the US Food and Drug Administration (FDA) under a special fast-track system.

Fluarix is not a new product and is already distributed in 79 countries, however GSK had never previously pursued approval in the USA on the grounds that the market was already saturated and it would not be able to capture significant market share

GSK will pay C$1.7 billion (€1.15bn) for ID Biomedical, which is one company that has answered the call by governments around the world for flu vaccine supplies, both to help with the current vaccine shortfall and guard against a potential flu pandemic, which scientists fear may be on the way.

ID Biomedical is currently in the process of expanding and upgrading its Canadian manufacturing facilities, which are expected, beginning in 2007, to produce around 75 million doses per year of its Fluviral egg-made influenza vaccine.

The Centers for Disease Control (CDC) in the US has estimated that at least 75 million doses of flu vaccine will be needed this season. Sanofi Pasteur has said it should be able to supply 60 million doses. Meanwhile, Chiron has said it can supply 18 to 26 million doses, provided it can get a green light for its production plant from the FDA, and GSK should be able to make 8 million doses available. MedImmune's nasal vaccine FluMist will also contribute to the supplies to the tune of around 3 million doses.

Worldwide, influenza vaccine production is around 300 million doses annually, but demand currently exceeds supply and is expected to increase dramatically, according to GSK.

GSK is already one of the world's largest vaccine manufacturers, but believes there is significant growth potential in a market that is shaking off its image as a low-value, commodity sector. Earlier this year the company predicted that the global vaccine market could quadruple in size by 2015 to £17-£24 billion from its current level of around £5 billion (€7.4bn). GSK recently boosted its vaccine technology platform via the $300m acquisition of Corixa, which makes a novel vaccine adjuvant.

The GSK/ID Biomedical announcement comes less than a week after Novartis offered $4.5 billion for the 58 per cent of Chiron it does not already own - since rebuffed by Chiron's management - in an attempt to get into the vaccines business.