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Chiron owner's shortfall; But strong drug sales 'reassuring'.

Byline: BY SOPHIE FREEMAN Business Staff

THE new owner of the Chiron flu vaccine factory in Speke missed analyst expectations yesterday with just a 4% rise in second-quarter net income.

Charges from the acquisition, including those related to the sale and the cost of integrating the business - have weighed heavily on pharmaceutical giant Novartis, which bought Chiron in April.

Industry analysts said Novartis' profit shortfall was a slight disappointment but strong drug sales were reassuring.

"It's a bit light, due to distortions from Chiron, but they are still talking about double-digit sales growth from the group," said Mike Ward, an industry analyst at Nomura Code in London.

The plant in Speke employs 700 people producing one of the world's best-selling flu vaccines, Fluvirin. It is also developing a pre-pandemic vaccine against the deadly bird flu virus for both the US and UK governments. But in 2004, the plant temporarily lost its licence to make the jabs after contamination problems meant 50m doses for the US market had to be destroyed.

That cost the company pounds 150m and sparked a public health crisis in America where Chiron supplied 50% of the country's flujabs.

Novartis said yesterday the acquisition of Chiron created a "new strategic growth platform" in human vaccines and molecular diagnostics.

"These fast-growing areas offer dynamic growth potential and complement existing activities in innovative medicines, generic drugs and over-the-counter treatments," said the company.

"For the full year, Novartis expects the consolidation of Chiron (based on preliminary estimates) to have a net negative effect on operating income of between pounds 192m and pounds 220m."

Income for the second quarter increased to pounds 941m. Industry analysts had expected a 12% rise to pounds 1bn, following the full consolidation of Chiron.

Novartis is preparing to launch several new potential blockbusters for diabetes, hypertension, asthma and eye diseases, which it hopes will maintain the momentum in future years.

Novartis also said its oral once-daily treatment for Multiple Sclerosis had recently started final Phase III clinical studies.

They are still talking about double digit growth
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Title Annotation:Business
Publication:Daily Post (Liverpool, England)
Geographic Code:4EXSI
Date:Jul 18, 2006
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