Sunday, August 1, 2004

GAITHERSBURG, Md. (AP) — MedImmune Inc. has scaled down and refocused its marketing plans for FluMist after a disappointing first year for the influenza vaccine.

The Gaithersburg-based company has cut the price in half for the vaccine, hoping to eliminate a major barrier to sales from last year, and plans to produce about 1 million doses this year.

The strategy is a departure from last year, when MedImmune staged a $25 million television and print ad campaign to convince consumers that its flu vaccine, delivered through a squirt in the nose, was better than the traditional needle in the arm.

The result? The drug once thought to be a blockbuster flopped. Only a fraction of the 4 million doses made were sold, and thousands ended up being distributed free of charge despite a harsh flu year.

Now the big ad campaign is gone, and MedImmune will pitch the drug to doctors and pharmacies — not the general public.

By keeping FluMist on the market, even at a loss, MedImmune is laying the groundwork for a reformulated version of the drug, expected to be ready by 2007.

The company hopes to move beyond the simple appeal that FluMist developed among many physicians: as a pain-free alternative to flu shots.

MedImmune says the vaccine, made of a weakened, live flu virus, provides better protection than shots made with a dead virus. But by marketing the drug to consumers, said Armando Anido, senior vice president of sales and marketing, it missed a chance to convince doctors that FluMist was a better drug.

“We had patients asking about FluMist, and the physician would say, ‘It’s just a nasal spray,’” Mr. Anido said. “It basically lost all of its advantages by just saying it was a nasal spray. That gave us the biggest evidence that we had not done a very good job at educating.”

By the end of the flu season, MedImmune and Wyeth had sold only about a quarter of the 4 million doses produced. It ended up giving away some of them to public health agencies. The company predicts FluMist will reduce earnings between 10 cents and 20 cents per share every year until 2007.

MedImmune also reported that a split with partner Wyeth over FluMist contributed to a $100 million second-quarter loss.

FluMist was different from flu shots in two major ways. It was inhaled, not injected, making it more acceptable to children who are afraid of needles.

It also used a live influenza virus to stimulate immunity, a technique developed in the 1960s. The virus was weakened so that it wouldn’t cause an infection. Flu shots, by comparison, use a dead virus.

MedImmune thought FluMist would encourage more people to get vaccinated, and it made big forecasts for the drug. During the first five years after its launch, MedImmune expected sales of the vaccine to reach $1 billion.

But FluMist stumbled even before it reached the market. The Food and Drug Administration approved it for people ages 5 to 49, excluding two groups at greatest risk for the flu: young children and the elderly.

When it finally hit the market last fall, FluMist’s price — $46 wholesale compared with about $10 for a flu shot — made it hard to win over consumers. Then a deal to sell through Wal-Mart collapsed, reducing the number of pharmacies carrying the vaccine.

Additionally, the drug, which must be kept frozen before use, was hard for physicians to store. Some hospitals asked people who had taken FluMist to stay away, afraid the live virus they received would infect patients with weak immune systems.

“Going to the consumer last year didn’t work. There was the high price, and the marketing message was confusing. They didn’t have it in enough outlets to convince consumers,” said Philip Nadeau, an analyst with SG Cowen.

The FluMist version expected in 2007, known as CAIV-T, will be easier for doctors to store because it won’t need to be frozen. MedImmune hopes to get FDA approval for use in children younger than 5 and the elderly.

Until then, MedImmune will continue to sell the current version, but the wholesale price will be cut to $23.50 per dose. Consumers probably will pay more once doctors and pharmacies add administration fees.

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