ID Biomedical's Shot in the Arm

ID Biomedical (Nasdaq: IDBE  ) recently showed the importance of being in the right place at the right time, especially in the vaccine business. With all the manufacturing and regulatory hoops involved in this process, this is no easy task -- a fact investors should probably keep in mind.

The Vancouver, Canada-based company announced yesterday that it had signed agreements with Henry Schein (Nasdaq: HSIC  ) , AmerisourceBergen (NYSE: ABC  ) , and McKesson (NYSE: MCK  ) for distribution of its flu vaccine Fluviral, which is approved for use in Canada. The deal, which could go into effect as early as next year and will run through the 2014/2015 flu season, could bring ID Biomedical as much as $2.5 billion in sales. The agreement is conditional upon the Food and Drug Administration's approval of Fluviral in the U.S.

ID Biomedical appears to have successfully exploited conditions caused by this flu season's debacle. This year, following Chiron's (Nasdaq: CHIR  ) disclosure of contamination problems at its manufacturing facility, Sanofi-Aventis (NYSE: SNY  ) and MedImmune (Nasdaq: MEDI  ) have picked up most of the slack. ID Biomedical, however, appears poised to fill a large portion of the U.S.'s flu vaccine needs in coming years.

Still, ID Biomedical has several hoops to jump through yet. The firm is investing heavily to increase production at the plant where it makes Fluviral. ID Biomedical has shipped 9 million Fluviral doses in Canada so far in 2004. Its scale-up plans, though, include capacity for 22 million doses in 2005 and 50 million doses by 2007. Further, ID Biomedical's facility has to be modified to meet FDA requirements. For a company that posted a CDN $29 million loss for the first nine months of the year on just CDN $22 million in revenue, these are hardly insignificant challenges. Given the risks involved in vaccine manufacturing, investors may want to tread carefully.

Fool contributor Brian Gorman is a freelance writer in Chicago. He does not own shares of any companies mentioned in this article.