Speaking on a conference call on Monday, Chiron's chief executive Howard Pien said the plant would produce fewer than 18 million doses of flu vaccine for the 2005-06 flu season, down from a previous estimate of between 18 and 26 million doses.
In an average year in the US, influenza causes more than 200,000 hospitalisations and kills approximately 36,000 people, primarily in the over-65 population.
Influenza vaccination is the most effective way to prevent influenza.
Last year, Chiron's 48-million dose production of Fluvirin flu vaccine was deemed unacceptable for use by the US Food and Drug Administration (FDA).
As a result, the plant that manufactures Fluvirin in Liverpool, England, was abruptly shut down due to contamination problems and has only recently been restarted.
The sudden loss of Chiron's total vaccine production last year cut the US vaccine supply in half and created a frantic search for flu shots nationwide.
Chiron also announced on Monday that its financial results for 2005 will be lower than forecast due to the below than expected vaccine production output.
"We ran out of days ... the number of changes we have had to make took us away from being able to produce vaccine," Pien said, attributing this year's shortfall to delays related to adapting new processes and procedures at the British plant.
Despite Chiron's lowered projections for this year, the FDA said it expected there would still be significantly more vaccine produced than last year.
After receiving approval last week from US and UK health regulators, Chiron has begun its first delivery and release of Fluvirin to customers in the US for the upcoming flu season.
"We are again positioned to help meet the needs of patients, healthcare providers and customers," said Pien.
Chiron said it expects to continue to deliver shipments of Fluvirin vaccine throughout October, November and into December, but the total number of doses produced will be fewer than it had expected.
Chiron will also continue to perform internal release procedures and standard FDA influenza vaccine lot release procedures on their shipments of Fluvirin vaccine.
The company expects to be back on track for the 2006-07 flu season, with a projected production capacity of 40 million doses of vaccine.
The company is also working to develop a vaccine against bird flu, but the earliest that vaccine could be on the market would be mid-2007.
Prices for the flu vaccine have risen about 20 per cent as demand for flu shots increases and US public health authorities push to vaccinate up to 180 million Americans annually.
Partly in response to last year's shortage, the US government have taken steps to assure that flu vaccine goes first this year to those who need it most.
Under federal guidelines, people in high-risk groups receive priority for flu shots until October 24, 2005. After that date, all people ages 6 months and older will be eligible to receive flu shots.
High priority groups include nursing home residents, those older than 65, younger people with chronic illnesses such as diabetes and asthma, pregnant women, health workers and children between 6 months and 2 years.
The government now advises that all healthy toddlers get flu shots after more than 130 US children died from influenza or its complications in the 2003-04 season.
The annual direct medical costs of influenza in the US are estimated at $3-5 billion.
Chiron is one of four manufacturers distributing flu vaccine this year, alongside Sanofi Pasteur, MedImmune and GlaxoSmithKline.