You have to believe that the people at Chiron, the former biotech that was acquired by pharmaceutical giant Novartis (NYSE:NVS) in April, are giggling like schoolgirls today. That's because Sanofi Aventis (NYSE:SNY), another powerhouse pharma and the company that is the primary producer of this country's influenza vaccine, just received a warning letter this week from the FDA regarding contamination at one of its vaccine-manufacturing plants.
Chiron, you may remember, was the second-largest producer of flu vaccine in the U.S.A. It went into a tailspin when its own manufacturing facilities were found to be contaminated in 2004. Virtually its entire supply of vaccine had to be destroyed, and the United States had to ration vaccine supplies. Competitors like Medimmune (NASDAQ:MEDI) and GlaxoSmithKline (NYSE:GSK) were able to step into the breach and become viable vaccine producers in their own right.
Despite a healthy pipeline of other products, Chiron never quite recovered from the loss of its vaccine business that year, setting the stage for the acquisition by its largest shareholder, Novartis. It is now one of four primary vaccine manufacturers.
For health-care providers, Sanofi's problems must be feeling like deja vu all over again, including Sanofi's assurances that it will be able to deliver the 50 million doses of vaccine it has promised. Chiron had also thought it would be able to continue supplying its half of the vaccine.
However, Sanofi's problems are different from Chiron's. Back in March, it discovered that some of the ingredients used to manufacture the vaccine were contaminated; Sanofi subsequently notified the FDA. Those ingredients were discarded, and no contamination has been found at the Pennsylvania facility since April. Yet because the nature of the contamination hasn't been determined, the FDA sent the letter flagging the company for failing to fix the problem and not being entirely forthcoming in its communications with the agency.
While the ultimate sanction against Sanofi could be the shutdown of its plant, the company and the FDA have said that they don't believe that the situation will likely reach that point. The quality control issues the FDA cited -- such as "clean" employees mingling with others in a non-sterile environment, and sterile equipment being transported through hallways used to transport soiled equipment -- were being addressed. The company was also scolded for not informing the FDA that glass had been found in some non-flu vaccine lots.
Despite the problems, the agency has permitted Sanofi to continue manufacturing the vaccine, either because these are not major issues, or perhaps because they are trying to head off another vaccine debacle. A second loss of half the country's flu vaccine supply in just two years would be yet another black eye.
While the people at Chiron (now Novartis) might not wish the ignominy of complete loss of product on Sanofi, you can't help but imagine them sitting in their offices snickering at the situation.
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Fool contributor Rich Duprey does not own any of the stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.
