New life seen for vaccine industry

Bird flu fears, research advances herald a revival


WASHINGTON -- Vaccines, the venerable guardians against measles, mumps and polio, are making a comeback after years of neglect because of their potential to fight a bird flu outbreak and prevent deadly diseases such as cervical cancer.

After largely abandoning the business because of low prices, tight regulations and fear of lawsuits, companies are building new labs. And, spurred by concerns about a flu pandemic, the federal government is spending hundreds of millions of dollars on vaccine research.

"There's a resurgence," said Frank Sloan of Duke University, who chaired a National Academy of Sciences committee that three years ago lamented the sorry state of vaccine innovation and production.

The heightened attention will receive a further boost with the Food and Drug Administration's expected approval this week of the human papillomavirus vaccine, which could prevent most cases of cervical cancer. It would be the third vaccine to win agency approval in as many months, after regulators allowed sales of vaccines to treat shingles among the elderly and a common stomach virus in children.

"The pendulum went too far," said Dr. Jay Markowitz, a biotechnology analyst at T. Rowe Price. "Companies realized a wholesale exit from the vaccine business was the wrong move, and at the same time, government realized that as well."

To prepare for a possible bird flu outbreak, the federal government is spending more than $160 million to stockpile vaccines. This year, it gave companies more than $1 billion to develop faster production techniques. What's more, the National Institutes of Health is conducting basic research to pave the way for the next generation of flu vaccines.

"There's an increased government investment," said Dr. Gary Nabel, director of the National Institute of Allergy and Infectious Diseases' vaccine research center. "That translates into more support for the research and more support for the purchase of vaccines. And that, in turn, increases the interest of companies."

Companies have taken notice. In April, the Swiss company Novartis bought a California vaccine maker for $5.4 billion. Within the past year, GlaxoSmithKline of London has purchased a Canadian manufacturer, acquired a research and production facility in Marietta, Pa., and expanded another in Germany. Sanofi Pasteur, a French company, is building three plants in Swiftwater, Pa.

"There really is a large potential," said Christine Fanelle, a spokeswoman for Merck & Co.'s vaccine division, based in West Point, Pa. "The adult and adolescent markets are untapped for vaccines."

Indeed, vaccines no longer concentrate on communicable diseases afflicting children. Last year, the FDA approved a vaccine for bacterial meningitis in college students. The HPV vaccine would be for girls and women ages 9 to 26, and the shingles vaccine is for people 60 years and older.

Even seasonal flu vaccines are being recommended for more than just the sick, young and elderly - an estimated 210 million Americans this year, up from 75 million in 1964.

A broader clientele means bigger sales. Novartis' chief executive recently told Business Week that the market for vaccines could grow 20 percent a year over the next five years. The global market for vaccines in 2005 was $5.8 billion, according to IMS Health, which tracks pharmaceutical sales.

"Over the next five years it's a booming market for vaccines," said Zach Wagner, senior pharmaceuticals analyst at Edward Jones in St. Louis.

The bright financial prospects have transformed the vaccine business, which had been in the doldrums. More than a dozen pharmaceutical companies had abandoned selling certain vaccines and, in some cases, quit the business altogether in the 1980s and 1990s because of low prices, tight regulation and, they said, costly lawsuits. Only five major pharmaceutical companies remained in the field.

The dire implications for public health weren't clear until British regulators shut down one of the few manufacturing plants in 2004 because of contamination problems, and the United States suffered a shortage of seasonal flu vaccines.

More recent worries about a bird flu outbreak, which could kill 2 million Americans and debilitate many more, have intensified the hunt for new vaccines as well as new technologies for making vaccines more quickly and in larger numbers. In addition to extra spending, the federal government has taken steps to accelerate flu vaccine approvals and offered companies immunity from lawsuits.

A better understanding of the causes of diseases and the functioning of the body's immune system has also sparked development of new vaccines - some, like the shingles vaccine, to treat diseases that patients already have rather than prevent diseases from arising.

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