Chiron Corp. on Wednesday put into place a distribution and salesoperation for its vaccines business in the U.S., where Chiron isnearing introduction of the first of what is expected to be a series ofproducts from its broad vaccine pipeline.

The Emeryville, Calif., company aligned with a group of firms underthe umbrella of the holding company, Biological and Popular CultureInc. (Biopop), to help address certain markets that won't be coveredby Chiron's own vaccines sales organization.

Chiron also said it acquired a "significant minority equity position" inprivately held Biopop, of Radford, Va., whose three subsidiaries inVirginia will be working with Chiron: General Injectables &Vaccines Inc. and InSource Inc., both of Bastian, and ResolveMedical Marketing Inc., of Radford.

Chiron already is the leader in vaccines sales in Italy through itsChiron Biocine operation in Siena, Italy, and is the leader inGermany through Chiron Behring, which it became part of in Junethrough the acquisition of 49 percent of Behringwerke AG, aMarburg, Germany, subsidiary of Hoechst AG. Chiron has the optionto acquire the remainder of Behringwerke's vaccines business for$123 million beginning in March 1998. That business had 1995revenues of $166 million. (See BioWorld Today, Feb. 21, 1996, p.1.)

Chiron had revenues of about $40 million from its vaccines businessin Italy for the first half of this year. Chiron won't record revenuesfrom the vaccines business in Germany, only its share of the profit.Those numbers should start appearing on financial statements for thethird quarter.

The new arrangement in the U.S. "is another piece in the assemblageof the distribution network we've put together for our vaccineproducts," said Larry Kurtz, Chiron's vice president of corporatecommunications. "We're creating a launching pad for the vaccineswe hope will be coming to market soon. This sets us up pretty well inthe U.S., Italy and Germany."

The Biopop companies will provide warehousing, distribution,customer service, billing and related services for Chiron's vaccinebusiness. Kurtz said Chiron's sales force will address the largecustomers, such as third-party providers, and the Biopop companieswill reach the more fragmented parts of the market, such asindividual physicians.

"We're trying to have our cake and eat it, too," Kurtz said. "Theadditional infrastructure and expense to reach the entire marketplacewould be substantial."

R.J. Kirk, chairman and CEO of Biopop, said he envisioned arelationship with a major biotechnology company such as Chironwhen he formed the company 12 years ago. Most of the company'srelationships center around specific products rather than across anentire portfolio like it will with Chiron.

"We possess the largest and certainly most technically sophisticatedmedical call centers in the world," Kirk said. "It's the melding ofleading-edge information technology to biotechnology to create whatwe call `complex health care products.' We represent tobiotechnology companies a very natural progression which willpermit them to move downstream to improve the yields on theirbiotechnology investments."

Kirk said the Biopop companies will operate a dedicated agency-typeplatform on behalf of Chiron.

The majority shareholder of Biopop is a limited liability corporationformed by the managers of the company. Chiron is the company'sonly other shareholder. Kirk would not reveal the extent of influenceChiron will have at Biopop, except to say Chiron will be representedon the board, nor the extent of the company's business, except to sayit is significant.

Chiron's first vaccine to reach the U.S. market likely will be a ChironBehring rabies vaccine, which was recommended for approval inJanuary and expected to be launched by year's end, Kurtz said.Chiron anticipates filing a product license application within a fewweeks for its diphtheria/tetanus/genetically engineered acellularpertussis vaccine. Efficacy studies are expected to begin next year inthe U.S. for an adjuvanted flu vaccine, which already has beenrecommended for approval in Italy.

Chiron's prophylactic genital herpes vaccine is in the late stages of aPhase III trial in the U.S. (with data expected by the end of the year),while a cytomegalovirus candidate is nearing Phase III studies.Chiron's genital herpes therapeutic vaccine candidate failed to meetits primary endpoint but did show some effects, Kurtz said, addingthat more specific details on that study will be presented next week inNew Orleans at the Interscience Conference on Antiviral Agents andChemotherapy. n

-- Jim Shrine

(c) 1997 American Health Consultants. All rights reserved.

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