The defining image of Howard H. Pien's horrible year is no doubt the crowds of elderly Americans camped out for hours at clinics, trying desperately to get their annual flu shots. Many of them were never vaccinated, because Chiron Corp. (CHR) -- one of only two major flu vaccine providers -- was prohibited from releasing doses produced at the Liverpool (England) plant that makes the treatment. British regulators suspended the plant's license in October, citing contamination problems, and Pien had to apologize for failing to provide any vaccine to U.S. patients.
Pien hoped the flu would be Chiron's ticket to the pharmaceutical big leagues. In 2003, just months after Pien was named chief executive of the 23-year-old Emeryville (Calif.) company, Chiron acquired British vaccine maker PowderJect Pharmaceuticals PLC and increased the efficiency of its Liverpool plant, helping it to make 50% more flu vaccine than it had the previous year. Pien planned to boost production by an additional 37% this year. He promised to build Chiron into a global powerhouse capable of producing vaccines for a host of illnesses beyond the flu, and he vowed to boost research in potentially more profitable biotech drugs.
Now critics wonder if Pien dropped the ball on quality. Without the vaccine, Chiron will take an estimated $300 million hit to its 2004 revenues, finishing the year with $1.8 billion, analysts predict. Chiron expects to report earnings of no more than $78.5 million -- less than half what it earned in 2003. Chiron's stock has fallen 30% since October, to $32. The Securities & Exchange Commission has launched an informal probe, and the U.S. Attorney's Office is investigating the company. "We are fighting our way out of this situation with the goal of remediating our facility," Pien says. "We will continue to act responsibly in the service of public health."
In November, Pien told the U.S. House of Representatives that he had a plan to get Chiron back in gear for the 2005-06 flu season. But to sickened patients and investors, that's a long time to wait to see if Pien can keep his promise.