News that Chiron had accepted a higher offer from suitor Novartis [[31/10/05a]] has been swiftly followed by the formation of a new vaccines and diagnostics division at the Swiss drugmaker.

The unit will combine Chiron’s $500 million dollar vaccine activities and $500 million diagnostic activities, and will be headed by Joerg Rheinhardt, currently Novartis’ global head of pharma development, who will serve as chief executive of the division. Dr Rheinhardt will be succeeded by James Shannon, who is currently head of clinical development and medical affairs at the group.

Chiron’s $600 million biopharmaceutical business will be subsumed into Novartis’ pharmaceutical division.

Chiron is currently ranked number five in the vaccines sector, behind Merck & Co, Wyeth, Sanofi-Aventis and GlaxoSmithKline, and Novartis has already pledged to invest in new acquisitions to bolster its position in the sector.

After concerns a few years that companies were exiting the vaccine sector because it was unprofitable and prone to litigation, the market is now expected to undergo accelerating growth, more than doubling in sales in the next five years to over $20 billion in 2009 from about $9.6 billion in 2004, according to industry surveys.