[Ip-health] Associated Press: Roche, Gilead End Tamiflu Dispute

[Thiru Balasubramaniam]

Roche, Gilead End
Tamiflu Dispute
Agreement Is Part of Effort
To Build Up Stocks of Flu Drug
*Associated Press*
November 16, 2005 6:07 a.m.

GENEVA -- Swiss drug maker *Roche Holding* AG said Wednesday that it has
ended a dispute with U.S.-based *Gilead Sciences* Inc. over the
manufacture of Tamiflu, in what they said was a joint effort to build up
stocks of the drug in the face of a threatened flu pandemic.

Roche will pay Gilead $62.5 million in retroactive royalty adjustments,
and the two companies said they will establish a joint committee to
oversee coordination of global manufacturing of Tamiflu, or oseltamivir,
and a coordination panel for the commercialization of the drug for
seasonal sales in the most important markets, including the U.S.

Experts consider the drug the most efficient treatment in case of an
outbreak of human influenza caused by a mutation of the bird flu virus
H5N1, which has so far caused a deadly epidemic among birds.

Gilead will have the option to co-promote Tamiflu in specialized areas
in the U.S., the companies said.

"The redefined agreement with Gilead is an important step," said William
M. Burns, chief executive of Roche's pharmaceuticals business, in a
statement from the company's headquarters in Basel. "Together, Roche and
Gilead will be able to focus their efforts even more on making sure that
the needs for this medicine can be met, both for the treatment and
prevention of seasonal influenza as well as for the worldwide
stockpiling for pandemic plans." Gilead's royalty on Tamiflu sales is
unaffected by the agreement and will range from 14% to 22%, depending on
sales volumes, the companies said.

Based on sales for the year so far and estimated volumes for the fourth
quarter, Gilead expects to receive a blended royalty for 2005 of about
18% to 19%.

Besides Roche's payment of $62.5 million, Gilead will retain an
additional $18.2 million that had been paid by Roche for the period
2001-2003. Roche had disputed the royalty calculations for that period.

The agreement ends a dispute dating back to June, when Gilead -- based
in Foster City, Calif.-- charged Roche with failing to adequately
promote and produce the drug and invoked a contract clause to demand the
return of all commercial and manufacturing rights. Roche has denied the
charges.

Tamiflu was invented in 1996 by scientists at Gilead, which quickly sold
all commercial rights and manufacturing responsibility in exchange for
annual royalties to Roche, which assembles various parts of the capsuled
drug in 13 locations.

Roche shares gained 0.5% to 194.40 Swiss francs ($147.72 or =80125.98) in
Zurich trading.

"The global threat of a potential avian flu pandemic has challenged
governments, public health officials and the pharmaceutical industry to
join together in partnership for the purpose of establishing a
comprehensive plan to combat this deadly disease," said Gilead President
and Chief Executive John C. Martin.

"Beyond this threat, seasonal influenza outbreaks result in hundreds of
thousands of deaths each year around the world," Mr. Martin added. "We
have ended our dispute with Roche in an effort to work together, with
the utmost diligence, to address this global public health need."

/Copyright =A9 2005 Associated Press/