Firms Look to Prevent Swine Flu Pandemic, Turn a Profit

April 28, 2009— -- Face-masks and hand-sanitizer are flying off the shelves and pharmaceutical stocks are skyrocketing on fears that a swine flu outbreak could go global.

Even as much of the economy took a blow from news of the potential epidemic, some companies with the tools to tackle a wide outbreak have already seen a bump in their share prices and could be poised to profit if the disease continues its deadly spread around the world.

Photos splashed across newspapers worldwide Monday showed Mexicans wearing surgical-style face masks and public health professionals urged Americans to wash their hands using alcohol-base sanitizers to stem the spread of the disease.

Mask sales already saw sharp increases. By Monday evening the top two best sellers on Amazon.com in the Health and Personal Care section were face masks.

The top seller, a 3M surgical mask labeled for "bird flu" use, had sold out on Amazon. Another manufacturer, Alpha Pro Tech, announced it would increase production to keep pace with demand.

Sales of hand sanitizer have been steadily on the rise for years, and a spike in mask sales seemed noticeable on Monday. Purell, the sanitizer market leader produced by Johnson & Johnson, has seen its sales double since 2003 to nearly half or $42 million of total $90.3 million market, according to Information Resources Inc., a Chicago-based market research firm.

"The hand sanitizer business will soar," said Professor Mahmud Hassan, director of the Pharmaceutical Management MBA Program at Rutgers University. "People will use more napkins and lotions. That business will go up."

Of course, J&J is a huge worldwide company with sales of over $140 billion a year, so sanitizer profits aren't likely to move the company's shares, which closed down slightly Monday in an overall bad day for stocks.

Manufacturers of antiviral drugs, companies gearing up to produce a vaccine, and those firms that make and sell low-tech products like hand-sanitizer and face-masks are turning profits in an otherwise skittish and down market.

"If this becomes a major pandemic, no one over the long-term will profit. No one makes money if everyone gets sick. In the short term, however, there are a couple of drugs that the CDC says could potentially treat swine flu and those companies are worth watching in the short term," said Dr. Mark Schoenebaum, a physician turned biotechnology analyst for Deutsche Bank.

As of Monday, some 1,600 people were suspected to have the disease in Mexico, killing as many as 149 people. In the U.S. 40 cases have been confirmed, with no related deaths recorded. The virus, considered dangerous because of an ability to pass from person to person, has also been found in Canada, Spain and the United Kingdom.

Companies gearing up for swine flu, including Roche, Gilead Sciences and GlaxoSmithKline, the manufacturers of the leading antiviral flu medications, are best positioned to see a boost in profits if the disease escalates to epidemic proportions, analysts said.

Tamiflu, which comes in pills, was developed by Gilead and manufactured by Roche. Gilead continues to collect royalties from Roche's sales of the drug. Both companies' share prices spiked soon after the U.S. government allowed for its stockpiles of the drug to be made publicly available.

Gilead stock surged to $47.53 at the end of the day Monday, up 3.78 percent. Roche rose to $31.72, up 4.34 percent.