The Foster City-based Gilead Sciences, best known for its AIDS drug Viread, notified Swiss pharmaceutical giant Roche on Thursday that it was terminating the 1996 agreement that gave the Swiss company exclusive rights to make and sell Tamiflu.

In tests of laboratory animals, Tamiflu has proven to be one of the only drugs effective against the strain of bird flu known as H5N1, now endemic among the waterfowl populations of Southeast Asia. In 2003, when people in the vicinity of infected birds started dying by the hundreds, scientists raised alarms that it could evolve into a pandemic strain capable of killing tens of millions of people worldwide. This has prompted Western governments to stock up on the drug, and in April, Roche reported that its first quarter sales of Tamiflu quadrupled to $330 million. The demand for the antiviral pill escalated so swiftly that Roche could no longer keep up with it, and is now planning to set-up another production plant in the US this fall.

Now that the drug is selling like pancakes, Gilead wants the rights back. In its SEC filing, Gilead claims that "Roche failed to manufacture Tamiflu consistent with its contractual obligations. By failing to promote Tamiflu, a product with important public health benefits, which has the potential of saving many lives, is not reaching those in need. This has materially compromised public health."

Yeah. Except that the avian flu has yet to pose threat to the western public health.

Read the news report here.