Flu vaccine shortage could give needed boost to MedImmune

FluMist price reduction might aid disappointing sales for company

December 06, 2003|By William Patalon III | William Patalon III,SUN STAFF

Yesterday's disclosure that the U.S. supplies of flu vaccines may run short could give a short-term boost to MedImmune Inc.'s so-far disappointing FluMist nasal-spray flu vaccine.

But the Gaithersburg-based company and its marketing partner will have to slash the vaccine's high price if the new product is to achieve long-term success, according to an analyst who follows MedImmune.

Aventis SA of France, the largest maker of flu vaccines, and Chiron Corp., of California, said yesterday that reports that a more virulent strain of the influenza virus was circulating this year had spurred more people to seek vaccinations, depleting their supply. The two companies make all the vaccine used in flu shots in the United States.

That leaves MedImmune as the only company with a large inventory available.

MedImmune and its Madison, N.J.-based partner Wyeth rolled FluMist out with fanfare - and an advertising budget of $25 million - earlier this year, expecting that the allure of a pain-free nasal spray would ignite sales of the first-year vaccine. MedImmune and Wyeth manufactured "between 4 and 5 million" doses, said MedImmune spokeswoman Jamie Lacey.

But the huge price premium being charged for FluMist - a wholesale cost of $46 vs. about $8 for the regular injection - chilled demand for the new spray.

Lacey said that as of Nov. 18, the company had shipped only 400,000 doses.

For the product to succeed long term, the price will have to decrease substantially, said Dennis Harp, a biotechnology-industry analyst for Deutsche Bank in New York. Harp said that even with its pain-free delivery feature, FluMist can command just a small premium that would price it at about $10 to $12 per dose wholesale.

"I think it's entirely possible [FluMist sales will jump] given the fears over this year's flu season. But the real question is: What kind of a product does FluMist become going forward?" Harp said.

Last month MedImmune announced it would miss its sales and profit targets because of FluMist's disappointing sales. It reduced its fourth-quarter and year-end guidance for revenue and earnings, while emphasizing its other businesses remained strong.

MedImmune shares climbed $1.64, or 6.46 percent, yesterday to close at $27.04. The shares peaked June 6 at $42.09.

MedImmune is taking steps to make FluMist more competitive, at least in the short run.

Yesterday, it announced that its research has shown that FluMist - which contains a live-but-weakened virus - should be more effective against the Fujian flu strain circulating this year than other available vaccines, because they are built around an inactivated virus.

The firm also said that a $25 rebate program remains in effect.

Bloomberg News and the Associated Press contributed to this article.

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