As some companies struggle with flu plans, others profit from pandemic

By Kristine Owram, The Canadian Press

TORONTO - While many Canadian companies fret about how to deal with staff shortages and dropping revenue from the H1N1 flu, others are profiting from growing demand for everything from hand sanitizer to medical advice.

BMO Nesbitt Burns calculated that a mild pandemic would cut Canada's annual economic growth by two percentage points, while a severe outbreak would cut growth by six percentage points due to absenteeism and reduced consumer demand.

But not all companies will be affected equally and many are already poised to turn a tidy profit.

Montreal-based medical equipment maker Noveko International Inc. (TSX: EKO.TO) has seen demand for its antimicrobial surgical face masks and its Azuro brand hand sanitizer soar since the flu first appeared in Mexico last April.

Noveko spokeswoman Chantal Vennat said the company sold 20,000 litres of hand sanitizer in total last year. Since the end of April, it's been selling 20,000 litres a week.

Not surprisingly, Noveko's biggest problem has been keeping up with demand. Although it contracts out production of its products, Vennat said it's been challenging mobilizing producers quickly enough and it has had to turn some orders down.

Despite this, Noveko has managed to increase production of its masks from one million a month to nine million a month since April.

"Right away at the end of April we shipped the first million face masks to Mexico, which was a good part of what we had in inventory because we were just at the beginning of commercialization for the masks," Vennat said.

"Right now we have firm orders for more than 100 million masks all over the world. Two weeks ago, we just released an order for 100 million masks for some regions in South Asia over the next three years."

That deal was valued at about $25 million.

Noveko is competing against heavyweights like 3M, Kimberly-Clark and Johnson & Johnson, which also make masks and hand sanitizers. Noveko asserts its masks are different because they have patented technology that traps bacteria and viruses and then neutralizes them instead of just keeping the germs contained.

Noveko saw a 63.7 per cent increase in revenues from continuing operations in its most recent quarter, and Vennat said this trend is expected to continue as the Noveko brand becomes better known around the world.

Other companies are hoping to profit from less tangible responses to the H1N1 pandemic.

In September, Montreal-based AXA Assistance launched a pandemic assistance hotline to help companies develop a contingency plan and reduce the disruption in their day-to-day activities caused by the flu.

Patrick Collette, business development director at AXA Assistance, said companies can pay ahead of time for a certain number of calls to the hotline. He said questions can range from what to do if a pregnant employee comes into contact with someone with the flu, to how to manage staff shortages due to illness.

"The value with us is they won't wait on the (government) Telehealth line or try to read everything that the government is publishing," Collette said.

"Our role is to make sure if they have a key question, in one hour a licensed nurse or a doctor will call back to make sure that it is answered. ... We feel that it's servicing a gap. People don't want to wait, more so businesses, and they want to feel that they can manage any issues quickly."

"We have about 20 companies who've signed up and we're looking to bring it up," Collette said, of the service that costs between $1,500 and $9,000 depending on the size of the company.

"Of course, we hope (the pandemic) will not be critical. If it stays like (it is), it's good news, but if it gets worse we'll be ready to help them out."

International corporations with operations in Canada are also profiting.

U.K.-based Glaxo Smith Kline (NYSE: GSK) is the manufacturer responsible for providing Canadians with the H1N1 vaccine through its manufacturing facility near Quebec City.

The company spent $200 million on the Ste-Foy facility in 2006 and 2007 to prepare it for a pandemic, and the investment has paid off.

The company has already shipped almost seven million doses of vaccine across Canada.

"In the weeks ahead there will be millions of doses coming off the production line," said spokeswoman Megan Spoore.

Internationally, Clorox Co. (NYSE: CLX) said earlier this week that sales of its disinfectant wipes helped boost the company's profit by 23 per cent in the third quarter to US$157 million.

And Kimberly-Clark Corp. (NYSE: KMB) said sales of its health-care products jumped by 15.8 per cent in the quarter.

"Approximately 40 per cent of the total gain in health-care volumes in the quarter was attributable to increased global demand for face masks as a result of the H1N1 flu virus," the company stated in its earnings report.