The spread of the avian flu virus can't be called a good thing. However, as the virus shows up in more and more countries, several drug companies are benefiting thanks to their innovative medicines. While their treatments aren't cures, the firms that are likely to reap a major bonanza from the bird flu are those that can develop vaccines. And in that race, there are two companies that seem to be likely winners.
The major winners now are companies that have developed antiviral drugs known as neuraminidase inhibitors. These medications may help reduce the severity of avian flu. The most popular is Tamiflu, created by Gilead Sciences (NASDAQ:GILD) and Roche Holding. TheBoston Globe recently reported that U.S. sales of the treatment are eight times higher than they were at the same time last year; internationally, more than 40 countries have placed orders for the medicine. The most recent financial data available for Tamiflu are impressive. For the first six months of the year, sales were $449 million versus $255 million for all of 2004.
The alternative to Tamiflu is Relenza, from Australia's Biota and GlaxoSmithKline (NYSE:GSK), a Motley Fool Income Investor recommendation. Relenza is at a disadvantage to Tamiflu because it's orally inhaled, while Tamiflu is a pill. Nevertheless, demand for Relenza is rising: Sales were just $5.5 million last year, but the U.S. government recently awarded GlaxoSmithKline a $2.8 million contract for the medicine.
Notably, though, there have been scattered cases in which the avian flu has shown resistance to Tamiflu. These cases underline the need for a vaccine. Given that a vaccine would have to be produced in huge quantities, larger companies may have an advantage over smaller firms as suppliers. Sanofi-Aventis (NYSE:SNY), the leader in the pursuit of a bird flu vaccine, certainly is large. And the company's leadership was recently confirmed when the federal government agreed to pay it $100 million to produce a bird flu vaccine.
Another contender, though, is GlaxoSmithKline. The company is already a major producer of the conventional influenza vaccine, and with its purchase of ID Biomedical (NASDAQ:IDBE) is poised to become even bigger. Glaxo's production capacity makes it a powerful competitor. As for its development timeline for an avian flu vaccine, Glaxo expects to begin large-scale clinical trials next year.
In the race for an avian flu vaccine, size matters. As a result, Sanofi and Glaxo may be the best positioned to reap the benefits from a vaccine.
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Fool contributor Brian Gorman is a freelance writer in Chicago. He does not own shares of any companies mentioned in this article.
