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Glaxo sees recurring pandemic flu business
November 12, 2009 / 9:05 PM / 8 years ago

Glaxo sees recurring pandemic flu business

NEW YORK (Reuters) - Sales of flu treatments due to the H1N1 swine flu pandemic may be sustainable beyond the current winter season, as governments around the world overhaul their long-term strategy on stockpiles.

GlaxoSmithKline Plc (GSK.L) Chief Executive Andrew Witty said on Thursday that pandemic stockpiling would be a recurrent business, rather than a simple one-off, with some 60 countries now running strategic reserves of both vaccines and antivirals.

“I think what that will lead to is a lower level, but still I think a material level, of potential sales to government stockpiling environments over the next few years,” he told the Reuters Health Summit.

“It’s going to be a material piece of business for the company.”

H1N1 swine flu continues to spread and has killed thousands of people around the world. Many countries are working to vaccinate their populations but vaccine production is slow.

Glaxo has said analyst forecasts for about 1 billion pounds ($1.7 billion) of H1N1 vaccine sales in the fourth quarter are broadly accurate, and similar numbers are forecast for the first quarter 2010.

Investors and analysts have questioned the sustainability of sales of vaccines and antivirals like Glaxo’s Relenza, which hit 464 million pounds in the nine months to end-September.

But Witty said this missed the point that increasing numbers of governments would in future be maintaining and refreshing stockpiles of treatments against the risk of another pandemic -- even though this may be decades away.

He added that it was misleading to think of pandemic sales as a windfall for manufacturers, since drugmakers like Glaxo had been researching and investing heavily for such an eventuality.

SIGNIFICANT BUSINESS

Others are also benefiting -- including Roche Holding AG ROG.VX, which makes antiviral Tamiflu, and rival vaccine makers like Sanofi-Aventis SA (SASY.PA), Novartis AG NOVN.VX, AstraZeneca Plc (AZN.L), CSL Ltd (CSL.AX) and Baxter International Inc (BAX.N).

“After this particular spike is gone, my belief is that those institutions (government stockpiles) will stay in place -- this notion of being ready and better-prepared for next time,” Witty said.

Pandemic flu will be a “very significant business” for Glaxo through until March and probably also in the second quarter of next year, he said. After that much will depend on how long the pandemic lasts, how many countries maintain stockpiles and of what size.

“We’ve spent the best part of 15 years investing for this situation ... so I‘m just going to slightly push back on this notion that we just sat around waiting for this to fall out of the sky,” Witty said.

“We’ve done a lot to put ourselves in a situation to be a supplier.”

By Sam Cage, additional reporting by Ben Hirschler, editing by Matthew Lewis

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