Novartis begins shipping flu vaccines ahead of crucial season

Novartis' ($NVS) vaccine business was one of the problem areas awaiting Joerg Reinhardt when he took on the role of chairman earlier this month. The unit was the only part of the business to post a loss last quarter, and some investors continue to push for the sale of the operation.

Novartis vaccines chief Andrin Oswald

Strong sales in the upcoming flu season could ease the pressure on the unit. Novartis has begun shipping vaccines in the U.S., but unlike several of its rivals lacks a quadrivalent offering. Last month Novartis vaccines chief Andrin Oswald reported demand was unaffected by the arrival of quadrivalent competitors, and the Swiss pharma expects to ship at least 30 million shots. The shipments will include the cell-culture produced Flucelvax, which Novartis is pitching as being a preservative and antibiotic-free alternative to rival vaccines. Flucelvax enters the market during a period of change, with at least four other manufacturers also pushing new flu vaccines.

Reinhardt has rejoined Novartis at an eventful period for its Indian operations too. While the intellectual property dispute has dominated headlines, Novartis is also adjusting to a change to its vaccine operations. In May Panacea Biotec signaled the end of its 8-year-old pediatric vaccine joint venture with Novartis, but gave little insight into the reason for the split. An anonymous source has now told India's Economic Times: "Novartis wants to own the entire vaccine business and helm it on its own." The alliance began in 2004 when Chiron--which was bought by Novartis two years later--inked a deal with Panacea Biotec.

Novartis' acquisition of Chiron was supposed to established the company in the vaccine market, but it has struggled to close the gap on GlaxoSmithKline ($GSK), Merck ($MRK) and Sanofi ($SNY). Profitability is a problem, prompting some analysts to call for Novartis to sell the business. Selling off the vaccine unit would partly reverse the diversification strategy pursued by former chairman and CEO Daniel Vasella. In an interview with the Financial Times this week, Vasella called the acquisition of Chiron "a long-term bet."

- view Novartis' flu season release
- catch up on the patent dispute news
- read the Economic Times article
- check out the FT's interview (sub. req.)