Merck poised for expansion of Zostavax shingles vax as demand grows

Analysts predicted Merck's ($MRK) shingles vaccine Zostavax would be a blockbuster when it was first released in 2006. But Merck quickly ran into manufacturing and supply issues, putting a damper on sales and expectations. A $1 billion upgrade has put its production problems behind it and posed Merck for expansion even as demand for Zostavax has jumped.

The company said the FDA has approved its Durham, NC, site to manufacture bulk varicella, an ingredient for both its Varivax chickenpox vaccine and Zostavax. Already approved in 2010 to produce finished chickenpox vaccines, the company said the long-term goal is for the facility to produce bulk and finished products for a host of vaccine products. The bulk product is currently being produced at a plant in West Point, PA.

With two plants approved to produce bulk varicella, Merck is well positioned to handle growing sales of its vaccines. According to its most recent SEC filing, Zostavax sales reached $309 million in the first 6 months of the year. That's up 38% from the $224 million sold in the same period last year. And this came ahead of the U.K. this week offering Zostavax to people aged 70 to 79. Around 800,000 people are eligible to receive the vaccine this year, the BBC reports, and more will be over the next few years. Sales of Merck's Varivax were also up 7% to $611 million in the first half of the year.

Nearly a decade ago, Merck began an extensive overhaul of its vaccine manufacturing that has included its operations in West Point and Elkton, VA, as well as Durham, where 1,100 people now work. It also built a $295 million vaccine-production plant in Carlow, Ireland, which it expects to be licensed in 2014. Merck resolved to get on top of the production problems that made initial supplies of the shingles vaccine spotty. It used a fast-track program to build a 214,000-square-foot facility that doubled the output of Zostavax and Varivax at Durham.

Merck said yesterday that the FDA approval will allow it to not only make bulk product for the U.S. market but also expand supplies globally. "The licensure of the Durham varicella bulk facility marks a significant milestone for Merck and adds additional manufacturing capabilities to an already strong Merck vaccine network," said Willie Deese, president of Merck's manufacturing division.

- check out Merck's release
- here's the BBC article
- read FiercePharmaManufacturing's take

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