The Great Swine Flu Mystery
a bonanza! At least that is how some describe the drug industry's
expected windfall from the swine flu pandemic as it prepares to
cash in on what could be the most widespread winter flu season for
The H1N1 outbreak will certainly be good news for the pharmaceutical
groups, but just how good remains a mystery as the firms supplying
the vaccines and treatments, and the governments buying them,
refuse to give details on how much it is all costing.
GlaxoSmithKline yesterday said various governments had placed orders
for another 149 million doses of Pandemrix, its newly approved vaccine,
taking the total number of orders to 440 million doses. At the same
time Japan confirmed orders of enough GSK and Novartis-made vaccine
to treat 50 million people.
GSK charges countries on a sliding scale, from €7 (£6.48)
a dose for the most developed, to less for emerging nations. While
the company will not say how much it expects to earn from swine
flu, analysts put the figure at between £1bn and £3bn.
GSK has also agreed to give the World Health Organisation 50 million
However, Savvas Neophytou, an analyst at Panmure Gordon, points
out that longer-term revenues could be higher. "The issue
is more what companies like GSK, which generates revenues of $40bn
(£25bn), will make in the longer term. There will be the
windfall from the H1N1 pandemic, but the outbreak is likely to
put pressure on governments to stockpile treatments and vaccines.
That is more likely to provide the drugs companies with recurring
revenues, and it is that that has got the investors more excited."
However, the drugs companies are reluctant to give details on
how much they will make and, in the UK especially, the numbers
are shrouded in mystery. GSK, and another vaccine maker, Baxter,
have sold enough vaccine to the Government for two doses per person,
the recommended supply, for almost the whole population.
The two companies will not say how much they have each sold,
however, or how much the UK taxpayer is paying. GSK is known to
have given the British Government a discount, but will not reveal
the amount. The Department of Health is equally silent. "We
cannot divulge the figure for the actual vaccine procurement as
it would violate confidentiality clauses in our contracts. The
manufacturers have quite reasonably insisted on these as if it
is possible to calculate the amount per unit we paid for vaccine
it could prejudice their negotiations with other countries,"
a DoH spokesman said.
GSK also refuses to say how many different governments have ordered
vaccine, adding that some of those announced yesterday were second
requests from administrations that had already asked for doses.
But it is not just GSK and the Department of Health that are
secretive about the economics of swine flu. The Swiss pharmaceutical
company Novartis is equally unwilling to give out information.
A spokesman yesterday said it would only give details where the
governments buying its vaccine had agreed to the disclosure. The
group confirmed that it would get $979m from the US, but would
not say how many doses it had ordered. France has ordered 16 million
doses, for an undisclosed amount, while Switzerland had placed
orders, but for an undisclosed number of doses, and for an undisclosed
amount. Sanofi-Aventis also refused to give details that had not
been published by governments, adding, "we see H1N1 vaccine
production as a public health challenge, not as a business opportunity,
although it will boost our revenues this year and next".
Baxter, the US group that along with GSK is supplying the UK with
vaccine, simply says it refuses to discuss pricing.
In the UK this has led to calls for an inquiry into how the contracts
were negotiated. Norman Lamb, the Liberal Democrats' health spokesman,
wrote to the National Audit Office in July asking if the contract
with GSK represents value for money. The National Audit Office
has replied, says Mr Lamb, and is broadly happy with the deal.
The Taxpayers' Alliance has also said it intends to investigate
GSK hit back at any allegations of profiteering. In July, its
chief executive, Andrew Witty, refused to apologise for the swine
flu revenues, adding that sales of the group's flu treatment,
Relenza, had rocketed from £57m last year to more than £600m
since the outbreak of the virus. "Swine flu is going to be
positive for performance, but only because we have put ourselves
in a position to do it. And we have done that by taking very significant
risks over a long time, diverting a huge amount of resource to
it and doing the research that nobody else has done, so I'm not
going to apologise for the fact that the company is going to make
a return," he said.
The UK ordered 10.5 million doses of Relenza, while Roche, the
Swiss makers of Tamiflu, sold 23 million batches to the Department
of Health. As with the vaccine contracts, the DoH declined to
comment on how much the taxpayer paid. Roche said it "would
rather not comment" on the deal, although it does say it
will make about Sfr2bn (£1.2bn) from global sales of Tamiflu
Reference Source 172
October 9, 2009