The swine flu pandemic seems to be benefiting GlaxoSmithKline (GSK) the most, as it is one of the largest vaccine manufacturers in the world. The company has existing orders for 195 million doses (costing about £6 per dose in the UK) of anti-flu drug Relenza from several governments all over the world.
In order to tackle the high demand, GSK is increasing its existing capacity for the production of Relenza to about 190 million doses by the end of this year from the current level of 60 million. The company witnessed huge growth in Relenza sales which came in at £60m ($98.4 million) during the second quarter of 2009, compared with £3 million ($4.9 million) recorded in the year-ago period. GSK expects full year sales to touch $573 million.
GlaxoSmithKline expects to earn revenue of about $2.1 billion from the sale of a new H1N1 vaccine next year. According to the World Health Organization (WHO), about 2 billion people could be infected in the next two years. Last May, the U.S. Department of Health and Human Services placed orders for GSK’s H1N1 vaccine.
GSK expects the candidate “A” H1N1 vaccine to be available around the October - December 2009 timeframe. In the meantime, we expect Relenza to benefit from the outbreak as the vaccine has proved somewhat effective in combating H1N1.
In the U.S., swine flu has killed about 300 people and made more than 1 million sick. To make matters worse, according to the Centers for Disease Control and Prevention, these numbers could go up. As a result, the U.S. recently placed an order to buy more vaccines worth $1 billion and France ordered an extra 28 million vaccines from Sanofi-Aventis (SNY).
The swine flu pandemic has been a boon to GSK. This is a big opportunity for the company where new products can compensate the eroding margin caused by the genericization of key products.
Disclosure: No position
