Flu shot shortage may raise sales of flu-fighting nasal spray

By Stephen Manning
Published December 8, 2003 7:40PM (EST)

Shortages of influenza vaccine shots could boost disappointing sales of the needle-free vaccine FluMist this winter, but some analysts say the drug's long term outlook is still dogged by a high price and limits on who can use it.

There is plenty of the nasal spray vaccine available -- only 400,000 doses out of the roughly 4 million doses made by Gaithersburg-based MedImmune and its partner, Wyeth, have been distributed to pharmacies and flu vaccine sites. And some health agencies are recommending those who can use it, should use it to save the traditional vaccine for others.

Prior to last week, however, MedImmune had a hard time selling FluMist. It's wholesale price of $46 per dose is much higher than traditional flu shots. And the drug, originally billed as a painless alternative for children scared of needles, hasn't been approved for use by toddlers and seniors.

But the news last Friday that the nation's two producers of traditional flu vaccine injections have run out of stock and won't be able to produce more this flu season has led some health agencies and consumers to turn to FluMist.

Colorado, which has reported six flu deaths, recommended last week that healthy people between the ages of five and 49 use FluMist to save dwindling flu shot stocks for young children and the elderly, who cannot use the nasal spray.

"There is an ample supply of it (FluMist)," said Lori Maldonado, a spokeswoman for the Colorado Department of Public Health and Environment.

The federal Centers for Disease Control also said last week that FluMist is an effective alternative to a shot.

At pharmacies in 33 Giant Food grocery stores in Virginia, FluMist sales tripled last week over the previous week, company spokesman Jamie Miller said. FluMist sells for $59.95 at Giant, while a traditional flu shot is $20, he said.

The higher demand could help the drug overcome its high cost -- which has hampered its roll out this season.

"FluMist will probably be the last place to turn," said Philip Nadeau, an analyst with SG Cowen Securities. "I think most physicians would think that FluMist is better than nothing."

MedImmune spokeswoman Jamie Lacey said it was too early to tell how the vaccine shortage would affect FluMist sales.

FluMist, which contains a live but weakened flu virus, is meant to be a painless alternative to the traditional flu injection, which is made from a dead flu virus.

MedImmune acquired the drug when it bought Aviron two years ago for $1.5 billion. It hoped FluMist would be a blockbuster drug, much like its childhood respiratory drug Synagis that had $668 million in sales last year. The company pumped $25 million into an ad campaign touting the drug to consumers and another $25 million pitching it to pharmacies.

But the drug's introduction was hampered by several factors.

Citing safety concerns, the Food and Drug Administration did not approve FluMist for children under 5 years and those above 50, the two groups at the greatest risk for the flu.

Then in October, Wal-Mart backed out of an agreement to stock FluMist in its pharmacies. MedImmune had counted on the deal to sell 500,000 doses at 1,000 Wal-Mart locations.

Last month, MedImmune downgraded its outlook for 2003 based largely on sagging FluMist sales. The company earlier predicted it would make between $120 million and $140 million on the drug, but dropped the forecast to between $55 million and $85 million.

MedImmune and Wyeth now offer a $25 mail-in rebate for FluMist customers to try to cut the cost.

But the higher price will remain a stumbling block even beyond this flu season, said analyst Dennis Harp of Deutsche Bank-North America.

Chiron and Aventis Pasteur, the two producers of vaccine shots, will likely produce more doses next year to avoid shortages, he said, threatening to leave MedImmune with an overpriced product with not much of a market.

"It remains a very expensive product," Harp said. "They will have to reintroduce the product at a lower price, which means they might not make any money off it in 2004."

Shares of MedImmune were up 30 cents to $27.34 in early afternoon trading on the Nasdaq market. Wyeth's stock traded at $39.60 per share on the New York Stock Exchange, down 15 cents.

Stephen Manning

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