Roche says it wants to increase supplies of Tamiflu
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Vietnam says it is to become the first country to produce under licence the drug believed to be an effective treatment for bird flu.
It said it had agreed with Swiss firm Roche to start making generic supplies of Tamiflu early next year.
Vietnam has suffered most of the 63 human deaths from bird flu to date, the latest fatality occurring last month.
Roche said recently it would allow other firms to produce the drug to combat a potential flu pandemic.
Supply shortage
It is looking at ways of boosting output of Tamiflu amid concerns of a supply shortage if there is a global pandemic.
Experts said Vietnam had the capacity ultimately to produce up to 20 million Tamiflu capsules a year.
Vietnam currently has access to only 600,000 capsules, donated by Taiwan.
Roche, which will select Vietnamese manufacturers to produce the drug, has also agreed to supply Vietnam with a further 25 million capsules - enough to treat 2.5 million people.
"Vietnam will be authorised to produce Tamiflu which will help the country acquire sufficient quantities of the medicine in order to face up to a bird flu epidemic," said Cao Minh Quang, from the Vietnamese health ministry.
Greater availability
Vietnam has reported 42 deaths from the human form of bird flu since 2003.
Roche's Tamiflu drug is seen as the most effective treatment for the deadly H5N1 strain of the virus but it is not a vaccine.
Roche has said it wants to increase availability of the drug, particularly in low-income countries.
Thailand, in which the drug is not patented, said recently it would begin making a version of Tamiflu.
Taiwan has also expressed interest in producing the drug while Roche is thought to have discussed production of it with both India and China.
The World Health Organization has advised countries to buy emergency supplies in case there is a pandemic.
It has warned that a pandemic could potentially kill up to seven million people, although others warn of a much higher death toll.