Swiss pharmaceutical group Roche and the American company Gilead Sciences have resolved their dispute about the licensing of the antiviral Tamiflu.
Gilead, which first developed the treatment, broke off its contract with Roche in June on the grounds that the Swiss firm was failing to market the drug properly.
Under the terms of the new agreement, Roche and Gilead will establish a joint committee to oversee the coordination of global manufacturing, including negotiations to give third parties the right to manufacture the drug.
California-based Gilead announced earlier this year that it did not feel that Roche had commercially captured the imaginations of governments enough for the regular seasonal influenza outbreaks. The Swiss firm purchased the worldwide rights to further develop and market the drug in 1996.
Tamiflu, on the market since 1999, is used in the treatment and post-exposure prevention of influenza. The drug is also considered by the World Health Organization to be the best defence against a bird flu pandemic if the disease spreads to humans.
With the threat of a pandemic, Roche has come under pressure from governments around the world to increase its production capacity for the treatment and said last month that it would consider allowing other parties, such as generic drugmakers, to produce it.
Gilead will also have a greater say in selling Tamiflu as a seasonal flu treatment and will have the option to co-promote the drug in specialised areas in the United States.
William Burns, chief executive of Roche Pharmaceuticals division, said in a statement that the redefined agreement was an important step.
"Together, Roche and Gilead will be able to focus their efforts even more on making sure the needs for this medicine can be met, both the treatment and prevention of seasonal influenza as well as for the world stockpiling for pandemic plans," he added.
Gilead's royalty on net sales of Tamiflu is unchanged and will range from 14 to 22 per cent, depending on the volume of sales each year. This would work out at 18 to 19 per cent for 2005, the firms said.
Roche had already sold SFr859 million ($649.8 million) worth of Tamiflu in the first nine months of 2005.
The Swiss company will pay Gilead $62.5 million in royalty reimbursements and has said that the US firm could keep $18.2 million which Roche had already paid after a dispute on royalty calculations for sales in 2001 to 2003.
The Basel-based firm announced last week that it planned to increase production capacity from the current level of 55 million courses of the drug per year to 300 million by the beginning of 2007.
This rapid expansion will be made possible by increasing the number of partners working on different stages of the six-to-eight-month production cycle with Roche. Some 150 companies and a number of governments have already applied for permission to work on the drug's production.
swissinfo with agencies
Tamiflu was invented by Gilead and licensed to Roche in 1996.
The oral treatment has proven effective against influenza A and B and the avian H5N1 strain of influenza currently circulating in the Far East.
In preparation for a possible bird flu pandemic, governments are stockpiling the drug. So far Roche has received bulk orders from around 50 countries.