Shares prices of domestic vaccine makers rose sharply yesterday on surging orders for vaccines, as fears grew over a fresh outbreak of the H1N1 flu, even as the benchmark Shanghai Composite Index fell 2.83 percent.

Vaccine producer Hualan Biological rose 2.47 percent to 57.7 yuan in Shenzhen yesterday, while Layn Natural Ingredients rose 2.93 percent to 44.94 yuan.

Zhejiang CONBA Pharmaceutical Co Ltd increased 6.13 percent to 12.12 yuan while Shenzhen Neptunus Bioengineering Co jumped 9.24 percent to 15.85 yuan in Shenzhen.

China Meheco Corporation closed at 20.98 yuan yesterday, up 10 percent.

The shares of the five companies had hit the daily limits of 10 percent on Monday.

"The recent gain is mainly underpinned by government orders for vaccines," said Cai Jianjun an industrial analyst at Guodu Securities.

Health Minister Chen Zhu warned last month that China faced a grim situation in containing the disease as the number of cases has risen. As of Oct 26, China reported 35,664 H1N1 infections with three deaths. In the US, President Barack Obama declared H1N1 a national emergency on Oct 24.

Xi Xiuming, an expert with the Ministry of Health's expert panel, said cautious steps and alertness is needed, but there is no reason for any panic.

The central government has also hastened its steps for purchasing H1N1 vaccines. Yesterday, Hualan said it won an order for 11.21 million doses of its flu vaccine from the central government. Beijing Tiantan said it has won an order for 3.02 million doses.

Sinovac Biotech Ltd said it received an additional order of 5.19 million doses for its H1N1 influenza vaccine.

The New York-listed company gained 7.61 percent to close at $8.06 apiece on Monday. All the doses ordered are due for delivery by Dec 12.

Cai, however, feels that the sudden boom in H1N1 vaccine stocks stems largely from speculation. "Actually, only two domestic listed companies, Hualan and Beijing Tiantan, can benefit from the new orders, while the rest are cashing in on the market euphoria for such firms," he said.

Li Yingpeng, an analyst at Galaxy Securities, said this is not the first ever rally of the vaccine sector.

"Ever since the outbreak of H1N1 in Mexico in March this year, pharmaceutical shares have risen several times. The strengthened share prices, however, does not completely reflect their true performance," said Li.

"However, for those companies that have won vaccine orders, there will be substantial improvements in balance sheets. For instance, if a single dose is priced at 20 yuan, Hualan's latest order alone can earn it 200 million yuan, which may bring about 100 million yuan of profit," Li said.