Bayer and Novartis have announced a series of agreements covering the multiple sclerosis drug Betaseron which will see the German firm buy a manufacturing site in the USA off the Swiss group which in turn will start selling its own branded version of the treatment in 2009.

Bayer acquired Betaferon/Betaseron (interferon beta 1b) through its recent purchase of Schering AG and its Bayer Schering Pharma unit has purchased Novartis’ biologics manufacturing facility in Emeryville, California, which is currently used to produce the drug for $110 million. It will pay an extra $90 million for inventory of Betaseron and the firms added that “to assure a smooth transition and safeguard continuous product supply,” Novartis will help Bayer qualify another possible supplier of the product.

Bayer Schering Pharma will continue to pay Novartis royalties on net sales of Betaseron until the expiration of a development and supply agreement in October 2008 and 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.

Explaining the rationale behind the agreement, Arthur Higgins, chairman of Bayer Schering Pharma said that “manufacturing knowledge is critical in this marketplace” and in addition to improving the profitability of the Betaseron franchise through this transaction, we believe a second independent brand will reinforce the existing growth of the global MS market”.

This would appear to be a very shrewd deal and comes after Mr Higgins told journalists at Bayer’s spring press conference in Leverkusen less than a fortnight ago that 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.