INDIA BUSINESS WORLD - MAY 11^th - MAY 31^st - 2008

RANBAXY, MERCK IN R&D TIE-UP

RANBAXY Laboratories has signed a strategic product development agreement with German pharma major Merck for drug discovery and clinical development collaboration in the anti-infectives field. As per the deal, the two partners will work together to develop clinically validated anti-bacterial and antifungal drug candidates. The agreement is in line with Ranbaxy’s recent overtures for collaborative research in various segments with other pharma companies both in India and abroad.

Under the terms of the agreement, Ranbaxy will receive an undisclosed upfront payment, in addition to potential payments totalling more than $100 million associated with the achievement of various research, development and regulatory approval milestones for each target included in the collaboration. This apart, Ranbaxy will also be eligible to receive significant royalties on worldwide net sales of any products commercialised under the agreement.

According to Ranbaxy CEO and MD Malvinder Singh, “The agreement is for multiple programmes with each molecule having a potential milestone payment of up to $100 million. As of now, the agreement is between Ranbaxy Labs and Merck but it would be part of Ranbaxy Life Sciences our R&D division as and when it is made an independent entity. We are keen on striking other such drug development research tie-ups with global pharma companies.”

Ranbaxy will carry out drug discovery and clinical development through Phase II of clinical trials. Merck will then develop and commercialise the drug candidates. The collaboration, beginning this year, will have an initial term of five years and can be extended mutually thereafter by the two partners. This deal could be similar in nature to Ranbaxy’s existing relationship with GlaxoSmithKline. The two had struck an alliance in 2003 under which Ranbaxy conducted the optimisation chemistry required to progress drug leads to the stage of candidate selection.

Ranbaxy had last year extended the scope of this R&D agreement with Glaxo as per which Ranbaxy will advance leads beyond candidate selection to completion of clinical proof of concept. Glaxo will conduct further clinical development for each programme and take resulting products through the regulatory approval process to final commercialisation.

For Merck, it would be in line with other such deals in India. For instance, Merck had recently entered into an agreement with Nicholas Piramal for oncology drugs besides its deal with Tata Group controlled Advinus for metabolic disorders.