Chiron Corporation’s share price took another knocking yesterday after the firm reported a dramatic drop in 2004 income – down from $304 million dollars in 2003 to $158 million – in a year that Howard Pien, president and chief executive, said was characterised by “both achievement and adversity.”
The firm’s financials suffered at the hands of the UK regulatory authority, the Medicines and Healthcare products Regulatory Agency’s temporary suspension of the product license for its flu vaccine, Fluvirin, after manufacturing deficiencies at its plant in Liverpool were uncovered [[06/10/04b]]. As a result, the company was not able to record any Fluvirin sales in either the third or fourth quarters of the year, and had to write off the entire Fluvirin vaccine product inventory in the third quarter, resulting in a $91 million charge to cost of sales. In December, the UK extended the license suspension [[08/12/04a]], and the US Food and Drug Administration issued the firm with a warning letter in connection with an inspection of the facility [[13/12/04b]]. Chiron says that the MHRA and FDA have agreed to conduct further inspections, but it does not know whether it will be able to supply vaccine for the 2005-2006 flu season. “As we enter 2005, our immediate outlook for Fluvirin is yet unclear. Following input from both the U.S. and UK regulatory authorities, we have embarked upon an ambitious remediation plan, and we are working toward our goal of supplying Fluvirin for the 2005-2006 influenza season,” Mr Pien added. As a result of the uncertainty, Chiron is not providing full-year 2005 earnings guidance.
Total 2004 revenues were $1.7 billion – down slightly on last year’s $1.8 billion figure – while net product sales were flat at $1.3 billion for the year 2004 and $1.3 billion for the year 2003 as no Fluvirin sales were recorded in the third or fourth quarters of 2004, versus sales of $219 million in the corresponding quarters of 2003. Excluding Fluvirin sales, the company’s product sales increased by 13% for the year 2004. Total blood testing revenues rose from $422 last year to $494 million, while the vaccines business brought in $481 million, versus $678 million in 2003 – excluding Fluvirin, vaccine product sales increased 4% over 2003. The biopharmaceuticals division reported sales and royalties of $563, which is marginally up on the $503 million recorded in the prior year.