Stock-taking

New York, Sept. 6 (Reuters): Independent directors of US drugmaker Chiron Corp have rejected as “inadequate” a $4.5-billion offer from Swiss group Novartis AG to acquire the 58 per cent of Chiron that Novartis does not already own for $40 a share in cash, Chiron said on Monday.

Novartis made its offer on September 1 in a bid to cement its presence in the vaccines business. A Novartis spokesman said the company had no comment on Chiron’s statement.

Emeryville, California-based Chiron is a flu vaccine maker that has struggled to bring plants in England and Germany up to regulatory standards over the last year.

“After a thorough analysis and consideration of Novartis’s offer to acquire the shares of Chiron it does not already own for $40 per share in cash, the independent directors of Chiron have determined that this offer is inadequate,” said Chiron in the statement.

The statement said in the 10 years that Novartis has been Chiron’s largest stockholder, Chiron has regularly discussed with Novartis a number of strategic initiatives, including mergers, significant acquisitions and other transactions.

“Chiron’s independent directors have not, however, solicited an offer to buy Chiron,” the statement added.

The Novartis offer on September 1 translated into a premium of about 10 per cent to Chiron’s closing share price on August 31. Chiron shares closed at $42.79 on Friday on Nasdaq. Analysts have said the proposed deal would make sense strategically and would give Novartis access to a range of vaccines at time when interest in vaccination is growing amid fears of a bird flu pandemic.

Chiron barely broke even in the second quarter of this year as problems at plants in Germany and the UK had the firm struggling to produce enough flu vaccine to supply customers before the coming winter.

However, FDA inspectors gave a favourable report after inspecting a plant in Liverpool, northwest England, and Chiron said it could start supplying the vaccine again by the 2005-2006 flu season

Novartis, the world’s No. 6 drugmaker by prescription sales, had sales of $28.2 billion in 2004 and a net profit of $5.8 billion. Chiron had 2004 sales of $1.7 billion.

Chiron operates three business segments ? the fast-growing vaccines division, blood testing, and BioPharmaceuticals, which makes drugs for infectious diseases and cancer.

Vaccines traditionally have been viewed as a low-growth, low-price business by comparison with mainstream therapeutic pharmaceuticals.

But the arrival of new technologies and a shake-out in the sector is changing that perspective and many industry experts now expect vaccines to show accelerated growth in coming years.

Britain's GlaxoSmithKline Plc, one of the world's leading suppliers, forecast in June the total vaccine market could quadruple by 2015 to between $30 billion and $43 billion.