Roche and Gilead Settle Dispute Over Tamiflu

Swiss drug maker Roche Holding said Wednesday that it had ended a dispute with U.S. biotechnology company Gilead Sciences Inc. over the manufacture of Tamiflu in what they said was a joint effort to build up inventories of the drug in the face of a threatened flu pandemic.

Roche will pay Gilead $62.5 million in retroactive royalty adjustments. The two companies also said they would 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 United States.

Gilead shares rose $3.99, or 7.7%, to $55.63, above its previous 52-week high of $54.11. Roche shares fell 0.7% to 192.10 Swiss francs ($145.97) in Zurich trading.

Experts consider the drug the most efficient treatment in 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.

“The redefined agreement with Gilead is an important step,” William M. Burns, chief executive of Roche’s pharmaceuticals business, said in a statement from the company’s headquarters in Basel, Switzerland.

“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.”

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 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 to Roche in exchange for annual royalties. Roche assembles various parts of the capsuled drug in 13 locations.