Glaxo expands vaccine capability
Not long ago vaccines were the neglected stepchild of the pharmaceutical industry. These days, with the avian flu threatening, they have become desirable again. Presumably because of this, pharmaceutical giant GlaxoSmithKline announced it would buy Canada-based ID Biomedical, a maker of flu vaccines, for over $1.4 billion US.
London-based Glaxo is already one of the few major vaccine makers in the world. It also recently announced the purchase of an unused vaccine factory in Pennsylvania from rival Wyeth (which is no longer in the vaccine business) to expand its US capacity.
Meanwhile, another pharmaceutical giant, Swiss-based Novartis, made a $4.5 billion to buy out US vaccine maker and blood-test manufacturer Chiron. Chiron, also a supplier of flu vaccines, had problems last year in quality control, causing a US flu vaccine shortage. While Chiron management rejected the initial offer, the buzz id that Novartis will come back with another bid.
According to a Motley Fool.com analysis (9/7/05), both companies are reacting to an expanding market opportunity.
Glaxo sees the flu vaccine market doubling in size to $3.6 billion by 2010, while Lehman Brothers analysts foresee a total vaccine market valued at more than $10 billion by 2007. Those numbers, and the fact that it's trying to keep pace against the larger Glaxo, spurred Novartis to make the offer.
It must be said that Glaxo's major entry into the US vaccine market is a rare case of expanding competition in an established field.
