Roche held a media briefing this morning on Tamiflu and pandemic planning, giving additional detail on the capacity increase and other related issues. The
main conclusion that could impact forecasts in the short term is that there is potential for government orders to cover more than the 20-25% of populations
that we have assumed so far, as interest in larger orders is being shown by governments that have already ordered stockpiles.
Roche indicated that ten to fifteen governments either have stockpiles, or have ordered stockpiles to cover 20-25% of their populations. Some are now coming
back to order more, the company reported. 20-25% was based on historical incidence of flu in pandemics, but governments are realising that for pandemic
planning purposes, further orders need to be placed for prophylactic usage by medical workers, transport workers etc. We estimate that an additional 5%
coverage by those governments we know to have placed orders so far could add another SFr500m of Tamiflu sales.
Detail given on pricing, in line with previous assumptions
Roche already has a tiered pricing system for seasonal flu treatment, and pandemic planning sales are at a significant discount to that. Tamiflu cost per
patient for seasonal flu has been 20-51. For pandemic sales, it is 15 per pack for more developed countries, 12 per pack for less developed countries.
We have been assuming $18 per patient (at current rates, 15 = $17.55). For countries buying the bulk material rather than finished capsules, the price is
7.7 per course for developed countries, 7 for less developed. One effect of this could be that as sales get beyond the current orders, which are mainly to
developed countries, the average price will come down further as a result of the changing mix. This reinforces our view that investors should not simply
apply a current margin assumption to the higher levels of Tamiflu production made possible by additional capacity.
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