Chiron Corp. said Wednesday it will not deliver as many flu shots this year as it had promised, prompting the beleaguered biotechnology company to cut its 2005 financial forecast.
The Emeryville, Calif.-based company, one of only two major makers of the nation’s flu vaccine, caused a public health scare in October when it failed to deliver 50 million shots at the beginning of flu season because of manufacturing problems. That was about half the nation’s expected vaccine supply.
Chiron said its Liverpool, England factory is still plagued with problems and that it now plans to produce 18 million to 26 million doses of its Fluvirin vaccine for the 2005-2006 season, down from a previous forecast of 25 million to 30 million doses.
High-profile failure
Since the company’s high-profile failure was announced in October, its stock has fallen more than 20 percent. Meanwhile, other drug makers are attempting to enter a U.S. flu vaccine market that was previously locked up by Chiron and the French pharmaceutical Sanofi-Aventis SA.
Analysts said London-based GlaxoSmithKline could sell as many as 10 million flu shots in the United States this flu season if the Food and Drug Administration approves its marketing application. Sanofi is expected to supply 60 million shots and the biotechnology company MedImmune Inc. of Gaithersburg, Md. is expected to provide 3 million doses of its nasal spray vaccine.
Chiron’s stock was down $2.84, or 7.5 percent, to $35.11 a share in afternoon trading on the Nasdaq Stock Market.
The company also cut its 2005 earnings forecast to 86 cents to $1.11 per share from $1.06 to $1.16 per share.
“While it remains possible that we will reach our previously announced range, the delays and other manufacturing issues have had an adverse impact on our ramp-up to full production,” Chiron chief executive Howard Pien said.
Flu shot debacle
Last August, Pien announced that Chiron had found 4 million tainted flu shots in its Liverpool factory, but still intended to ship about 46 million doses to the United States. At the time, U.S. health officials said they were confident the nation’s vaccine supply wasn’t in jeopardy.
But on Oct. 5, British regulators shut down the factory and prohibited Chiron from shipping any vaccine — a move that caught U.S. health officials by surprise just as the nation’s flu season was starting.
Since then, October has struggled to repair its tarnished image and regain the confidence of U.S. health officials. A Centers for Disease Control and Prevention spokesman didn’t immediately return a telephone call Wednesday.
The company faces myriad federal investigations and investor lawsuits because of its failure. The mishap cost the company an estimated $300 million in lost sales, and Chiron took a $91 million charge in the third quarter last year because of the vaccine debacle.
In March, British officials said the company could resume vaccine making, but the FDA still needs to inspect the plant before Chiron can ship shots to the United States. The FDA, which plans a July inspection, could still bar Chiron from the U.S. market if it’s not satisfied with its manufacturing practices.
Pien relinquished the title of president in February and wasn’t given an annual bonus in 2004 according to regulatory filings. He received a $1.5 million bonus in 2003.
Meanwhile, flu experts and government officials are meeting in Memphis Friday to develop new production and distribution schemes for flu vaccine to avoid another Chiron-like debacle.
