Wednesday, October 20, 2010

Big pharma make big bets on infectious diseases: J&J and Glaxo invest in treatments for infectious diseases

Infectious diseases are catching the attention of big pharmaceutical companies lately. Over five years ago, GlaxoSmithKline started investing in flu vaccines with the anticipation that new variants of flu viruses are emerging and will cause global pandemics. Glaxo began delivering its new H1N1 vaccine last week and has already received over 440 million orders from governments around the globe.

Another pharmaceutical giant, Johnson & Johnson (J&J), recently acquired Crucell, a Dutch vaccine producer, for $2.42 billion. The acquisition is a strategic move that positions J&J in the vaccine market. J&J also announced that it plans to expand its research to encompass infectious diseases like HIV and hepatitis C.

Vaccines are more difficult to make and require larger upfront investment than prescription drugs. So, as patents for brand-name drugs expire and margins fall, big pharma companies are looking to produce vaccines to bolster a business that is less likely to be undercut by low-cost producers.

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