We are pleased to hear that India’s Shantha Biotechnics received a $340 million contract to supply its combination vaccine, SHAN5 for the period of 2010-2012 from a United Nations agency. The vaccine is used for immunizing children against five diseases – Diptheria, Tetanus, Pertussis, Hepatitis B and Hemophilus Influenza B. In July, Sanofi-Aventis’ (SNY) vaccine division Sanofi Pasteur had acquired a 78% stake in Shantha Biotechnics for 550 million Euros ($783 million).

Shantha Biotech has been a prominent player in the vaccine segment for quite some time. It works with several international agencies like the UNICEF in the Asia Pacific, Africa and Latin America. The company is expected to post sales of $90 million in 2009. The deal should be beneficial to both the companies. While Shantha Biotechnics has the resources to produce quality vaccines at cheap rates, being the largest company entirely dedicated to vaccines, Sanofi has the financial strength and rich experience.

Shantha Biotech has a strong pipeline for vaccines, including a rotavirus vaccine (expected to be launched in 2012), a conjugated typhoid vaccine and an HPV vaccine. These vaccines could become major revenue earners for the company on approval.

Sanofi-Aventis possesses one of the world’s leading vaccine operations, with total sales of 2.86 billion Euros in 2008, an increase of 3% over the previous year. Sales in the second quarter were 712 million Euros, representing about 9.5% of the company’s total revenue. In addition to existing products, Shantha Biotech’s developmental-stage vaccines would complement Sanofi Pasteur’s current portfolio.

The current outbreak of the swine flu pandemic can prove to be a major opportunity for vaccine manufacturers. All major players in the vaccine segment are busy conducting human tests for H1N1 vaccines. Companies like Sanofi Pasteur, GlaxoSmithKline (GSK), Novartis (NVS), Baxter International (BAX) and AstraZeneca (AZN) are all vying to get their vaccines to the market at the earliest.

Sanofi-Aventis is the biggest producer of flu medicines. The approval of H1N1 vaccine would enable the company to post strong revenue growth.

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