Profits up for flu vaccine makers

Primary school students receive injections of anti-H1N1 influenza medicine in Hunan province. GlaxoSmithKline (GSK) has received orders for 1.2 million packs of its anti-H1N1 influenza medicine, Relenza, from the Chinese government. Asianewsphoto

International pharmaceutical companies are cashing in on China's efforts to protect its people from the H1N1 pandemic with anti-influenza medicines.

GlaxoSmithKline (GSK), a leading international pharmaceutical company and China's largest by sales volume, received approval from the State Food and Drug Administration for its anti-H1N1 influenza medicine to enter the China market in July.

Since then, GSK has prepared 1.2 million packs of the anti-H1N1 influenza medicine called Relenza available for governments at all levels in China. The governments are storing the anti-virus in anticipation of a massive flu outbreak in coming months.

"GSK expects very strong demand for Relenza this year in China," Mark Reilly, general manager of GSK China, told China Business Weekly.

Chen Zhaorong, area medical manager at GSK China, also predicted that GSK will receive more orders in the months ahead.

"Compared with that from the other nations worldwide, China's orders are still small (for GSK)," Chen said.

Actually, the production capacity for Relenza is around 60 million packs. GSK has contracts in place to supply Relenza to over 60 economies. Of which, at least 10 percent of its new production have been allocated for developing nations.

But Chinese rules require that only governments can purchase the anti-H1N1 flu medicine. Relenza is still unavailable for sale to consumers.

As the weather turns colder, China is now bracing for a major H1N1 flu case outbreak. As of Nov 11, more than 62,871 cases were reported in 31 provinces, municipalities and autonomous regions of the Chinese mainland. About 32,000 cases were reported just since Oct 12.

"Many regions are entering the traditional period for possible flu outbreaks, which will last for two to three months, and prevention and control work is becoming tougher," said Liang Wannian, vice director of the health emergency office under the Ministry of Health.

The Chinese government plans to allocate 1.09 billion yuan for prevention and treatment of the flu, including purchases of vaccinations, anti-viral medicines and medical instruments.

The huge investment is attracting global players like GSK. To meet the growing demand for anti-virals in China, GSK is considering investing in a manufacturing facility to produce Relenza for the country, said the GSK's Reilly, declining to elaborate.

Tamiflu sales

Roche Diagnostics' Tamiflu is another anti-viral treatment approved by China.

"We believe Roche Diagnostics will be benefiting from the H1N1 influenza outbreak in China," Cao Yong, a spokesperson for Roche Diagnostics China, told China Business Weekly.

Thanks to flu outbreaks in the United States, United Kingdom, Japan and Australia, this year, Roche Diagnostics' sales increased by as much as 362 percent from a year earlier to 2 billion francs (2.13 billion yuan) during the first nine months of this year, according to the company's financial report.

Roche Diagnostics' Tamiflu is the first medicine that was approved to enter the Chinese market after the first H1N1 flu case was reported in China. Since September, the government has been purchasing and storing Tamiflu.

"We have been closely watching and communicating with the Ministry of Health about the latest cases and the purchasing demand," Cao said.

But companies such as his are also "trying to be a responsible company" during the flu outbreaks.

"It's not only an opportunity for cash, but also for serving and curing people," Cao said.

Roche is developing donation programs tailored for developing nations such as India.

"We have donated quite a volume of Tamiflu globally, and the move will go on. We also stick to the principle of keeping the price reasonable for all," Cao said.

Rising Chinese shares

Chinese pharmaceutical companies, especially those represented by the vaccine producers, are also benefiting.

The World Health Organization said the illness likely will not disappear until as many as 80 percent of people worldwide contract H1N1 flu.

Vaccines have proven the most efficient way to treat H1N1 flu. The Chinese government is expected to acquire and store more than 126 million units of H1N1 influenza vaccinations from the nation's 11 producers.

In late October, the local producers -- including Sinovac Biotech, Hualan Biological Engineering and Beijing Tiantan Biological Products -- received another round of orders from the Chinese government. They are required to finish producing the vaccine before Dec 12.

Shares of the companies have been surging. Since August, when Hualan Biological announced the start of clinical trials for its new H1N1 vaccine, the company's share price doubled to 62 yuan at the end of October, up from about 30 yuan in mid-August.

Hualan Biological is the largest vaccine producer, and it could produce as much as one-third of vaccines nationwide by the end of this year, which would amount to 40 million units annually.

Tiantan Biological's share price also climbed to 30.8 yuan by October, up by 150 percent from 20.4 yuan in early August.

US-listed Sinovac Biotech was the first company to announce completion of preliminary clinical trials on Aug 17.

Since then, the company's share price has inched up by 65 percent to close at $7.41 on the last trading day of October, up from $4.50 in August.

(China Daily 11/16/2009 page3)