Mon, Oct 24, 2005 - Page 11 News List

Roche making a killing on Tamiflu

VACCINE PRODUCTION As panic spreads about the possibility of an avian flu epidemic, Swiss pharmaceutical giant Roche is accused of putting profits before people

THE OBSERVER , LONDON

George Abercrombie, chief executive of Roche North American Pharmaceuticals, is followed by Senator Charles Schumer, as they leave a meeting in Washington on Thursday. Swiss drug-maker Roche AG has agreed to meet with four generic manufacturers willing to increase production of Roche's antiviral drug Tamiflu to prepare for the possibility of a bird-flu pandemic, Schumer said after the meeting.

PHOTO: NY TIMES NEWS AGENCY

For the obsessively guarded, conservatively dressed and unflamboyant Oeri, Hoffman and Sacher families, avian flu could be good news. Over the next two years, the heirs of Fritz Hoffman, founders of Roche, one of the world's most powerful pharmaceutical companies, and who already rank as among the world's richest families, could see their combined ?10 billion (US$17.7 billion) fortune reach giddy heights.

Twenty members of the founding family control Roche, which industry analysts estimate will benefit from the Tamiflu drug thought to relieve the symptoms of avian flu, with extra profits of ?500 million this year and ?1 billion next.

And since the family owns about 10 percent of shares and crucially 50.01 percent of voting rights, they will ensure that no outside interests seize their company and enjoy the profits -- though many would like to.

As avian flu spreads from southeast Asia into Europe, sparking fears of a worldwide epidemic that medical experts say could claim 50 million lives, Roche, famous as the company behind the Valium tranquillizer, appears poised to clean up.

The Basel-based company is already the fastest growing drugs firm in the world with a share performance to match. Investor returns have increased 50 percent in a year. Last week its share price reached record highs after it said third-quarter profits rose by 20 percent to ?3.9 billion.

And that growth is primarily due to a drug it did not even invent. It was US biotech firm Gilead that developed Tamiflu. But nine years ago, Gilead signed a development and licensing agreement with Roche.

It is currently the subject of legal action which will be resolved in a year. Gilead claims Roche has been negligent in its manufacture of Tamiflu which has led, Gilead says, to a series of product recalls. Gilead also says Roche has failed to market the product well, which has reduced the potential revenue the drug could have made. Roche categorically refutes the allegations.

But as legal action rumbles, Roche faces other possibly more serious threats. The firm is under unrelenting pressure to increase production of Tamiflu. In the US, Senator Charles Schumer has threatened legislation compulsory to license Tamiflu unless Roche allowed generic producers to boost the number of pills in circulation.

The senior Democratic senator accused Roche of "putting profits ahead of world safety." He has threatened, along with Republican lawmakers, to introduce legislation to force Roche to relax its stranglehold on the drug.

Pressure appears to have paid off. Last Thursday, after a month of holding its position, Roche said it would talk to four generic drug manufacturers about increasing production. Health campaigners say this is no guarantee that Roche will act. If it does, it will delay matters as long as possible so it gets the most revenue possible before low-cost manufacturers get in on the act.

Michael Bailey, of campaigning group Oxfam says: "This situation is absurd. A government will have to make a move because Roche seemingly can't deliver. It's a classic case of international intellectual property law not working."

"It seems Roche is holding on as long as possible before allowing generic companies the right to produce so it can make as much cash as possible," he says.

Roche says it can produce 10 million treatments each year and so far 40 governments have placed orders for Tamiflu. It says that although any government ordering a bulk supply should expect to wait a year before its order is satisfied, generic firms have to prove that they can safely manufacture Tamiflu as there are 10 complicated steps involved in its production.

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