Swiss giant Novartis has completed a $200 million deal with Bayer Schering which will see the manufacturing rights to the big selling multiple sclerosis treatment Betaseron (interferon beta 1b) move over to the German firm.

While Betaseron is already marketed by Bayer Schering, it was manufactured first by Chiron after a 1993 deal signed by predecessor Schering and subsequently by Novartis which snapped up Chiron in 2006.

The agreement was inked in March and Novartis will now receive the $200 million as a one-off boost to its coffers in return for the Betaseron manufacturing rights, as well as production equipment, stock and buildings leases at a site in California.

Novartis will continue to receive royalties from Bayer Schering sales of Betaseron until October 2008 when a development and supply agreement ends. It will then support the Swiss drugmaker in the regulatory filing process of a Novartis brand of interferon beta-1b. When approved by health authorities, it will supply this medicine to Novartis from 2009 and receive in return a double-digit royalty.

The launch of this brand is expected to give Novartis an increasing presence in treating patients with relapsing forms of multiple sclerosis ahead of its anticipated submission of a once-daily oral therapy FTY720 (fingolimod), which is currently in Phase III trials. Novartis expects to submit FTY720 for US and EU approvals in 2009.

Although patents on Betaseron start expiring this year, generic drugmakers may find making copycat versions of the treatment difficult because it requires a complicated biotechnological production process. The agreement ends a legal dispute between the two companies which saw Bayer sue Novartis last year for manufacturing data as part of a plan to switch production to facilities owned by Boehringer Ingelheim.