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Winners & Losers in Fight Against the Flu

 
By Kathryn Glass
FOXBusiness
     

    For most of us, the very mention of "swine flu" brings about feelings of fear, or at the very least thoughts of fevers, congestion, annoying coughs and stuffy noses. But there's also potential upside to the H1N1 hype.

    Indeed, for some companies the possibility of a global pandemic means one very important thing: higher profits. Many companies have already gotten a boost from the frenzy created by the swine flu, and the beneficiaries span everything from the obvious to the obscure. 

    Of course, while the flu has offered an economic boost to many, not all companies stand to gain. Following is a list of the H1N1 winners, and losers. And don't forget your flu shot.

    WINNERS

    Pharmaceuticals: The obvious winners in any public health crisis requiring a vaccine, drug-making giants Sanofi Aventis (SNY), Novartis AG (NVS), GlaxoSmithKline PLC (GSK) and CSL Ltd. have all profited mightily from increased sales related to the flu.

    AstraZeneca (AZN), maker of the nasal vaccine, also stands to benefit from government orders of the vaccine. Roche Holding AG boosted its full-year view on the anticipation of higher sales of Tamiflu, and Baxter International Inc. (BAX) expects the vaccine to add an additional $40 million to its sales in the fourth quarter.

    In addition, smaller biotech firms like Biocryst Pharmaceuticals Inc. (BCRX) received approval and announced the Department of Health and Human Services’ order for its intravenous flu medication, peramivir, on Thursday.

    Companies involved in the identification and diagnosis of the flu, such as like Quest Diagnostics (DGX) and Quidel Corp. (QDEL), should also see a positive impact.

    Drugstores: Retail pharmacies and drug stores are next on the list of obvious beneficiaries, with sales likely to get a boost as consumers take preventative measures to avoid catching the flu and seek treatment methods.

    Drugstore chains such as Walgreen Co. (WAG) and CVS Caremark Corp (CVS) will both be able to administer the vaccine at many of their locations nationwide, which should also improve store traffic.

    Disinfectants: Consumer products manufacturer Clorox (CLX) noted that improved sales of disinfectant products helped boost fiscal first quarter earnings 23% and Johnson & Johnson (JNJ), maker of hand sanitizing gel Purell, said demand for the anti-bacterial solution is up as a result of swine flu fears.

    Health Care Products: Makers of protective masks, such as the N-95 respirators from Kimberly-Clark Corp. (KMB), saw strong earnings growth in the third quarter as a result of increased sales of preventative flu gear.

    Rival mask-maker 3M (MMM) said its masks are backordered through the end of the year.

    The two companies announced plans to continue to ramp up production of the masks and both boosted full-year earnings views in anticipation of increasing demand.

    Other products such as hospital gowns and uniforms are also getting a boost. Superior Uniform Group (SGC) CEO Michael Benstock said his company has seen increased sales of its precaution gowns, as hospitals stock up in preparation for flu patients and visitors.

    “These gowns have been around for over 60 years and we’re really getting to see the full use of them during this H1N1 crisis,” Benstock said in an interview with FOX Business.

    Medical Web Sites: As more people attempt to diagnose their own symptoms and seek out information on the flu, online medical sites like WebMD (WBMD) could be in a position to profit.

    WebMD Health Corp.’s advertising sales were up 20% from the year-ago quarter, a considerable feat in the current economy. The company also saw revenue grow 15%, and while it did not attribute that growth directly to H1N1, the company said it saw unique visitors to its site grow 19%, while page views were up 27% in the third quarter.

    LOSERS
    Airlines: The airline industry was in peril long before the emergence of H1N1, but now that travelers have another thing to worry about, carriers are facing some unprecedented hurdles.

    Both leisure and business travel fell precipitously in the past year, as companies and consumers grappled with the recession and avoided international travel.

    In June, Giovanni Bisignani, the International Air Transport Association’s Director General and CEO, said he expected the industry to lose $80 billion in revenue as a result of “falling demand, collapsing yields, broken consumer confidence, and pandemic fears.”

    Now that the virus has proven less severe than was initially thought, the industry is likely to rebound some; but if vaccine shortages continue or the number of flu cases increases unexpectedly, the airlines could take a hit.

    Travel Industry: It’s not just the airlines that are suffering; as international travel slows, and pandemic fears grow, popular tourist destinations have suffered. Cities like New York had already seen business travel slow as a result of the recession, and declines in business travel coupled with pandemic fears has brought about lower roommates and more incentives to travelers.

    Mexico’s tourism industry has struggled enormously in the wake of the swine flu outbreak early last spring. High-end resorts in popular Mexican resort towns are still offering low rates and packaged deals to attract travelers.

    Food Industry: Any food service company with a stake in the pork industry has had problems related to the misinformation spread in the early days of the flu’s media coverage.

    Pork farmers themselves have suffered some of the greatest losses, but larger food and beverage manufacturers like Tyson Foods (TSN) and Hormel Foods Corp. (HRL) saw their shares slide as a result of early skepticism related to the flu, and Tyson saw a drop in profits on pork, while Hormel noted it was having difficulty in its “export markets.”

    Pork processor Smithfield Foods Inc. (SFD) was perhaps the biggest loser. The company is the world’s largest producer of pork and reported a loss of $190 million for fiscal 2009, its first annual loss in decades. Smithfield reported another $108 million loss in the first quarter of 2010.

    WINNERS & LOSERS
    Hospitals: Hospitals, of course, have some potential upside related to H1N1, as they stand to profit from increased patient visits. However, the near strike by a California nurses union in October to protest poor access to protective gear and an insignificant level of preparedness for an epidemic is an indicator of some of the issues hospitals could face if the number of swine flu cases increase too quickly.

     
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