Indonesian President Susilo Bambang Yudhoyono says the authorities there will cooperate with the U.S.-based Baxter International to produce human vaccines for the H5N1 bird flu virus.
President Yudhoyono says that Baxter has offered the option of producing the vaccines in Indonesia through Bio Farma a government company, who will obtain the technology.
He says the vaccines would be produced as soon as possible.
Health Minister Siti Fadillah Supari says Baxter was planning to visit Indonesia in the near future to check out production facilities in Bio Farma, which is the only vaccine and sera manufacturer in the country.
Supari says they are unsure whether facilities at Bio Farma are adequate enough to produce the vaccine, or whether another option is needed.
Indonesia, which is the world's fourth-most-populous nation, has recorded 12 confirmed human H5N1 avian flu cases with seven deaths.
The news of the deal with Baxter has come several days after the country revealed its plan to produce its own anti-viral drug Tamiflu in three to five months.
Yudhoyono has said that the state-owned drug firm PT Kimia Farma would make a locally produced version.
At present there are no commercially available vaccines for H5N1 worldwide, and although there is an experimental vaccine there are only a few thousand doses of it available.
These are based on the current H5N1 strain and no one knows how well the vaccines will match a future pandemic strain, which would have a different genetic make-up to enable it to pass easily from person to person.
The H5N1 strain at the moment is hard for humans to catch and remains essentially a virus in birds.
Human influenza vaccines have to be reformulated slightly every year in order to match the circulating strains because the virus mutates so quickly.
The theory is that one dose of the current vaccine might "prime" a person's immune system so they will get stronger effects from a later, better-matched vaccine.
Apparently Tamiflu, along with another anti-viral drug called Relenza, has also been shown to minimise the effects of H5N1 infection if taken early enough.
The distributor of Tamiflu, Swiss giant Roche AG, has said it does not have a patent for the medication in Indonesia, and the country is free to make it for the local market.
Indonesia wants to stockpile enough Tamiflu to cover 11 percent of its 220 million people and the government wants to buy 2 million capsules from Roche.
The country already has 800,000 Tamiflu capsules, or 80,000 courses.
Millions of chickens and other birds in Indonesia have died from the disease or been culled to prevent its spread since bird flu was first detected in fowl in late 2003.
The virus has been detected among poultry in two-thirds of Indonesia's 33 provinces.