Abstract

Avian flu has been the focus of significant attention since 2004, when there were reports of human infections in Asia from the avian flu H5N1 strain. To prevent the catastrophic mortality of mankind, several governments are stockpiling antivirals and pharmaceutical firms are increasing their efforts to develop vaccines. As the two existing antivirals in the market are not expected to deliver the best efficacy against this flu bug, the imminence of a pandemic could be inducing a boom effect on the companies that research and develop future antiviral drugs and vaccines. In other words, the event of a potential avian flu pandemic may generate blockbuster opportunities for drug manufacturers. At the same time, participating pharmaceuticals are also exposed to ‘exogenous shock’ in an event that the avian flu causes only temporary panic and fizzles out soon after. We apply some biotechnological options to invest and options in sequential investments to develop a targeted vaccine. In event of a less damaging flu occurring, we also examine Big Pharmas withdrawal options from R&D. One antiviral drug in the market and two competing vaccines in the pipelines are selected for these comparative case studies.

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