The Business of the Flu; The threat of a pandemic is revolutionizing the vaccine industry, with billions pouring into new technology.

Byline: Alexandra A. Seno

Taiwan is close enough to the avian-flu outbreaks to fear the potential for a pandemic, and it is racing to find a modern vaccine. Christine Liu Ding-ping, the Taiwan Center for Disease Control's deputy director, and her team are reviewing new manufacturing technologies and will fund three of them by the year-end. "One hundred percent of the proposals for emergency production involve new technology," she says. Authorities in Singapore, also close to the outbreaks that have killed about 60 people in Asia so far, are also joining the hunt. Last week the search got a huge boost when the U.S. government announced a $7 billion pandemic-preparedness plan, including big money for revolutionary new vaccine-production processes.

The long-overdue overhaul of the beleaguered vaccine business is underway, and may translate into better days ahead for manufacturers. Andrew Farlow, an Oxford University economist who specializes in vaccine-finance issues, says, "Though the current epidemic fears may not come to fruition, they have done a useful purpose if they knock us over into developing the new technologies to be ready for pandemic flu." Current flu vaccines still rely on a manufacturing standard established more than half a century ago, which involves educated guesswork and special fertilized eggs. John Beadle, chief medical officer of PowderMed, a British biotech firm, says, "If this were a war, we would not expect to go to battle with 50-year-old planes."

One of the big beneficiaries of new investment dollars is likely to be the cell-culture industry, which uses various cells (human, and monkey or dog kidney) rather than eggs as the medium in which to cultivate vaccines. Cell culture can shave production time from six months to three, and avoids the risks of egg contamination or shortages--risks heightened by the direct threat avian flu poses to the global chicken population. Out of the $7 billion the United States plans to spend, $2.8 billion will go to new methods that dispense with the egg, like cell culture. The leading patent holders in this field include big pharmaceuticals like Chiron of the United States and Sanofi-Pasteur of France, as well as emerging biotechs like Crucell of the Netherlands and ID Biomedical Corp. of Canada.

Another group of likely winners are corporations in the field of reverse genetics engineering, led by a U.S. biotech, MedImmune. Scientists have used reverse genetics to create earlier strains of ...