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Novartis vaccine division hit by Bexsero setback

ZURICH (Reuters) - Swiss drugmaker Novartis suffered a fresh blow to the turnaround prospects of its loss-making vaccines division as a key committee advised against including its meningitis B vaccine on Britain's routine vaccination program.

The UK Joint Committee on Vaccination and Immunisation (JCVI) said on Wednesday that it had taken the interim decision not to recommend Bexsero because the vaccine is unlikely to prove cost-effective.

Bexsero won European approval this year to become the first vaccine against "MenB", a bacterial infection that can kill in 24 hours and poses the greatest risk to infants.

The declining incidence of MenB, however, means that cash-strapped governments may be reluctant to administer the vaccine broadly as a preventative measure.

Bexsero is seen as crucial to the Novartis vaccine unit, which has struggled to catch up with the market leaders - GlaxoSmithKline, Sanofi and Merck - and was the only one of the Swiss company's five divisions to report an operating loss in the second quarter.

"Today's decision represents a material setback to Novartis's beleaguered vaccine division. In the absence of a successful appeal, Bexsero revenue will likely be restricted to a minimal private-payer market," Citi analyst Andrew Baum said.

"More importantly, it could force Novartis to sell, partner or more likely integrate its vaccine business within its pharmaceutical infrastructure."

Novartis said the committee's decision underestimated the "potentially devastating impact" of the disease.

"It's disappointing to see that the decision was mostly driven by financial considerations and without any pricing discussion with Novartis," said Andrin Oswald, head of the Novartis Vaccines and Diagnostics division.

The drugmaker said it would supply information on pricing before the recommendation is finalized.

(Reporting by Caroline Copley; Editing by David Goodman)