The company was expected to deliver half the nation's flu vaccine stockpile this year, and analysts said the business makes up about 25 percent of Chiron's annual sales. Chiron's shares plunged 19 percent.

British health officials notified Chiron executives overnight Tuesday that the company could not ship some 48 million flu shots from its Liverpool factory because of sterility concerns. Chiron said it has not shipped any of its Fluvirin vaccine and no recall was necessary.

Chiron Tuesday cut its expected 2004 earnings from $1.50 to $1.60 a share to between 35 cents and 45 cents a share. Analysts estimated the missed flu season would cost Chiron about $400 million in sales.

"This will absolutely hammer earnings," said Banc of America Securities analyst Mike King. "Making vaccines is a risky business."

In August, the company announced several million flu shots were tainted, but that it only expected a slight delay in providing the United States with protection against this year's flu season. The British government's action Tuesday caught company and U.S. health officials by surprise because they thought Chiron had remedied its problem in time to ship its vaccines this year.

Just last week Chiron chief executive Howard Pien assured federal lawmakers at a congressional hearing the company had lost only 4 million doses and fully expected to help meet the nation's flu vaccine needs.

"Chiron deeply regrets that we will be unable to meet public health needs this season," Pien said. "What happened was unexpected."

Pien said "human error" apparently led to the tainted shots, but he declined to give more details.