Vaccines to stay hot for research and M&A

By Ben Hirschler

LONDON (Reuters) - The previously humdrum world of vaccines has roared into favor, thanks to new higher-margin products, and industry executives expect intensified research and more M&A as firms move to exploit the opportunities.

"The vaccine industry has been the poor child of the pharmaceutical industry for a long time but that is changing," Leonard Kruimer, chief financial officer of Dutch firm Crucell (CRCL.AS: Quote, Profile, Research, Stock Buzz), told the Reuters Biotechnology Summit in London.

"Five years ago when we told people we had a promising technique to make vaccines better and faster, they would just fall asleep at the table," he added.

Back then, major pharmaceutical companies were exiting the sector. Now they are waking up to the potential of a market that is seeing accelerating growth at a time when demand for standard medicines is slowing down.

The past year has seen a wave of consolidation in the sector, with deals including Novartis AG (NOVN.VX: Quote, Profile, Research, Stock Buzz) agreeing to buy out Chiron Corp CHIR.O and GlaxoSmithKline Plc (GSK.L: Quote, Profile, Research, Stock Buzz) snapping up Canada's ID Biomedical Corp.

"The consolidation that has taken place will probably continue for a little bit," predicted Kruimer, whose own company completed the acquisition of Swiss group Berna Biotech BBIN.S this week.

Gordon Cameron, the chief executive of another small independent vaccine company, Britain's Acambis Plc (ACM.L: Quote, Profile, Research, Stock Buzz), told the summit in London that a "virtuous cycle" was playing out as scientists discovered new vaccine targets and big companies jumped on the bandwagon.

In this environment there was a clear rationale for small to medium-sized companies to get together to increase critical mass and broaden pipelines, he said.  Continued...