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Biological products industry

Chiron Corporation Faces Class Action Lawsuit Over Fluvirin Vaccine Production Issues

Strategic Insights

— 2 min read

Murray, Frank & Sailer LLP has filed a class action lawsuit on behalf of all purchasers of Chiron Corporation securities during the period between July 23, 2003, and October 5, 2004. The complaint alleges that Chiron supplied approximately half of the flu vaccines administered in the United States and that serious problems at its Liverpool plant threatened the company's ability to provide the vaccine for the 2004-2005 flu season.

Key Takeaways:

  • Chiron manufactured its flu vaccine, Fluvirin, in a Liverpool, England, plant it acquired in July 2003, which supplied approximately half of the flu vaccines administered in the United States.
  • The company had under contract to provide its flu vaccine to the United States for the 2004-2005 flu season, but serious problems at the Liverpool plant, documented since 2000 by the FDA, threatened Chiron's ability to provide the vaccine.
  • Problems with the plant, including systemic quality-control issues and high levels of bacteria in unfinished vaccines, signaled to defendants that the plant suffered from serious issues that could lead to unsafe vaccines and/or a serious disruption in the Company's ability to produce the vaccine.
  • On October 5, 2004, Chiron announced that its license to manufacture Fluvirin had been temporarily suspended by the UK regulatory body, the Medicines and Healthcare Products Regulatory Agency.
  • The price of Chiron common stock plummeted from $45.42 per share on October 4, 2004, to $37.98 per share on October 5, 2004, a one-day drop of 16.3% on unusually heavy trading volume of over 25 million shares.
  • Chiron received a grand jury subpoena from the U.S. Attorney's office for the Southern District of New York on October 12, 2004, and the SEC initiated an informal investigation on October 13, 2004.
  • The lawsuit alleges that defendants reported impressive revenue growth driven by sales of Fluvirin, while failing to disclose serious problems at the Liverpool plant that threatened Chiron's ability to provide the vaccine.

Statistics:

  • Chiron supplied approximately half of the flu vaccines administered in the United States.
  • The company had under contract to provide its flu vaccine to the United States for the 2004-2005 flu season.
  • On October 5, 2004, Chiron's stock price dropped 16.3% on unusually heavy trading volume of over 25 million shares.
  • Fluvirin sales accounted for approximately 12% of the Company's overall revenues in 2003.
  • The FDA documented systemic quality-control issues at the Liverpool plant in June 2003.
  • The FDA found high levels of bacteria in unfinished vaccines at the Liverpool plant in June 2003.

Sources:

  • Murray, Frank & Sailer LLP
  • PRIMEZONE via COMTEX
  • The Wall Street Journal
  • Food and Drug Administration (FDA)
  • Medicines and Healthcare Products Regulatory Agency (MHRA)
  • U.S. Attorney's office for the Southern District of New York
  • SEC (Securities and Exchange Commission)

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