Friday, October 28, 2005

Fighting for Profit

Gilead had been engaged in a headlong battle with Swiss company, Roche, for rights control of the anti-viral drug Tamiflu. Tamiflu is the drug touted in most media stories regarding Avian Flu as the best, if somewhat questionable, defense against potential infection. However, it is a fight that many others are now fighting on behalf of Gilead.

This is not hard to understand because now that Tamiflu is mentioned this way in many, many news articles, the profits are about to become huge. Just reported, Chiron Corp. was granted a $62.5 million contract to produce Tamiflu, since Roche appears unable to meet the escalating demand, having just declared restricted access to the drug by US markets. That announcement was not met with great mirth and US Senator Charles Schumer immediately demanded that Roche give up its claim on the rights to Tamiflu, a demand that now appears close to being satisfied.

Gilead, which licenses the rights to Tamiflu, has claimed the Roche has never seriously marketed the drug, but now that the media is doing the job for them, who needs Roche anymore? Back in June, Gilead served notice that the license would be terminated. This was only a short time after increasing numbers of outbreaks were beginning to be reported and the subsequent ramp up in media coverage. However, if multiple licenses are granted to a number of manufacturers, Gilead, which receives royalties on sales, may back off the fight, something that could take a year or more.

But again, the fight appears moot at this point, because negotiations have prevailed in Gilead's favour and others are about to begin production. Roche even got on the ball and announced they will build a new factory for Tamiflu production. No one goes to that kind of trouble for a one-off and I can only imagine that this will mean yearly ocurrences of potential epidemic "threats." We had one just last year, when the panic mounted after a flu vaccine shortage spooked everyone. Oddly enough, that shortage was cause by vaccine contamination at the production facility in England, owned and operated by one Chiron Corp.

One thing is certain, Gilead is mostly concerned about the selling the drug, and lots of it. With the media selling it for them, multiple companies about to join the production line and governments around the world buying it up by the truckload, Gilead will be sitting pretty. Indeed, Gilead is now being cited by the SPX as a "superstock." And that is probably putting a smile on the face of Donald Rumsfeld.


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