In the face of looming flu vaccine shortages in the United States, ID Biomedical Corp. has signed three sweeping supply deals valued at up to $2.5-billion (U.S.) with a trio of leading vaccine distributors that could make the company No. 2 or No. 3 in the industry in North America.
Vancouver-based ID, which now supplies 75 per cent of Canada's flu vaccine needs, also disclosed that it has been approached by Ottawa for the 1.2 million excess doses that it had hoped to sell in the United States this year.
The Canadian government is "now short of vaccine and there is a concern that there could be a spike in demand later in the season," ID chief executive officer Anthony Holler, who is also a doctor, said yesterday.
Shares of ID rose $1.55 or 9 per cent to $18.36 on the Nasdaq Stock Market yesterday in heavier than normal volume of 3.5 million shares. One analyst said the agreements with Henry Schein Inc. of Melville, N.Y., AmerisourceBergen Corp. of Valley Forge, Penn., and McKesson Corp. of Pittsburgh represented a "company transforming event" for ID.
Under the accords, which could begin as early as next year and end after the 2015 flu season, each distributor has agreed to purchase a minimum number of doses of ID's Fluviral vaccine, following regulatory clearance from the U.S. Food and Drug Administration.
"So long as we can obtain and maintain regulatory approval for the 2007-2008 flu season and continue to successfully manufacture our product, these transactions will ensure a potentially significant revenue stream for years to come," ID president Todd Patrick said.
ID's emergence as a major vaccine player followed its purchase in September of Shire Biologics, which was in the midst of a major expansion in Quebec to boost capacity to 50 million doses by 2007 from 22 million doses in 2005.
Within weeks of the deal closing, Chiron Corp. of Emeryville, Calif. shocked health officials by cancelling plans to ship about 48 million doses of flu vaccine this season, or about half of the 100 million doses required in the United States. Sanofi Aventis SA of France is shipping the other half of the U.S. supply.
The move followed a decision by British health authorities to suspend Chiron 's manufacturing licence at a plant where it makes its Fluvirin vaccine for sale in the United States after batches were found to be contaminated.
At the end of October, Chiron disclosed that it could no longer offer any assurances that it will be able to "resume manufacturing or sale of Fluvirin for the 2005-2006 influenza season or ever," prompting a global scramble by U.S. health authorities to make up the shortfall.
U.S. Health and Human Services Secretary Tommy Thompson is expected to announce this week plans to purchase additional flu shots, following FDA inspections of foreign manufacturers, including ID.
"What you're seeing and what you're going to see is [distributors]locking up supply where ever they can," said one industry source, who asked not to be identified. "Because the market is growing, there will be room for Aventis, Chiron, ID and others."
Dr. Holler said ID has updated its manufacturing line to meet FDA requirements as part of a plan to seek accelerated approval of Fluviral for sale in 2005 and 2006.
Accelerated approval would allow ID to sell 15 million doses next year and 20 million doses in 2006 under its three distribution agreements. In 2007, it would earmark 38 million doses for the United States, with another 12 million doses supplied to Ottawa.
Henry Schein, expected to distribute 50 per cent of ID's Fluviral, said that at current market prices, it would pay ID about $45-million for 2005, climbing to about $113-million in 2007. Industry sources figure the accord works out to about $6 a shot, several dollars higher than estimated prices in Canada.
ID declined to forecast vaccine prices but said the agreements assume a modest 4 per cent annual price increase based on the average retail price, which is now around $8 a shot in the United States.
The distribution deals do not cover ID's highly touted nasal flu vaccine FluInsure, which is still in development.
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