Chiron Will Not Supply Fluvirin Influenza Virus Vaccine for 2004-2005 Influenza Season.

EMERYVILLE, Calif. -- Chiron Corporation (NASDAQ:CHIR)

-- UK regulatory authority suspends manufacturing license and denies product release

-- Chiron to hold investor conference call/audio webcast at noon EDT 

Chiron Corporation (NASDAQ:CHIR) announced that the UK regulatory body, the Medicines and Healthcare Products Regulatory Agency (MHRA), has today temporarily suspended the company's license to manufacture Fluvirin(R) influenza virus vaccine in its Liverpool facility, preventing the company from releasing any of the product during the 2004-2005 influenza season. Chiron has not released any Fluvirin into any territory, and therefore there is no requirement to recall or withdraw any vaccine.

"Chiron deeply regrets that we will be unable to meet public health needs this season. We take our responsibility to protect human health very seriously," said Howard Pien, president and CEO of Chiron. "Chiron believes in the value of influenza vaccination, and we are committed to taking all necessary actions to ensure an adequate vaccine supply for the 2005-2006 influenza season."

As Chiron conducted its internal quality assurance confirmatory testing in recent weeks, MHRA, in its capacity as the Liverpool production facility's local regulatory authority, reviewed the test data and the manufacturing processes at the facility. As noted in the company's September 28, 2004, press release, Chiron anticipated that the regulatory review process would be satisfactorily completed in time to allow release of Fluvirin in early October. However, MHRA has asserted that Chiron's manufacturing process does not comply with UK Good Manufacturing Practices regulations and has suspended the company's Liverpool facility license to manufacture influenza vaccine for three months. Chiron has initiated discussions with the MHRA to determine the appropriate corrective actions.

As a result of the license suspension, Chiron does not expect to record any sales of Fluvirin for the 2004-2005 season. Chiron disaffirms its previous full-year 2004 pro-forma earnings guidance of $1.80-$1.90 per share (a range of $1.50-$1.60 per share on a GAAP basis), including its August 2004 guidance of being in the low end of this range. Chiron currently expects pro-forma and GAAP earnings per share to be negatively affected by a range of $1.10-$1.15 as a result of today's announcement. Chiron currently expects full-year 2004 pro-forma earnings of between $0.70-$0.80 per share (a range of $0.35-$0.45 per share on a GAAP basis).

In August, Chiron announced a delay in providing Fluvirin for the 2004-2005 influenza season. Chiron has communicated regularly with the U.S. Food and Drug Administration (FDA), which has regulatory oversight for vaccines marketed in the United States, and the U.S. Centers for Disease Control and Prevention (CDC), which makes recommendations for influenza vaccination through its National Immunization Program (NIP) and the Advisory Committee on Immunization Practices (ACIP). Chiron has informed the FDA, CDC and the UK Department of Health of the current situation. Chiron had previously expected to provide nearly half the U.S. supply for the 2004-2005 influenza season and is discussing potential impact with the FDA and CDC. In the United Kingdom, where Fluvirin typically accounts for approximately 20 percent of the influenza vaccine market, Chiron plans to make up a significant proportion of this supply with vaccines that are produced at its other European sites and approved for use in the United Kingdom (but not the United States). Chiron plans to continue to work with the CDC and the U.S. Food and Drug Administration's Center for Biologics Evaluation and Research (CBER) in preparation for the 2005-2006 influenza season.

"Our manufacturing and quality staff have worked hard to resolve what we viewed as a problem limited in scope to a few batches, and we believe our quality assurance confirmatory testing demonstrates that the Fluvirin doses we anticipated releasing are safe. While the MHRA's conclusions are unexpected, we respect the regulatory authority's judgment," said John Lambert, president of Chiron Vaccines. "We apologize unreservedly to the public and our customers for being unable to meet our commitments this year."

Chiron's full-year 2004 pro-forma earnings per share guidance of $0.70-$0.80 per share excludes amortization expense on acquired intangible assets related to the acquisitions of PathoGenesis, Chiron Behring, Pulmopharm, PowderJect and Sagres of approximately $0.35 per share. Chiron management uses pro-forma financial statements to gain an understanding of the company's operating performance on a comparative basis. Pro-forma amounts exclude special items relating to certain acquisitions, which may not be indicative of the company's trends or potential future performance. All references to per-share amounts are per diluted share.

Chiron will hold an investor conference call and audio webcast on Tuesday, October 5, 2004, at noon EDT to further discuss today's announcement on Fluvirin supply. To access either the live call or the one-week archive, please log on to www.chiron.com/webcast. Please connect to the website at least 15 minutes prior to the conference call to ensure adequate time to download any necessary software. Alternatively, please call 800-819-7026 from the United States or Canada or 706-643-7768 internationally. Replay is available approximately two hours after the completion of the call through 11:55 p.m. EDT, Tuesday, October 12, 2004. To access the replay, please call 800-642-1687 from the United States or Canada or 706-645-9291 internationally. The conference ID number is 1364850.

About Chiron

Through its global Blood Testing, Vaccines and BioPharmaceuticals businesses, Chiron Corporation addresses human suffering with more than 50 diverse products to detect, prevent and treat disease worldwide. The company's consistent success has come from its pioneering science, skill in delivering innovations in biotechnology and disciplined business approach. Chiron believes that science has the power to improve people's lives and harnesses that power to transform human health. For more information about Chiron, please visit www.chiron.com.

About Chiron Vaccines

Chiron Vaccines, the world's fifth-largest vaccines business, is headquartered in Oxford, United Kingdom, and has facilities located throughout Europe, the United States and Asia. Chiron Vaccines is the world's second-largest manufacturer of influenza vaccines and has important meningitis, pediatric and travel vaccine franchises. Chiron Vaccines is the leading vaccine manufacturer in the United Kingdom, Germany and Italy. The company's portfolio of products includes vaccines for influenza, meningitis C, rabies, tick-borne encephalitis, yellow fever, haemophilus influenzae B (Hib), polio, mumps, measles and rubella (MMR) and diphtheria, tetanus and pertussis (whooping cough).

This news release contains forward-looking statements, including statements regarding the supply of Fluvirin that Chiron expects to deliver to the U.S. market in future influenza seasons, Chiron's expected earnings per share, sales growth versus prior periods, product development initiatives, and new product marketing. These forward-looking statements involve risks and uncertainties and are subject to change. No assurances can be given that additional issues with respect to Fluvirin or Chiron's manufacturing generally will not arise in the future or that the MHRA will not further suspend or revoke the license to Chiron's Liverpool facility . Many factors could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements, including, among others, additional adverse developments resulting from investigations or discussions with or actions taken or required by the MHRA, FDA, U.S. Department of Health and Human Services, or CDC. In addition, a full discussion of the company's operations and financial condition, including factors that may affect its business and future prospects, is contained in documents the company has filed with the SEC, including the form 10-Q for the quarter ended June 30, 2004, and the form 10-K for the year ended December 31, 2003, and will be contained in all subsequent periodic filings made with the SEC. These documents identify other important factors that could cause the company's actual performance to differ from the expectation expressed or implied by these forward-looking statements, including the outcome of clinical trials, regulatory review and approvals, manufacturing and testing capabilities, pricing pressures, intellectual property protections and defenses, litigation, stock-price volatility, and marketing effectiveness. In particular, there can be no assurance that Chiron will timely maintain anticipated levels of profitability, increase sales of existing products, successfully develop and receive approval to market new products, or achieve market acceptance for such new products. In addition, the company may engage in business opportunities, the successful completion of which are subject to certain risks, including shareholder and regulatory approvals and the integration of operations.

Consistent with SEC Regulation FD, we do not undertake an obligation to update the forward-looking information we are giving today.

NOTE: Fluvirin is a trademark of Chiron Corporation.