Seeking a cure

SAN FRANCISCO — Chiron Corp.’s aggressive plan to dominate the U.S. flu vaccine market is in tatters and the company’s financial future is clouded as the public health crisis it caused continues to mount.

Earlier this month, British regulators barred the Emeryville-based company from shipping to the United States some 48 million flu shots called Fluvirin made in its Liverpool, England, factory because of contamination concerns.

Chiron’s failure cost the United States nearly half its expected vaccine supply for the flu season, prompting health officials to ask healthy people to forgo shots this year.

On Wednesday, Chiron said it wrote off its entire flu vaccine inventory, costing the company $91 million in the third quarter.

Of bigger concern, though, is the company’s ability to fix the production problems and restore its tarnished credibility with investors and regulators in time for next year’s flu season and beyond.

Chiron’s setback came a little more than a year after it purchased the British vaccine maker Powderject for $878 million and entered the flu shot market.

After the acquisition, Chiron announced ambitious plans to increase production from 26 million shots made in 2002 to 50 million for this flu season.

The company vowed to spend $100 million upgrading the Liverpool factory and analysts were optimistic the company would be able to cut production costs, raise prices and sell more vaccine as the U.S. government continued its campaign to inoculate nearly 200 million Americans.

Its flu vaccine accounted for about $220 million of Chiron’s $1.66 billion in sales in 2003. It expected more than $300 million in sales this year.

The company also hoped to capture a significant share of the flu vaccine market to put it in a dominant position once it rolled out a new manufacturing process in the next several years.