GSK prepares to cash in on bird flu fears

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The company is hoping to benefit from the contingency plans of worried governments and corporations, as Roche, its Swiss rival, struggles to keep up with demand for Tamiflu, its flu treatment and the most widely regarded means of treating any outbreak of avian flu.

The Swiss company is likely to say today that it has witnessed a significant upswing in orders for Tamiflu, as it reports its latest quarterly results. It received US approval yesterday for a new Tamiflu manufacturing plant but was having to bat away growing calls for the company to give up patents and allow other pharmaceuticals companies to make the pills.

GSK's Relenza acts in a similar way to help fight the flu virus but is regarded as less reliable because it is inhaled, not swallowed. That might mean people with breathing difficulties do not get the correct dose.

Many governments are likely to resist calls to stockpile GSK's drug because of this drawback and because neither drug is wholly effective, only lessening the symptoms if taken early enough. The UK Government is buying 14.6 million doses of Tamiflu, enough to treat a quarter of the population.

GSK said it was enjoying significant interest in Relenza and was talking to several governments about contributing to bird flu stockpiles. One City analyst said the company might see an additional $1.4bn (£800m) in annual sales of the drug when the new capacity comes on-stream.

The company made 11 million doses of Relenza last year and has invested in new equipment at several manufacturing sites, including at Montrose in Scotland, that will boost capacity to 31 million doses in 2007, with more to follow.

Michael Leacock, a drug sector analyst at Nomura, told clients: "A major opportunity lies in the US, where the joint National Vaccination Advisory Committee and Advisory Committee for Immunization Practices meeting recommended that 133 million treatments of flu drugs be stockpiled in preparation for a possible pandemic. We understand Roche can deliver only 10 million courses of its Tamiflu in 2005 and 12 million in 2006 to the US, despite its new US plant. Relenza is seen as an important back-up product in pandemic flu planning."

Shares in Roche were among the best performers on the Swiss stock exchange yesterday because of investor excitement over Tamiflu, but there are increasing calls for it to give up its monopoly on the product.

Cipla, India's second-largest drug maker, will put in a provocative request today for a licence to make Tamiflu. Several US politicians have demanded Roche allow US companies to set up manufacturing plants.