Roche Diagnostics and Igen International Inc are in talks regarding a potential transaction. The two sides are reportedly in negotiations on a possible Roche takeover of Igen, a deal that would end the legal wrangling over Origen that dates back to 1997. Losing access to Origen would be a major blow to Roche's diagnostic business, a key part of the company's laboratory testing business.

Igen confirmed that it is in discussions with Roche Diagnostics, a division of F. Hoffman-LaRoche regarding a potential transaction. There can be no assurance that a transaction will be reached or on what terms, the Company claimed.

A U.S. appeals court this month threw out most of the $505 million in damages that a lower court had awarded Igen in a lawsuit, which claimed that Roche improperly calculated royalties. But the appeals court allowed Igen to terminate the contract.

Igen had given Roche notice that it wants the contract ended, which would block Roche from selling products based on Igen technology. Both companies have confirmed they are in talks to hammer out details of a new licensing deal.

Roche generated some 500 million Swiss francs ($371.2 million) in 2002 sales from products based on Igen technology and paid the Maryland firm royalties of nine percent on product sales. The entire diagnostics division had 2002 sales of 7.24 billion francs.

Buying Igen could cost the Swiss pharmaceuticals group more than $1bn, more than twice as much as the punitive damages it faced as a result of a bitter five-year legal battle, but a deal would end uncertainty over the future of its diagnostics division, analysts say.

Igen has been fighting a battle with Roche over the terms of a new agreement since a US court annulled a licence that allows Roche to use Igen antibody technology in tests for a wide range of medical conditions from fertility to heart attacks and cancer.

Igen is also dependent on striking a deal with Roche. The other three players Bayer of Germany, and Abbott Laboratories and Johnson & Johnson of the US have their own technologies. And only Roche needs to license Igen technology to carry out molecular testing.