April 6, 2010 / 10:08 AM / 10 years ago

UPDATE 2-GSK agrees to one-third cut in UK H1N1 vaccine order

* Cap at 34.8 mln doses, saving third of original order

* Govt says no cancellation fee paid, details confidential

* GSK says will work with governments as needs change

(Adds quotes, details, background, GSK share price)

By Kate Kelland

LONDON, April 6 (Reuters) - GlaxoSmithKline (GSK) (GSK.L) has agreed the British government can cut its order of H1N1 swine flu vaccines by about a third.

The government and GSK said separately on Tuesday they had agreed to cap the number of Pandemrix shots to 34.8 million doses, including those already delivered, and there would be no cancellation fee.

“The final settlement was mutually agreed as representing fair value for the UK government and the manufacturer,” the health department said in a statement.

The government also said the agreement meant it would now receive other GSK products, including H5N1 “bird flu” vaccines and courses of the antiviral drug Relenza to replace the amount used during the peak of the swine flu outbreak.

The government did not give further details of the deal, saying they were commercially confidential, but said the agreement was in line with GSK’s settlements with other countries. The government’s statement was repeated in GSK’s statement on the deal.

About 17,000 people have died from laboratory-confirmed cases of H1N1 but the World Health Organisation, which declared the H1N1 flu a pandemic last June, has said the real death toll is likely to be many times higher.

However, initial fears that the pandemic would kill many millions have turned out to be unfounded so far and governments around the world that ordered vast supplies of vaccines have been seeking to renegotiate their deals with suppliers like GSK.

The British company, which is the biggest supplier of H1N1 vaccines, has already reached agreements to cut vaccine orders for Germany and Belgium.

Other H1N1 flu vaccine manufacturers such as Novartis NOVN.VX and Sanofi-Aventis (SASY.PA) also faced order cancellations from France.

Simon Jose, general manager of GSK UK, said the firm was keen to work with governments when public health needs changed.

“Understanding of the H1N1 pandemic has significantly evolved since the declaration by the WHO last June and we recognise that governments’ needs and public health priorities are changing,” he said in a statement.

“We are committed to working with them to respond to their needs as the pandemic evolves and find appropriate and fair solutions.”

GSK shares were 0.7 percent lower by 1025 GMT.

British health minister Andy Burnham said the deal represented “good value for the taxpayer” and meant the government would be able to keep a strategic stockpile of vaccine.

“This both protects the public purse and ensures the UK remains at the forefront of pandemic preparedness worldwide,” he said in a statement. (Additional reporting by Paul Sandle, editing by Karen Foster)

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