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Last Updated: Wednesday, 16 November 2005, 09:34 GMT
Tamiflu firms in licensing deal
Packet of Tamiflu capsules
Demand for the medicine has soared amid fears of a pandemic
Drug firms Roche and Gilead have set aside their differences and struck a deal over the production of Tamiflu, the main weapon against a flu pandemic.

The two companies have been in arbitration after Tamiflu inventor Gilead moved to break up a 1996 licensing agreement earlier this year.

Roche will pay Gilead $62.5m (36m) and royalties of between 14% and 22%.

Concerns about the spread of bird flu and the speed with which governments need to prepare have prompted the deal.

'Global threat'

"We have ended our dispute with Roche in an effort to work together, with the utmost diligence, to address this global public health need," said Gilead chief executive John Martin.

"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."

The money is not a great deal
Claude Zehnder, ZKB

Governments have been stepping up their efforts to stop the spread of bird flu and have been looking at ways of protecting their populations.

Roche has been discussing licensing the production of the drug to other firms and nations in an effort to ensure that enough of the medicine is available should it be needed.

In the UK, the Department of Health has placed an order for 14.6 million courses of Tamiflu to cover a quarter of the population in the event of a flu pandemic

Sales of Tamiflu are expected to top the $1bn mark.

Better deal

As part of the new agreement, Gilead will have more say in how production of Tamiflu is boosted, and will pay a smaller share of manufacturing costs.

The row broke out because Gilead felt that Roche had not done enough to market Tamiflu in the US, and had failed to sell it as a seasonal flu treatment in other markets.

Gilead will now have a greater role in how and where Tamiflu is marketed.

"The money is not a great deal," said Claude Zehnder, an analyst at Swiss bank ZKB. "But it is certainly a good thing that they have agreed this amicably."

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