Only two drug companies are developing human vaccines for clinical trials in the United States, but rival firms have made no move, citing thorny patent issues and fears of making huge investments in a vaccine that may not be needed, Stohr said.

"Companies have to take a certain risk. We feel there should be more companies beginning production ... of vaccine to be ready for testing in humans," Stohr told Reuters.

"Clinical testing is expensive and there is a shared responsibility by governments and public health authorities to compensate for an apparent lack of market forces," he said.

Thailand this week reported its first case of human to human transmission of bird flu, raising the specter of a pandemic.

Bird flu virus is now endemic in Asia, where people often live in close contact with birds and animals. First seen in Kong Kong in 1997 it has killed 30 people this year in Vietnam and Thailand. Of 15 cases in Thailand this year, 10 were fatal.

The WHO has warned for years that one day one of the flu bugs that regularly decimates poultry, particularly in Asia, could trigger an epidemic similar to 1918 when 40 to 50 million people died, more than those killed in World War One.

Vaccines and antiviral drugs would be in short supply in the first months, according to the U.N. agency. Representatives of more than a dozen drug firms met in Geneva on Wednesday to discuss preparedness for a possible influenza pandemic.

"The pandemic strain is most likely to be the H5N1 because that is what is circulating," Stohr said. "Nobody would have a vaccine if the pandemic comes in two months, and (still) very very few people would have a vaccine in four months."

"SEVERE OBSTACLES"

Only Aventis Pasteur Inc and Chiron Corp - with contracts from the U.S. National Institutes of Health (NIH) - are currently developing a human bird flu vaccine. Under the two deals, under which 2.4 million doses will be produced, NIH is paying for costly clinical trials. The WHO provided the prototype strain used to develop the vaccines.

Japan has also announced support for companies in developing clinical batches for testing, according to Stohr.

In the event of a pandemic, Europe which is home to 70 to 75 percent of the global drug manufacturing capacity would be key to producing sufficient quantities. "But the reality is none of their companies is investing in developing a pandemic vaccine."

Pharmaceutical companies worldwide have expressed interest, including at the latest talks, according to Stohr. "But we keep hearing that there are severe obstacles, in their view, to start the initial steps to pandemic vaccine development.

"Some companies say they don't see the market and why invest money. Others say intellectual property rights would be impinged on," he said.

Four groups - a U.S. company and three U.S.-based research institutes - claim the patent covering reverse genetics, a complex technology used to remove avian pathogenicity from the virus in WHO's prototype vaccine, according to Stohr.

This means that any company using the strain could be expected to pay a license fee, potentially denting its profits.

"If they do not know what fee the patent holder will request, they don't know what they are buying. So the whole environment is completely uncertain to them," Stohr said.