Big Pharma: 2012-13′s Flu Vaccine Field

by James Brumley | December 13, 2012 9:14 am

iStock 000004200832Small e1284401025130 Big Pharma: 2012 13's Flu Vaccine FieldRed alert! The Centers for Disease Control and Prevention has issued its obligatory flu warning for 2012.

Though it’s pretty much the same boilerplate caution from last year (and the year before that, and the year before that …), this one has been penned a bit earlier than usual, reflecting a relatively early start to this year’s flu season. So, get your shot, wash your hands, use a tissue, and … pick the right stocks?

It might be a trade that’s wedged in somewhere between “blatantly obvious” and “cliché,” but certain pharmaceutical stocks do indeed get an annual flu bump around this time of year. So, if it’s going to happen, you might as well play it.

As is so often the case, though, picking the winner is the real trick. You might want to look smartly before you leap, since not every flu vaccine maker actually has a product that has been officially approved as a flu vaccine in the United States for the 2012-13 influenza season.

Here’s a rundown of the names the CDC has given the green light to this time around:

Novartis

Novartis185 Big Pharma: 2012 13's Flu Vaccine FieldYes, this is the same Novartis AG (NYSE:NVS[1]) that had egg on its face back in late October [2]after some vials of its Agrippal and Fluad influenza vaccines were found to have developed clumps in them. The clumping was very limited and turned out to be nothing; the vaccines were always safe to use.

Though Novartis might seem like a leading name in the vaccine world, using it as your flu vaccine play might not be highly effective. See, the company’s entire vaccine portfolio only makes up about 5% of Novartis’ annual revenue. And, only about a quarter of that 5% is driven by flu vaccines. That’s just a tad over $700 million for a company that does nearly $60 billion in sales per year. Even the recent approval of Flucelvax (which doesn’t use eggs to incubate the vaccine[3]) isn’t apt to make a big dent this year.

Nevertheless, Novartis’ Fluvirin has gotten the CDC’s nod of approval. The vaccine should generate worldwide sales of $359 million in 2012.

GlaxoSmithKline

GlaxoSmithKlineLogo Big Pharma: 2012 13's Flu Vaccine FieldU.K.-based GlaxoSmithKline (NYSE:GSK[4]) is the manufacturer of the Fluarix vaccine (for ages 3 and up), as well as FluLaval.

Don’t get confused about the flu vaccine’s maker here. A company called ID Biomedical manufactures FluLaval, but that’s a subsidiary of Glaxo’s thanks to a 2006 acquisition.

Some experts predict $375 million worth of FluLaval sales this year, though again — not a big chunk considering GSK’s $27 billion in annual revenues.

Sanofi

Sanofi3 Big Pharma: 2012 13's Flu Vaccine FieldFrench pharmaceutical company Sanofi (NYSE:SNY[5]) said in the middle of the year that it plans to ship 60 million doses of its seasonal flu vaccine this year. Those shipments largely consist of Fluzone in a handful of doses and target patient profiles.

Sanofi also makes several other influenza vaccines, including Intanza (IDflu), Panenza, Humenza and Vaxigrip (Mutagrip), though you should note that not all of those are used in the United States.

Either way, Fluzone is the company’s flagship drug in the category, with 2012’s likely global revenue approaching $1.343 billion.

Merck/CSL Limited

MerckLogo e1282588089406 Big Pharma: 2012 13's Flu Vaccine FieldNo, Merck (NYSE:MRK[6]) isn’t a name one tends to think of during a discussion of influenza vaccines, but it’s in the game as a distributor of Afluria, made by CSL Biotherapies — a subsidiary of CSL Limited (PINK:CMXHY[7]).

Most investors don’t realize that Australia’s CSL is actually one of the world’s bigger flu vaccine manufacturers. It just doesn’t market much under its own name. The company sold $130 million worth of Afluria worldwide in 2010, with Merck selling $56 million worth in the United States (as FluVax) that year.

While CSL Limited is one of the more compelling ways to play, it’s also only available via either thinly traded pink-sheet stocks or the Australian stock exchange.

AstraZeneca

AstraZeneca185 Big Pharma: 2012 13's Flu Vaccine FieldLike Merck, AstraZeneca (NYSE:AZN[8]) doesn’t quite ring a bell as a major influenza play. But, it’s in the game, through its MedImmune subsidiary (which AstraZeneca purchased in 2007).

MedImmune is the maker of the popular FluMist, which is administered as a nasal spray rather than an injection. Sales of FluMist totaled $145 million in the third quarter, and $161 million for all of last year.

As of this writing, James Brumley did not hold a position in any of the aforementioned securities.

Endnotes:
  1. NVS: http://studio-5.financialcontent.com/investplace/quote?Symbol=NVS
  2. egg on its face back in late October : http://investorplace.com/2012/10/novartis-flu-vaccine-ban-who-wins/
  3. which doesn’t use eggs to incubate the vaccine: http://www.medicalnewstoday.com/articles/253104.php
  4. GSK: http://studio-5.financialcontent.com/investplace/quote?Symbol=GSK
  5. SNY: http://studio-5.financialcontent.com/investplace/quote?Symbol=SNY
  6. MRK: http://studio-5.financialcontent.com/investplace/quote?Symbol=MRK
  7. CMXHY: http://studio-5.financialcontent.com/investplace/quote?Symbol=CMXHY
  8. AZN: http://studio-5.financialcontent.com/investplace/quote?Symbol=AZN

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