UPDATE 4-Flu a windfall for some drugmakers, shares jump

* Swine flu to trigger demand for drugs, vaccines

* New orders expected for Roche's Tamiflu, Glaxo's Relenza

* Roche shares gain 3.5 pct, Glaxo up 5.7 pct

* Biotech stocks Biocryst, Novavax, Biota soar

* 3M ramps up production of masks
(Adds 3M, Baxter comment, link to Factbox, updates shares)

By Ben Hirschler

LONDON, April 27 (Reuters) - The threat of a pandemic
triggered by a new swine flu strain that has killed more than
100 people in Mexico will provide a windfall for some makers of
drugs, vaccines and protective masks.

Switzerland's Roche Holding AG (ROG.VX) and Britain's
GlaxoSmithKline Plc (GSK.L) are the two big pharmaceutical
groups set to benefit most as governments and corporations step
up orders for their drugs Tamiflu and Relenza.

Shares in the two companies rose almost 4 and 6 percent
respectively on Monday, while shares in some smaller biotech
companies soared.

But analysts cautioned that the commercial impact would be
muted by the fact that many governments had already placed
substantial stockpile orders because of the previous threat
posed by avian flu.

"There is certainly a perceived benefit and there probably
will be some actual benefit but not as much as the first time
round with avian flu," said Jeff Holford, an industry analyst at
stockbroker Jefferies.

Relenza, known generically as zanamivir, and Tamiflu, or
oseltamivir, both appear to work against the new flu strain,
which has spread to the United States and as far as New
Zealand. [ID:nFLU]

Among smaller companies, U.S.-based Novavax Inc (NVAX.O),
which is working on new types of vaccines, surged 125 percent;
Biocryst Pharmaceuticals Inc (BCRX.O), which is developing a
new flu drug called peramivir, rose 85 percent; and Australia's
Biota Holdings Ltd (BTA.AX), which licensed Relenza to Glaxo,
jumped 82 percent. [ID:nBNG448254]

DRUG RESISTANCE

Roche said it was working on scaling up production of
Tamiflu but noted that the lead time for the drug from
synthesis of the product to packaging was eight months.
[ID:nLR151421]

Glaxo is also urgently seeking ways to increase production
of Relenza. The company said it had supplied 100,000 packs of
Relenza and 170,000 additional doses of seasonal flu vaccine to
Mexico since the start of the outbreak. [ID:nLR107259]

Although the WHO said Tamiflu was working against strains
of the new H1N1 swine flu some analysts expressed concern it
might be less effective than Relenza, since there have been
widespread reports of resistance by seasonal H1N1 flu.
[ID:nN02427328]

James Knight, an analyst at stockbroker Collins Stewart,
said Relenza had potentially the biggest upside as a result.

Demand has historically been greatest for Tamiflu, which is
given as a convenient tablet, while Relenza must be inhaled,
and Roche sold some 4 billion Swiss francs ($3.5 billion) of
Tamiflu to governments in 2006 and 2007.

Recently, though, Glaxo's product has been winning more
business as buyers diversify their medicine reserves.

In the first quarter of 2009, sales of Relenza into
government stockpiles -- notably Britain and Japan --
outstripped those for Tamiflu, although total Relenza sales of
222 million pounds ($323 million) were still below the 401
million Swiss francs ($350 million) generated by Tamiflu.

Tamiflu was originally invented by U.S. biotech company
Gilead Sciences Inc (GILD.O).

VACCINE PREPARATIONS

The flu outbreak, which poses the biggest risk of a pandemic
since avian flu surfaced in 1997, will also fuel demand for
vaccines from major producers like Sanofi-Aventis SA (SASY.PA),
Glaxo, Novartis AG (NOVN.VX) and Baxter International Inc
(BAX.N), although making shots against the new strain will take
months. [ID:nN26495217]

Baxter said it had asked the World Health Organization for
a sample of the swine flu virus. The sample potentially could
be used to develop an experimental vaccine.

"At this point, it's too soon to say" what role, if any,
Baxter might play, company spokesman Chris Bona said.

Baxter, which currently sells vaccines against tick-borne
encephalitis and to prevent meningitis, has also developed a
vaccine to prevent infection with the avian influenza virus. It
is being stockpiled by government clients.

A number of companies said they were in talks with the WHO
and the U.S. Centers for Disease Control and Prevention about
developing a vaccine against swine flu and were also discussing
capacity issues.

At least 20 companies make flu vaccines. Other smaller
players include Australia's CSL Ltd (CSL.AX) and nasal spray
maker MedImmune, acquired by AstraZeneca Plc (AZN.L) in 2007.

In the meantime, demand for protective masks appears to
have jumped in the wake of the swine flu outbreak, accelerated
by U.S. government recommendations.

"We have seen an increase in demand and we have increased
production," said Jackie Berry, a spokeswoman for 3M Co
(MMM.N). "We have added additional shifts in our facilities."
(Reporting by Ben Hirschler, additional reporting by Ransdell
Pierson and Helen Chernikoff in New York, editing by Greg
Mahlich and Matthew Lewis)