Novartis' Bexsero left off U.K. immunization schedule

Novartis' Bexsero may be the only vaccine approved for life-threatening meningitis B, but that wasn't enough to convince the U.K.'s Joint Committee on Vaccination and Immunisation (JCVI) to add it to Britain's routine vaccination schedule. The regulatory body deemed the jab too costly for use by the U.K.'s National Health Service, dealing a blow to Novartis' ailing vaccines division.

Though the shot was approved by the European Medicines Agency (EMA) in January for individuals as young as two months, the U.K.--which Novartis ($NVS) hoped would be an early adopter, paving the way for uptake in other countries--did not take the bait. The verdict doesn't bode so well for uptake with other governments, which might be reluctant to add it to their own programs as they focus on pinching pennies.

The Swiss company said in a release that it was disappointed with the decision, noting that bacterial meningitis and septicemia kill more children under 5 in the U.K. than any other infectious disease. "Until Bexsero is included on the routine immunization schedule, which provides broad access to vaccines for children, meningitis B will remain a threat for youth in the U.K. causing needless death and disability," the company said. Novartis also took issue with JCVI's cost evaluation, which it says was made before pricing negotiations took place.

The company has reason to be dismayed. It's banking on the meningitis shot to revive its troubled vaccines unit, created in 2006 via its $7.5 billion Chiron buyout. Since then, the vaccines business has been plagued by delays, including the FDA's negotiations over Phase III trial design for Bexsero, and sales have dropped far below expectations. Vaccines and diagnostics together are expected to lose money this year, CFO Harry Kirsch said during last week's Q2 earnings call, but Bexsero's launch was nevertheless expected to improve margins and profitability.

The U.K.'s decision could spell doom for the "beleaguered" vaccines unit, Citi analyst Andrew Baum told Reuters. If Novartis can't win the U.K. over on appeal, the company could be forced to sell the unit, find a partner, or fold the vaccines business into its pharma infrastructure, he said. "In the absence of a successful appeal, Bexsero revenue will likely be restricted to a minimal private-payer market," Baum said.

In addition to giving Novartis' vaccines unit a jolt, success for Bexsero would help offset the sales plunge anticipated for the company's top blockbuster, Diovan. The blood-pressure drug went off patent last September, but it so far lacks a generic competitor from India's Ranbaxy Laboratories, which held exclusive rights to produce it.

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