Royalty wars

Drug inventors row over profits from avian flu

Published: Saturday 04 July 2015

Tussle over profits Two pharmaceutical giants -- Gilead Sciences Inc and Biota Holdings -- patent holders of anti-avian flu drugs Tamiflu and Relenza respectively, are squabbling over the profits being raked in by spiralling sales. As the scare of an avian influenza pandemic takes root world over, the biotech firms are now slapping damage claims on pharmaceutical manufacturers, who had bought commercial rights of the drugs from them.

Tamiflu's commercial and manufacturing rights were sold to the Swiss company Roche Holding AG in 1996 by Gilead Sciences Inc, the inventor of the drug. Massive Tamiflu stockpiling and shooting sales made Gilead decide to claim a bigger share in the profits and it slapped a lawsuit on Roche blaming it for not marketing Tamiflu effectively.

The dispute was resolved out of court this month with Roche agreeing to pay Gilead us $62.5 million in back payments and raising the royalty rate from 10 to a whopping 32 per cent. The two companies will now oversee manufacturing, commercialisation and "pandemic planning" jointly. Gilead will now co-promote Tamiflu in specific us regions, but it said it will limit its promotion till 2006 and is not yet sure whether it will exercise this option in 2007 and after.

Melbourne-based Biota Holdings, which invented Relenza, the other anti-viral drug, handed over the manufacturing rights to GlaxoSmithKline (gsk) about six years ago. But recently, it too sued gsk for 'dumping' Relenza, by cutting Relenza's marketing budget by a massive 84 per cent. When France placed a huge order for Relenza stockpiling in early November(the order was three times the global sales of the drug from its launch in 1999 to June this year), Biota, which receives seven per cent royalty on Relenza, saw its stock price shoot up to us $1.43, a 36 per cent rise. This is in contrast to last July, when Biota's stock price was languishing at us $0.33. The windfall brought by Relenza made Biota claim a massive damage suit of us $228 to us $318 million as its profits from gsk.

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