Why there will be more than enough swine flu vaccine to go around (AZN, GSK, NOVN, SNY, NVAX, SVA, INO, HEB, CVM, BPAX)

July 30, 2009 · Filed Under General 

With federal health officials now stepping up efforts to be sure there is enough swine flu vaccine in the U.S., opportunities may be slimmer than the Street expects for all but five companies taking the lead in delivering them.

Count on Congress to take swift action when problems hit close to home. This week, six Senate pages are sick with flu symptoms that could be H1N1, or swine flu. It just so happens that this is the week the government suggested 159 million Americans get vaccinated.

Five companies are busy ramping H1N1 vaccine production for the U.S. market, in hopes of making them available in October.

Those companies are AstraZeneca plc (NYSE: AZN), GlaxoSmithKline plc (NYSE: GSK), Novartis AG (Nasdaq: NOVN), Sanofi-Aventis SA (NYSE: SNY) and Australia’s CSL Ltd.

Many also-ran companies also are preparing vaccine candidates, in the event they are needed. Those companies include Novavax Inc. (Nasdaq: NVAX), Sinovac Biotech Ltd. (Amex: SVA), Inovio Biomedical Corp. (Amex: INO), Hemespherix Biopharma Inc. (Amex: HEB), Cel-Sci Corp. (Amex: CVM) and BioSante Pharmaceuticals Inc. (Nasd BPAX).

Despite the big ramp in swine flu vaccine production, shares of most also-ran swine flu vaccine makers have been running for months, partly in anticipation that they, too, will see top-line benefits from major Western governments buying product from them, perhaps as early as this flu season.

A look at the numbers suggests the swine flu revenue available to the also- rans may be slim.

Federal health officials this week said pregnant women, health care workers and children six months and older should be first to get vaccinated — a group that totals about 159 million people. Bullish traders long many of the also-rans note that there will not be enough to go around: Only 120 million doses of the vaccine will be made available by the five approved manufacturers by fall.

But that may be more than enough to cover everyone who wants one. Many Americans either do not have access to the vaccines, or are happy to go without them. The CDC would like 90 percent of seniors and 60 percent of high-risk adults to receive flu shots. But in 2006-2007, only 66 percent of seniors and 35 percent of targeted young adults ever received them, despite that year being an active flu season.

For those who think that adults will make sure their kids get the shot, the data suggest otherwise. Children may be the population that lags most when it comes to getting inoculations. According to the CDC, fewer than 15 percent of kids in the U.S. get all of their recommended vaccines. According to the most recent CDC data available, the most aggressive state when it comes to inoculations is Massachusetts, where more than a quarter of kids received all the shots they are supposed to have.

Access to vaccinations is only part of the problem. Among the wealthy, there are parents who are choosing not to give their kids their recommended shots, for fear of side effects. Plus, some parents believe their kids are safe, because all the other kids are getting their inoculations (which the data suggest is not the case).

True, the CDC will likely put out an all-out press blitz to get kids immunized against swine flu. But based on past efforts, an aggressive adoption rate may be 60 percent of the targeted population — or about 95 million.

Adoption among senators likely will be high. For everyone else who needs one and makes the effort to get one, there likely will be more than enough to go around — Mike Tarsala

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