Powderject Pharmaceuticals, the vaccines specialist, on Tuesday became only the second British biotechnology company in history to report a profit.

News that the company had joined Celltech as a biotech in the black - with a surprise £100,000 pre-tax profit for the year to March 31 - pushed the shares up 7 per cent to 491p.

Analysts, who had been expecting a £4m loss, praised the rapid turnaround from the previous year's pre-tax loss of £20.5m.

"I haven't seen a company perform like this for a long time," said Edward Husband at Numis Securities.

Paul Drayson, chairman and chief executive, said a rise in turnover from £40m to £113m, combined with an increased margin of 51 per cent (42 per cent) explained profits coming through a year earlier than expected.

Mr Drayson predicted the current year would produce pre-tax profits of £25m on turnover of £160m.

Half of the revenue is due to come from sales of Fluvarin, the flu vaccine. A further £32m will come from the contract, won last month, to supply the UK government with smallpox vaccines.

Mr Drayson said there was no certainty of other smallpox vaccine revenue, but added: "We are certainly competing for contracts in several other countries."

He dismissed speculation that the company's long- standing contract to supply the UK government with BCG vaccines to combat TB was under threat. "We're not expecting to lose this contract," he said.

The current £17m deal, won in March 2001, is due for renewal in the summer.

Mr Drayson said profits this year would be buoyed by the sale in March of the company's drug-delivery business, which made an operating loss of £9.2m.

Powderject stressed it had now completed its transformation into a vaccine company.

Analysts expected several more bolt-on acquisitions this year to bolster production capacity and its position in therapeutic vaccines.

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