Worldwide, about 122 people have caught avian influenza (A/H5N1); and 62 of them died). They came in direct, intimate contact with infected birds or with someone who was in intimate contact with poultry. As migrating birds brought the potentially deadly strain to the West, a sense of panic enveloped governments. They were pressed to jumpstart preparations for a pandemic and buy the only promising weapon against avian flu. And despite the money being poured into securing stockpiles of Tamiflu®, there is little flexibility in shortening the time it takes to make the drug from shikimic acid, which is extracted from Chinese star anise. Yet investors in Tamiflu®, like U.S. Defense Secretary Donald Rumsfeld, are making out like a bandit.
Worldwide, about 122 people have caught avian influenza (A/H5N1); and 62 of them died). They came in direct, intimate contact with infected birds or with someone who was in intimate contact with poultry. As migrating birds brought the potentially deadly strain to the West, a sense of panic enveloped governments. They were pressed to jumpstart preparations for a pandemic and buy the only promising weapon against avian flu. And despite the money being poured into securing stockpiles of Tamiflu®, there is little flexibility in shortening the time it takes to make the drug from shikimic acid, which is extracted from Chinese star anise. Yet investors in Tamiflu®, like U.S. Defense Secretary Donald Rumsfeld, are making out like a bandit.
[Update: The Washington Post reports this morning on the rising demand for Chinese star anise. Most ordinary famers, however, have benefited little from the price hike. (18.11.2005)]Oseltamivir phosphate, sold under the brand name Tamiflu®, has shown to be effective against the H5N1 avian influenza virus circulating in Asia, according to C.D.C. Director Dr. Julie Gerberding. But it is neither a cure-all drug nor a vaccine. It falls in the class of antiviral drugs known as neuraminidase inhibitors, which attempt to stop or disrupt the spreading of the influenza virus. (The “N” in H5N1 represents the neuraminidase glycoprotein; the “H” represents hemagglutinin [HA] glycoprotein responsible for attaching the virus to cells.) More peer-reviewed research on anecdotal reports of oseltamivir resistance is expected to be published in the coming months.
Gilead Sciences, Inc., a California-based pharmaceutical firm, developed oseltamivir and licensed manufacturing and marketing rights in 1996 to F. Hoffman-La Roche, headquartered in Basel, Switzerland. The patent on oseltamivir runs out in 2016. In June, when avian influenza was becoming a growing concern and governments and companies began stockpiling the drug, Gilead told Roche that it was terminating the 1996 licensing agreement.
In a statement, Gilead said Roche breached the agreement because it failed to adequately “commercialize” and promote Tamiflu®, suffered from repeated manufacturing problems that led to supply shortages, and did not pay the full royalty. The dispute has now entered a binding arbitration process that could last a year. The squabble would not affect production, a Roche spokesman said.
Before avian flu became a concern, few had heard of oseltamivir. And as Gilead alleged in the press release, Roche had taken few steps to market the drug in the United States and other major markets. The drug’s fortune has changed since then. U.S. Defense Secretary Donald H. Rumsfeld owns at least US$5 million worth of Gilead shares and continues to profit from the growing demand for Tamiflu® and has decided, on advice of a private securities lawyer, not to sell the stocks. Mr. Rumsfeld, whose department has ordered US$58 million worth of Tamiflu® for the troops, has recused himself from decisions related to the drug. His ties to Gilead dates back to 1988 when he became a board member. He was chairman of the board from 1997 to 2001.
Other famous members on the board include former Secretary of State George Shultz and Gayle Wilson, wife of former California Governor Pete Wilson.
Tamiflu® is a weapon against not only avian influenza but also a wide range of Types A and B influenza. Yet in the third quarter of last year, Gilead received only US$1.7 million in royalty from Roche, compared to US$12.1 million it got in the same period this year. Analysts estimate that the royalty amounts to 10 percent of what Roche makes on the drug. Gilead’s total revenue in the third quarter was US$493.5 million, a 51 percent increase from last year.
Profits from Tamiflu® are expected to skyrocket for both Gilead and Roche, as governments and companies place billions of dollars’ worth of orders for it. But can Roche meet the demand quickly? Probably not.
It takes about 12 months to make Tamiflu® capsules from raw ingredients. Shikimic acid, the chief ingredient, is extracted from Chinese star anise (Illicium verum) — unrelated to anise (Pimpinella anisum). China meets the bulk of world’s industrial demand for shikimic acid, but Roche has found an alternate, steady source in a modified strain of E. Coli, according to Chemical & Engineering News. Dr. John W. Frost and his research group specialize in genetically engineering microbes and have created an E. Coli strain, which, when fed glucose, produces a lot more shikimic acid than normal strains do.
The demand for Tamiflu® has nearly doubled the wholesale price of the star anise in Guangdong, Yunnan and Fujian provinces, China Daily reported today. There have been conflicting reports about whether there is a shortage of star anise. Chinese news agencies have denied this. But turning star anise into shikimic acid and then to the flu drug is not as easy as buying star anise off the market. The 10-step chemical process is long and tedious and involves explosive azide chemistry.
Amid fears of Tamiflu® shortage, India and Taiwan have said they would go ahead and produce generic versions of the drug without Roche’s permission. India admits there are technical challenges and difficulties in obtaining raw material. Taiwan claims to have already produced a version that is almost, but not quite, like oseltamivir.
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