US Department of Health and Human Services Awards Novartis $486 Million Contract to Build Manufacturing Facility for Pandemic Flu Vaccine

Holly Springs, North Carolina site will have capacity to provide 150 million doses of pandemic vaccine within six months of declaration of influenza pandemic

Novartis novel cell-based manufacturing technology vital alternative to traditional egg-based vaccines production

Commercial production of pre-pandemic and seasonal flu vaccines planned after completion in 2012

Plant to provide 300 highly skilled jobs at opening

BASEL, Switzerland, January 15, 2009 -- Novartis announced today that the US Department of Health and Human Services, Biomedical Advanced Research and Development Authority (HHS, BARDA) has awarded Novartis Vaccines a contract for up to USD 486 million over eight years to support the design, construction, validation, and licensing of U.S. cell-based influenza vaccine manufacturing facilities in Holly Springs, North Carolina, to provide a pre-pandemic supply of influenza vaccine and to provide the capacity to manufacture 150 million doses of pandemic vaccine within six months of declaration of an influenza pandemic.

"I am delighted that Novartis Vaccines' facilities in Holly Springs will be able to support the US Government's ability to respond quickly to a potential pandemic, as well as contribute to America's vaccine infrastructure for seasonal flu," said Dr. Joerg Reinhardt, Chief Operating Officer of Novartis. "We believe that this contract award underscores the US Government's commitment to ensure pandemic vaccine supply, and reflects their confidence in Novartis."

A major advantage of Holly Springs' future influenza cell culture production is that it will not rely on the availability of eggs. Avian influenza virus is currently considered the most likely source of the next pandemic - and it is lethal to both chickens and their eggs. Without eggs, traditional influenza manufacturing techniques cannot produce vaccines, so the Holly Springs flu cell culture production capabilities would be a vital alternative.

"This HHS contract builds on the strategic investment made by Novartis in vaccines innovation, and reinforces the significant financial and technology investments we have already committed to Holly Springs," added Dr. Andrin Oswald, CEO of Novartis Vaccines and Diagnostics. "We currently anticipate that by 2012 the site will provide jobs for more than 300 highly skilled people with the capability to produce cell-based seasonal flu vaccine, pre-pandemic vaccine and 150 million doses of pandemic vaccine within six months of the declaration of an influenza pandemic."

Under the contract, Novartis is responsible for, among other things, pre-construction document development, land use and zoning, construction, commissioning, validation and licensing of the facilities (which are already under construction in Holly Springs, North Carolina), with the goals of regulatory licensure, manufacture and release of seasonal and pre-pandemic vaccine, as well as provision for pandemic vaccine supply in the event of a pandemic. The contract also requires Novartis to provide two commercial-scale annual lots of pre-pandemic vaccine for a minimum of three years. In addition, HHS has the right to exercise options to purchase additional influenza vaccine over 17 years.

About influenza

Influenza is a contagious, potentially serious respiratory illness caused by influenza viruses that attack the upper respiratory tract. It can cause mild to severe illness, and can lead to death. Influenza viruses easily spread from person to person in respiratory droplets created by coughing and sneezing. According to the World Health Organization (WHO), every year an estimated 3 to 5 million people worldwide become seriously ill from influenza, and as many as 500,000 - primarily children and the elderly - die from ensuing complications[1]. A recent study conducted by researchers at the Centers for Disease Control and Prevention (CDC) concluded that, in the US alone, the total economic burden (including direct medical costs, lost wages and impacts on productivity) imposed by such epidemics averages somewhere in the neighborhood of USD 87 billion every year[2].

About pandemic influenza

Pandemic influenza occurs when a new influenza virus emerges that causes serious illness and is easily transmitted among humans. In this situation, the virus can result in a worldwide outbreak of disease, or pandemic. Pandemic influenza occurred three times in the last century. Avian influenza, or "bird flu," does not normally infect humans, but recent outbreaks of H5N1 avian influenza have resulted in hundreds of human cases, with a mortality rate of more than 50%. Billions of birds have been destroyed in an effort to contain the virus, which is now considered endemic in parts of Asia.