Drugmakers Boost Output Of Vaccines In Europe, Flu Medication In...

Drugmakers Boost Output Of Vaccines In Europe, Flu Medication In JapanFRANKFURT, TOKYO (Nikkei)--With infections of swine influenza increasing daily, European and Japanese drugmakers are scrambling to ramp up manufacturing operations, but in difference areas -- vaccines in Europe, and flu treatments in Japan.
An employee working in the packaging line of Tamiflu in the Roche plant in Switzerland (AP) Earlier this month, Sanofi Pasteur -- the vaccine unit of French pharmaceutical giant Sanofi-aventis -- announced it would invest 150 million dollars, or about 14.5 billion yen, in a vaccine plant in the U.S. state of Pennsylvania that will be able to produce up to 100 million vaccines.
Since the outbreak, GlaxoSmithKline Plc of the U.K., another major vaccine producer, has been inundated by orders from European governments for a swine flu vaccine. The firm said it would be able to supply the vaccine within six months.
Meanwhile, in Japan, vaccine production is led by such academic entities as the Kitasato Institute of Kitasato University, and the Research Institute for Microbial Diseases of Osaka University. Denka Seiken Co. (4561) appears to be the only Japanese company specializing in the field, which will make it difficult to suddenly increase production in the country.
Low profitability is the main reason that major domestic drugmakers have been reluctant to produce influenza vaccines. "Companies need to recruit several tens of thousands of people to conduct clinical studies when making new vaccines, which entail higher risks of side effects than other drugs," said Masafumi Nogimori, president of Astellas Pharma Inc. (4503). On top of that, drugmakers must absorb losses if vaccines are returned by purchasers. Risk appears to outweigh profit in vaccine production, unless domestic firms can rely on economies of scale, as do European rivals.
Japanese drugmakers are accelerating efforts to develop and produce flu medications. "To combat swine flu, we are reviewing our strategy using the CS-8958 flu medication," said Kazunori Hirokawa, an executive at Daiichi Sankyo Co. (4568), at an earnings briefing on May 13. The company initially aimed to ready its production system for seasonal flu, but will rework the plan to cope with the new type as well.
The CS-8958 medication is effective in treating the seasonal H1N1 strain influenza, the same as the swine flu. Clinical trials for the drug are in the final stage in Japan, and Daiichi Sankyo is expected to file for approval with the Health Ministry by year-end. The firm is now considering whether to carry out development and sales by itself overseas as well, or find business partners -- rather than selling development and manufacturing rights to foreign makers. If there is solid demand, the drugmaker might be able to earn more profit by expanding operations than selling the license, despite high development costs.
Toyama Chemical Co., a subsidiary of Fujifilm Holdings Corp. (4901), and Shionogi & Co. (4507) are also developing new flu medications that they aim to start selling as early as next year. "We are stockpiling materials for drug production," said Fujifilm Holdings President Shigetaka Komori. Many other firms are taking similar actions, anticipating surging demand.
Given that flu medications are susceptible to fluctuating demand like vaccines, they are not mainstay products for major drug firms. For example, Chugai Pharmaceutical Co. (4519) logged 38.7 billion yen in sales of its Tamiflu influenza drug in fiscal 2007. But the figure plunged to 8.4 billion yen in fiscal 2008, and Tamiflu sales of parent company F. Hoffmann-La Roche Ltd. of Switzerland also suffered a 68% drop to 53 billion yen.
Over 70% of Tamiflu prescribed in the world is consumed in Japan. In this regard, Japanese drugmakers have a responsibility to step up flu medication output, and play a major role in fighting swine flu.

-- Translated from an article written by Nikkei staff writers Eiichiro Shimoda, Yoshinori Ogiso
(The Nikkei Business Daily May 20 edition)

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