Multinational Monitor

MAR/APR 2006
VOL 27 No. 2


Plague and Profit: Business, Bureaucracy and Cover-up in the Spread of Avian Flu in Asia
by Mike Davis

Fowl Play: The Role of Agribusiness in the Avian Flu Crisis
by Devlin Kuyek

Migratory Birds as Scapegoats: The Role of Wild Birds in Spreading Avian Flu
by Dr. Leon Bennun

Questions and Answers on Bird Flu from the CDC


Preventing Pandemic: The Global Strategy to Stop a Bird Flu Pandemic Before It Starts (Or Control It, If It Does)
An Interview with David Nabarro

At Risk: The dangers of an Eroded Public Health System
An Interview with Irwin Redlener

The Sky May Not Be Falling: An Eminent Scientist's Cautious View on Bird Flu Anxiety
An Interview with Edwin Kilbourne

Stopping Spread Among Poultry
An Interview with Alex Theirmann

The Tamiflu Manufacturing Controversy
An Interview with Yusuf Hamied


Behind the Lines

The Political Economy of Bird Flu

The Front
Great Bear Rainforest Story -- Dirty Halliburton

The Lawrence Summers Memorial Award

Names In the News


The Tamiflu Manufacturing Controversy

An interview with Yusuf Hamied

Dr. Yusuf Hamied is the chair of Cipla, the Indian generic drug manufacturer that burst onto the international scene in 2001 when it announced it would offer an AIDS "cocktail" - a combination of antiretroviral drugs to treat HIV/AIDS - for $350 a year, at a time when brand-name makers were charging $10,000 a year or more. In addition to low-cost versions of Big Pharma's products, Cipla has innovated new combinations and formulations of many products, including the first effective three-in-one AIDS drug pill.

When Roche was claiming that no competitor could produce Tamiflu (generic name: oseltamivir) because of the complexity of the manufacturing process, Cipla again shocked the world by announcing last October that it would make a generic version available.

Multinational Monitor: How long had Cipla been looking at manufacturing oseltamivir [the generic name of the branded drug Tamiflu]?

Dr. Yusuf Hamied: We looked at the product seriously beginning in 2004, when the talk on avian flu started gaining prominence. We looked at it carefully.

We look at all antivirals. We are the only company in India today that manufactures amantadine, which was used for the SARS epidemic. All the anti-AIDS drugs are also anti-virals. All the drugs for hepatitis are anti-virals. Acyclovir, we do, that's an antiviral. Valacyclovir, we do, that's an antiviral. So we look at all the antivirals very carefully.

That's how we looked at oseltamivir.

We are also today manufacturing zanamivir [another anti-viral that appears useful in treating bird flu].

MM: Roche, which holds the rights to oseltamivir, had claimed that it was too complicated for generic firms to make, and that it would take two to three years for a new entrant to begin manufacture. How long did it take you to figure how to synthesize and manufacture oseltamivir?

Hamied: There are many methods of making oseltamivir. There are the original methods, which had two steps using sodium azide. We did that also, because we have experience in sodium azide manufacture for [the AIDS drug] AZT. So our company has experience in handling sodium azide as a reagent. That was one of the things that interested us initially in the oseltamivir synthesis.

Many other processes for oseltamivir came about which avoided these two hazardous steps. They required lengthy synthesis, but avoided these two steps. And whereas the original yield from shikimic acid [the key input] to oseltamivir was 10 to 12 percent by weight, with the newer methods you can get between 30 and 50 percent. So that was a big improvement.

There are patented methods of Roche for manufacturing oseltamivir. We have tried to avoid Roche's process patents, because we sincerely believe that oseltamivir is not covered under product patent in India. We believe that it was known pre-1995 as a chemical, although it was approved for marketing in 1999 in the United States. We believe that we will be allowed to produce it at least in India, and countries like India that have a cutoff date of 1995-2005 for when product patents begin, as well as in lesser developed countries that have a cutoff date of 2016.

We also believe very sincerely that the product patent on oseltamivir, which was first patented by Gilead in America, is a valid patent for the United States. However, all patents on the same subject that were patented in Europe and elsewhere in the world are flawed. I believe that if somebody challenged the product patent for oseltamivir, apart from America, it would be found not valid.

MM: You announced that you would manufacture in October 2005?

Hamied: We gave a statement to Donald McNeil of the New York Times on October 13, and he published in the New York Times on October 14 that we are going to go ahead and manufacture oseltamivir. In February of this year, we introduced "antiflu" on the Indian market and marketed it in India, totally legally. We have permission from the Indian RDA to manufacture and market the product, and that is what we are doing.

MM: So you are now selling it in India, legally.

Hamied: We can sell it in India. The demand is not there. There doesn't appear to be a demand for the product in India. There is much talk of stockpiling, but I don't think the Indian government is stockpiling very much.

MM: Have you been approached by the Indian government?

Hamied: I have made an announcement to my fellow countrymen. Alright, if the government does not stockpile, then Cipla will stockpile, and Cipla will keep enough stocks, at various stages of manufacture, so that it doesn't get date expired in the end. Why keep the capsules? I can keep the substance and fill millions of capsules in a day. So why should one stockpile the finished capsule? We can then stockpile various intermediates of the product. We have already invested in this whole project in excess of $20 million, which is virtually a humanitarian gesture as far as we are concerned.

MM: Have you been approached by other governments about selling them oseltamivir?

Hamied: We have been approached by governments that are friendly to us, and companies that are friendly to us, and international agencies that are friendly to us, to supply oseltamivir, either the active substance or the capsules. What I would like to see immediately is for the World Health Organization (WHO) to make an announcement that these two products - oseltamivir and zanamivir - are on the lists of prequalified products so that we can apply and get these products qualified. [Ed.: The WHO's prequalified list of HIV/AIDS drugs gives countries a signal that a product is of proven quality; many countries will grant marketing approval to WHO-prequalified products without requiring separate review by their own national drug regulatory agencies. National drug review can be very timely and costly for the relatively small generic firms.]

MM: Having gone through the effort, how hard is it to reverse engineer the product?

Hamied: It is lengthy, not hard. It's about 14 steps, but some of the steps are very simple. It is not all that difficult or hazardous to do.

As for price - shikimic acid prices went up to as high as $700 a kilo, from $40 a kilo. I think today it is hovering around $200 a kilo, or even less. We procured large quantities at a price of around $500 a kilo, which makes the end product a little more expensive for us than it would be if I produced it today with shikimic acid at $200 a kilo. We'll see how it goes.

We are there in it, and we will stick to it. We will stockpile. We will do whatever is necessary for a humanitarian effort. It is not really profitable at this juncture, it is not a money-making exercise for us.

MM: How would you characterize Roche's claims that it is such a hard product to manufacture?

Hamied: Ask them again. That question was asked and they answered it when no one else was in the picture. Ask them the question again, and maybe they will give a different answer.

We did have meetings with Roche and discussed matters with them. What we said, and I stand by our word on this, was, "We don't need any technology from you. We don't need any technological advice from you. We just want to pay you a royalty of 4 percent on our sales in countries where you have valid patents." That was our request to Roche: "Where you have valid patents, we are willing to pay you a royalty." They did not respond favorably, so what can I say?

MM: What should they be doing for a licensing regime?

Hamied: I think they should keep it open. Roche should make available a voluntary license to whoever wants to sell oseltamivir in any country of the world and pay them a suitable royalty where they have valid patents. Where they don't have patents, I think the question of royalty doesn't come up.

MM: What are they in fact doing with their licensing scheme?

Hamied: I have no idea. I think the question is best asked of them.

They have licensed one company in India. It is a so-called license - what it means, I don't know, because the product is today not patented in India. So I am free legally to produce it. If a product patent is granted to Gilead [the patent holder in the United States and elsewhere; Gilead licenses the right to produce the drug to Roche] then we may have to withdraw oseltamivir from the Indian market, although I would still be free under the Indian patent laws to market it in countries where there are no patents and in some of the least developed countries of the world.

MM: Do you have any sense of what Roche's strategy is in refusing to license it?

Hamied: No. I have no idea. I'm told they did discuss the situation with many companies. What they said to those companies, I don't know.

I do know the Indian company to whom they licensed the product made statements which probably they should have not made - saying they uphold Roche's patents in India. Who are they?

The government hasn't granted any patents. So who is the so-called licensee to claim that they are upholding Roche's patents? Maybe that was a precondition of Roche, I don't know.

I only know what Cipla's position is: We are legally manufacturing oseltamivir in India, as per the Indian laws as of today.

MM: Gilead has an application for a product patent pending?

Hamied: Yes, and there is a pre-grant opposition [urging the patent request be denied].

MM: You believe the request will be denied?

Hamied: It should be under the patent law. But one never knows with the Indian government. I only know that if there is an emergency, we will provide it to whoever wants it, legally. We do not want to break any laws.

MM: If there was an outbreak among humans, how much can you manufacture?

Hamied: How much do you want today? Do you want a ton of oseltamivir? I will give it to you within a month. How much do you really want, how much do you want stockpiled, and who is going to pay for it? That's the question. Cipla has already invested $20 million with no return.

Today, we are producing at the rate of 100,000 doses - 100 kilos a week, 400 kilos a month. How much should I stockpile? Tell me. Who will pay for it?

We are stockpiling the various intermediates at the various stages of manufacture, so that my risk is less.

But if there is a pandemic, it won't be that a million people get it Day One. It will take a period of time.

We are definitely going to produce, and are producing already, zanamavir as an alternative. That is the inhaled product of Biota in Australia, which was licensed to GlaxoSmithKline.

MM: They are not complaining about your production?

Hamied: They cannot, because the product was patented in 1993. The patent for that does not count in India.

Oseltamivir is a borderline case. The patent was filed on oseltamivir, not oseltamivir phosphate, which is the drug that is marketed. There are many loopholes in the Gilead patent application for oseltamivir in India, which we have challenged.

MM: Is it correct that GlaxoSmithKline said that even where they claim a patent, they will not try to enforce it?

Hamied: I have no idea.

It is not their patent. It is a patent of Biota in Australia. Glaxo pays them a royalty.

Like oseltamivir is not a patent of Roche, it is a patent of Gilead. Roche is paying Gilead a royalty, and I am also prepared to pay a royalty on valid patents, so what is the big deal?

Of the world's top 50 selling products, you will find that fully 70 percent are marketed by companies that did not invent them.

Pfizer did not do any work on Lipitor; it was done by Parke-Davis. Lansoprazole [brand name: Prevacid], the world's second largest drug, was developed by Takeda, but it is marketed by Abbott.

With all of the hype on R&D, I'm not saying real research and development efforts do not take place. But with whose money? A lot of drugs come out from small companies and are then licensed to the big boys. Tell me one Japanese company that has a blockbuster - there is none. This is because they have to tie up with the big American or European companies, or they can't get their products on the market. Innovation without marketing is a waste of time.

Of the AIDS drugs on the market today, virtually all were invented pre-1995. The drugs that are not pre-1995 are lopinavir, part of the Kaletra molecule, and atazanivir. For drugs invented after 1995 but before 2005, the Indian patent law says that if you are a generic firm that has done R&D and manufactured the product prior to January 1, 2005, then you can continue doing so. You must negotiate a royalty with the patent holder if and when his patent is granted. [Ed.: Under the patent rules of the World Trade Organization (WTO), India did not need to begin granting product patents until 2005. WTO rules required India to accept patent applications on products invented between 1995 and 2005, and to begin considering those patent applications in 2005.] This is the situation on all these drugs. We started R&D on oseltamivir in 2004. We were marketing lopinavir in India well before 2005. So the worst scenario today, legally, for these products is that Cipla does not have to withdraw any product from the market, but has to pay a royalty to the patent holders.

MM: You have an automatic compulsory license.

Hamied: We have an automatic compulsory license, because we initiated the R&D work - which we can prove - prior to January 1, 2005.

MM: What is happening with the other Indian companies? Will they end up hooking up with the multinationals, or will they stay independent?

Hamied: It is fair to say a problem will arise only after 2010 for all of us. Until 2010, we have our hands full - with the generics already on the market and what not. The problems will arise after 2010, when we won't have newer products to market. Then you will see the power of monopolies in countries like India.

Cipla and myself personally, we have never been against patents, and we don't mind paying royalties. We have been against monopoly. The Third World cannot afford monopoly. India, with a population of 1.2 billion, simply cannot afford monopolies.

Roche's Reply

Multinational Monitor: What is Roche's policy on sublicensing the patent rights to Tamiflu? Does it restrict the firms to whom it will license rights? How many firms has it licensed to?

Terry Hurley, director of public affairs at Roche: Roche has granted sub-licenses for the manufacture of oseltamivir to Shanghai Pharmaceutical Group and HEC group for mainland China and Hetero Drugs for the production of oseltamivir for India and developing countries. Roche has also reached an agreement with Aspen in South Africa for the production of generic oseltamivir for the African market. Tamiflu has patent protection in over 30 countries Where there is no patent protection, governments are free to purchase or manufacture Tamiflu at their discretion.

MM: Does Roche still maintain that, absent assistance from Roche, it will take 2-3 years for a new firm to begin manufacture?

Hurley: The manufacturing process for Tamiflu is a complex multi-step process and can take up to 12 months from sourcing of raw materials through to finished goods. This includes the sourcing of the starting material as well as a potentially explosive intermediate process which needs to be carried out by specialist manufacturers. The API [active ingredient] has to undergo an alcoholic granulation process to enable it to be filled into capsules.

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