Chiron Scrambles To Reopen British Plant For Flu Season
10/19/2005 5:12:20 PM
With an April deadline looming, Chiron Corp. has launched a massive effort to reopen its British vaccine factory in time to deliver shots to the U.S. for next fall's flu season. But the company doesn't know whether it will be enough, its chief executive acknowledged in an interview this week.
In his first interview since British regulators shuttered the Liverpool plant Oct. 5 because of bacterial contamination, CEO Howard Pien said there was no way to forecast how many doses Chiron might sell this year, if any. He said it was possible that Chiron could capture half the U.S. market if the plant cleanup went smoothly and the company beat competitors to market.
"We will try, but we may not succeed," he said. And he didn't rule out the possibility of future problems at the plant and in regaining Chiron's share of the market. "If we succeed, we may not sustain," he said. "And if we sustain, we may not have the market share."
The Emeryville, Calif.-based company has said that it will need to start production in March to deliver vaccine in the fall. In December, the British Medicines and Healthcare products Regulatory Agency extended its suspension of the Liverpool plant's license until early April, but Chiron hasn't given up, noting that the license suspension could be lifted anytime and that an April start-up might be early enough.
Pien said a team of 70 experts was implementing a "remedial plan" calling for broad changes that go beyond addressing U.S. and British inspectors' findings. "Truthfully, this has taken a lot out of us, and it would be horrendous if we ever had to live through this again," Pien said. He was interviewed at his hotel in San Francisco, where he made a presentation Wednesday to investors at the J.P. Morgan Healthcare Conference.
Some analysts are somewhat optimistic about Chiron's prospects. Jennifer Chao of Deutsche Bank upgraded Chiron's shares to a "buy" Jan. 3, saying she thought it could deliver at least 35 million doses next season. Chiron's shares closed Friday at $34.63 on the Nasdaq stock market; they are down nearly 24 percent since British regulators suspended the company's license Oct. 5.
Chiron is under investigation by the Justice Department, which is looking into disclosures that the company made about its ability to supply vaccine last year. Chiron also faces an informal inquiry by the Securities and Exchange Commission and a slew of shareholder lawsuits.
Pien said he was concerned about perceptions of Chiron as a greedy company that was in the flu vaccine business "only ... to make more money." In fact, he said, "nothing could be further from the truth."
Chiron ramped-up vaccine production in 2003 and 2004 because of its "deep, long-term commitment to public health," he said. It has said it produced 38 million doses in 2003, 50 percent more than in 2002, and attempted to make 52 million doses in 2004 to meet estimates of demand by public health officials. Government inspectors have linked Chiron's problems in Liverpool to the ramp-up.
Problems began last summer, when the company discovered bacteria in finished vials of vaccine. Chiron said in August that it would probably throw out 4 million doses of total production of 52 million doses. Pien said at the time that the cause was probably "human error." Chiron completed its investigation Sept. 27 and concluded from internal tests that 46 million to 48 million doses were safe to use. The next day, the British regulatory agency began a two-day inspection that resulted in the suspension.
In Liverpool, the remedial plan is being implemented in stages. Pien said it involved new construction, employee training, an overhaul of manufacturing systems and procedures and changes in safety testing. At each stage, British inspectors will review the changes, along with observers from the FDA. Pien said the first inspection took place before Christmas and took 2 1/2 days. When asked how long such an extensive remediation plan would take under ideal conditions, Pien declined to say. He noted that companies in similar situations "have taken years" to bring factories up to snuff.