By Leah Schnurr

TORONTO, June 23 (Reuters) - Microbix Biosystems Inc plans to build and operate a new influenza vaccine plant in China, which will be one of the largest facilities in the world, the Canadian biotechnology firm said on Monday.

The tiny Toronto-based company said its joint venture with the Hunan provincial government should be operational in 2013 and will be able to produce 100 million doses of flu vaccine a year, a huge boost to the world's current capacity of fewer than 500 million doses.

The C$200 million ($197 million) plant will be built in China's central Hunan province. The provincial government has committed C$100 million to the project and has committed to an initial 100 million doses. The remainder of the funding will be raised by Microbix through licensing partners.

The company will receive management fees during the design, development and commission of the project and will receive royalty payments on sales of the vaccine. Microbix also has exclusive marketing rights outside of China.

The amounts of the fees and royalties were undisclosed.

Phil Casselli, president of Microbix, said revenue from the venture, as well as any proceeds from licensing agreements, could help lift the company to profitability in the long run.

Microbix reported a net loss for fiscal 2007, hurt in part by higher costs.

Shares in the biotech company closed flat at 80 Canadian cents after jumping as much as 25 percent to C$1.00 earlier in the day.

Microbix said the facility will use its Virusmax technology, which will allow the plant to produce more vaccine over shorter periods of time.

The company, which licenses its products to larger firms, said it planned to seek regulatory approval for the vaccine in several other regions, including the United States, Canada and Europe.

Microbix director Mark Cochran said China currently vaccinates about 2 percent of its target population against the flu, but wants to increase that to about 20 percent, or 400 million doses a year.

Cochran said the new factory would focus on meeting China's seasonal vaccination needs, but the company will also consider exporting the vaccine depending on the level of demand in China and around the world. ($1=$1.02 Canadian)