July 15, 2005

Chiron cuts supply of German-made flu vaccine

CHICAGO (Reuters) - Chiron Corp., which scrapped its flu
vaccine last season because of contamination problems, on
Friday warned it will cut supplies to non-U.S. markets this
year due to plant issues in Germany.

Chiron warned that production of its German-made Begrivac
flu vaccine will be sharply scaled back due to sterility
problems, and said it is working with U.S. regulators to
restore production of its Fluvirin vaccine made at a British

The stock fell 2.5 percent in early trade.

Chiron cut supply expectations for its Begrivac vaccine to
about 8 million doses and said it may delay shipments until
early October.

"The news that they now have flu vaccine product problems
in Germany was a surprise, and it adds to the sense that this
company can't operate its own business," said Geoff Porges, an
analyst at Bernstein & Co.

Chiron had expected to supply about 12 million doses of the
Begrivac vaccine, which is made at its facility in Marburg,
Germany, to customers outside of the United States for the
2005-2006 flu season. It now expects to supply about 4 million
doses in those markets.

Chiron repeated its forecast that it will produce 18
million to 26 million doses of its Fluvirin flu vaccine for the
2005-2006 flu season, with the lion's share headed for the U.S.

But Chiron said achieving those levels is contingent on
several factors, including successfully passing inspection by
U.S. regulators of its manufacturing plant in Liverpool,

Chiron cut its outlook for production of Fluvirin in June
citing product start-up delays. Its earlier outlook was for
between 25 million and 30 million doses.

Shares of Chiron dropped 94 cents to $36.33 Friday on

(Additional reporting by Kim Dixon in Chicago)