Singapore: Sanofi has set up a new factory in France for commercial production of the world's first vaccine for dengue, despite the fact that mid-stage studies for the vaccine yielded disappointing results last year.

Sanofi is developing the first lot of its dengue vaccine at the new $398 million (300 million-euro) factory, even as it awaits results of clinical trials to determine whether the product will be a blockbuster hit or a considerable flop.

Although Sanofi's vaccine provided good protection against three-of-the-four viruses that cause dengue, in a trial among 4,000 children in Thailand last year. Yet it was ineffective against type 2 at the time of the trial, which is the dominant dengue strain in Thailand. Sanofi is now studying the shot among more than 30,000 children and adolescents in Latin America and South East Asia.

While a success with the vaccine is expected to earn Sanofi $2.6 billion (2 billion euros) a year in sales, failure would see the firm's investment and trials end in vain and will cost the firm an estimated $800 million in losses.