Roche, Glaxo face long legal fights over flu drugs

Manufacturers of Tamiflu and Relenza, the two drugs offering the best hope of holding a bird flu pandemic at bay, face years of legal wrangling with the products' original developers, according to industry officials.

Switzerland's Roche Holding AG and Britain's GlaxoSmithKline Plc face separate claims of failing to market the drugs properly from US-based Gilead Sciences Inc and Australia's Biota Holding.

In both cases, the two sides are headed into the drawn-out process of binding arbitration.

Gilead's head of commercial operations said today that his company was braced for a long battle with Roche over Tamiflu.

"There was a period allowed for resolution but we have moved through that period and we are now in formal arbitration," Kevin Young told Reuters during a visit to London.

"It will take a long time -- years rather than months."

Gilead first announced in June that it had served notice of breach of contract notice on Roche, claiming the Swiss group had neglected to promote Tamiflu, as well as mishandling its manufacture and underpaying royalties.

A victory for Gilead could see Roche hand back the rights on Tamiflu or pay an increased royalty on sales, according to industry analysts.

Roche, however, says it fulfilled all its obligations to Gilead and that the biotech company's claim has no merit.

The growing threat of a bird flu pandemic has turned Tamiflu from a minor product into a major seller for Roche, with revenues of 580 million Swiss francs ($650.60 million) in the first half of 2005.

Roche said earlier this week it was outsourcing some parts of the 10-stage production process needed to make the drug in order to increase capacity but added it had no intention of farming out production entirely.

Young said Gilead would not do anything to jeopardise Tamiflu supplies, which are being stockpiled by governments around the world for use in the event of a pandemic.

But he reiterated Gilead's contention that Roche had not done enough to ensure adequate supply.

"We feel very passionately that this is really a breakthrough product and to see the lack of interest over a period of years led us to the stage of legal recourse," he said.

Biota filed a similar lawsuit against Glaxo last year, seeking around US$300 million in royalties that it claims it would have earned if Glaxo had marketed its drug properly.

That case, too, is now heading for arbitration, according to Glaxo, which refutes Biota's claims.

- REUTERS