Vietnam has reached an agreement with the Swiss manufacturer of the antiviral drug Tamiflu to allow the country to produce a generic version starting early next year in an effort to protect its population against bird flu, a Health Ministry official said Wednesday.

The deadly and virulent H5N1 strain of the bird flu virus has killed at least 63 people in Southeast Asia -- most of them in Vietnam -- since late 2003. On Tuesday, Vietnam reported its first human death from the illness in three months.

Bird flu has devastated poultry flocks throughout the region and jumped to humans, raising fears that it could mutate into a form easily passed from human to human and cause a global pandemic.

Tamiflu is one of the few medications believed to be effective in treating bird flu. Swiss pharmaceutical company Roche Holding AG developed oseltamivir, known by the trademarked name Tamiflu, but cannot keep up with soaring demand.

Residents of Vietnam have rushed to buy Tamiflu, which is in short supply.

"In talks with Roche representatives yesterday, we have reached an agreement in principle...to allow Vietnam to produce Tamiflu," said Nguyen Van Thanh, deputy director of the pharmaceutical administration department under the Health Ministry.

Under the deal, Roche will provide the materials and technical assistance to Vietnam so it can produce oseltamivir, a Health Ministry statement said.

In Switzerland, Roche spokesman Daniel Piller refused to confirm the deal ahead of a media briefing scheduled to be held within hours.

"We are in discussions with them. The discussions are very positive," he said. "The discussions are ongoing."

The World Bank said Wednesday it will cost up to $1 billion over the next three years to fight bird flu in poultry and prepare for a human influenza pandemic. That cost does not include the stockpiling of antiviral drugs and human flu vaccines, Fadia Saadah of the World Bank told a global meeting on how to contain the disease.

Some 90 percent of the money would be needed by individual countries, with the remainder used by agencies like the World Health Organization that are fighting the disease, Saadah said. She said the costs were based on initial, rough estimates to help the world move ahead as quickly as possible in the fight against the disease.

Vietnam has stockpiled 600,000 Tamiflu capsules donated by Taiwan. Those have been distributed to bird flu-hit provinces.

Thanh said Roche had also agreed to supply Vietnam with 25 million Tamiflu capsules, enough to treat 2.5 million people.

The Health Ministry statement said Roche is "committed to helping Vietnam carry out its reserve plans and supply the medication in case of pandemic."

The first batch of 2 million pills will be available in December, and the rest will be provided by August 2006, the statement said.

In recent weeks, the price of one course of 10 Tamiflu capsules in Vietnam has ranged from $28 to $76, reflecting the spike in demand.

Several other countries, including India and China, have been in talks with Roche about licenses to produce Tamiflu.

China's premier, Wen Jiabao, warned Wednesday that the country faces a serious threat from bird flu because the disease is still not under control despite massive nationwide efforts to stop its spread.

China has reported four outbreaks of bird flu in the past month though there have been no reported human infections. But health officials say a human case is inevitable if China cannot stop repeated outbreaks in poultry.