* Roche's return bucks broader retreat by Big Pharma

* Has struck three small deals since last November

* Better diagnostic tests key to targeted treatments

* Regulatory, legislative changes encourage new research

By Caroline Copley

ZURICH, June 2 (Reuters) - Roche is betting the same tools that made it the world's largest producer of cancer drugs will help it tackle the growing public health crisis of antibiotic resistance as regulators and politicians encourage fresh research.

The Swiss drugmaker used its expertise in in vitro diagnostic tests to develop highly-targeted cancer medicines. Now it believes it can use those same skills to find out quickly which bugs cause which infections, and help doctors kill them.

Experts are currently warning that superbugs resistant to even the most powerful drugs threaten to undermine modern medicine - requiring a response on the same scale as efforts to combat climate change.

Infections that are resistant to antibiotics affect more than 2 million people in the United States every year and kill around 23,000 people as a result, according to the Centers for Disease Control and Prevention.

"Bacteria are probably smarter than we are and they're always evolving," said Janet Hammond, global head of infectious diseases at Roche's pharma research and early development unit.

Roche pioneered some of the more modern penicillins, but wound down its research at the end of the 1990s.

However it has been quietly rebuilding its expertise over the past two years. It struck a deal for the license of an experimental antibiotic from Switzerland's Polyphor last November and formed a partnership with Britain's Discuva and U.S. biotech Spero Therapeutics earlier this year.

"We're very optimistic that we have a good chance of success or we wouldn't be going back into the space, but it's certainly not a slam dunk," Hammond said.

BIG PHARMA RETREAT

Roche's return to the field runs counter to a gradual drift to the exit by Big Pharma over the past decade: Only a handful of pharmaceutical firms with large antibiotic R&D programmes remain, compared to nearly 20 in 1990, according to the Infectious Diseases Society of America (IDSA).

Faced with dwindling returns on antibiotics R&D, drugmakers Bristol-Myers Squibb Co, Eli Lilly and Co and Pfizer Inc switched their focus to cancer and chronic diseases that command higher prices and are taken for longer.

AstraZeneca PLC, which has the most developed pipeline of the remaining players, recently also said it would put less money into the business.

As a result very few new antibiotics have come to market over the past few decades, leaving doctors with very few weapons to fight serious and life-threatening infections.

Regulators are now looking to speed up the approval of any new antibiotics, and U.S. politicians are working on new legislation like the Developing an Innovative Strategy for Antimicrobial Resistance (DISARM) Act to remove obstacles - such as the current payment systems - that are putting companies off from developing new drugs.

Those measures, as well as legislation like the 2012 Generating Antibiotic Incentives Now (GAIN) Act - which offers drugmakers an extra five years of market exclusivity - have played a part in tempting back not only Roche but also a slew of smaller firms like Cubist Pharmaceuticals, The Medicines Company and Basilea.

DIAGNOSTIC TESTS

Most antibiotics used today are "broad spectrum" products, which can kill a wide range of bugs but are also responsible for breeding resistance because they damage gut flora creating an environment for infections to flourish.

But Roche believes developing tests that can accurately identify within a matter of hours which microbe caused an infection will help it push ahead.

Unless such tests to speed up the diagnosis of infections become available, physicians will be pushed to keep prescribing "broad" products, said David Livermore, a professor in medical microbiology at the University of East Anglia who has spent more than 30 years researching antimicrobial resistance.

Roche's most advanced product is the antibiotic from Polyphor, currently in mid-stage testing, and targets just one bacteria: multi-drug resistant pseudomonas aeruginosa.

Although Roche is not developing a companion diagnostic - a test to predict which patients will respond best to therapy - alongside this antibiotic, it is exploring new ways to identify infections more quickly and accurately through the collaboration of its pharma research and early development unit and diagnostic teams.

The Swiss company is also interested in researching treatments for hospital-based infections that are difficult to treat, such as those called by "Gram-negative" bacteria, as well as opportunities to treat prosthetic joint infections and endocarditis, a rare and potentially fatal type of heart infection, Hammond said.

REINVIGORATE - CAREFULLY

Roche may for now be the only member of "Big Pharma" to look again at antibiotic research, but top healthcare officials are hoping to lure more back.

"We need to explore what it is that would reinvigorate this system to produce not just one new antibiotic, but a steady series going on for decades," said Sally Davies, Britain's chief medical officer who last year warned antibiotic resistance was a "catastrophic threat" to health.

However - should these attempts prove successful enough to spur a new range of medicines, the commercial rewards ought to be delinked from the number of prescriptions, warned Alex White, head of Roche's team that looks for licensing deals in the field of infectious diseases.

Otherwise, indiscriminate usage of the new antiobiotics could only breed new superbugs.

"One of the paradoxes of antibiotic development is that the more successful you are in developing a really good antibiotic that you then license and launch in the market place, the less you really want it to be used unless it's absolutely necessary." (Additional reporting by Kate Kelland; Editing by Sophie Walker)