Ranbaxy Laboratories Limited (RLL) and GlaxoSmithKilne (GSK) have expanded their four-year-old drug-development agreement on Tuesday, a step that could enable the former to earn an additional $100 million (Rs 450 crore) through potential royalty and other payments.
The new agreement, modifies and expands the terms of their 2003 strategic alliance to provide Ranbaxy expanded drug-development responsibilities and further financial opportunities.
Under the original agreement, Ranbaxy carried out the chemical tests required to take drug leads being developed to the stage of candidate selection.
Under the new agreement, Ranbaxy will advance beyond mere candidate selection, going right up to the stage of completion of clinical proof of the efficacy of the drug concerned. GSK will then go in for further clinical development of each programme and take resulting products through the regulatory approval process to final commercialisation.
Ranbaxy could thus receive substantial milestone payments for products it develops, which are subsequently launched by GSK, and up to double digit royalties on worldwide net sales.
Ranbaxy will retain the right to co-commercialise the products in India.
The new milestones and royalties will apply both to future drug discovery
programmes and to the two programmes currently in progress at Ranbaxy, that were started under the original agreement with GSK.
The expanded alliance forsees potential for working together on a wide range of
therapeutics of interest to GSK, including anti-infectives and metabolic,
respiratory and oncology products. While recognising the performance and
clinical-development capabilities of Ranbaxy, it also conforms to the agenda
of GSK's Center of Excellence for External Drug Discovery ("CEEDD").
The CEEDD, created after the initial agreement between Ranbaxy and GSK, is
a small, dedicated team that contributes to the GSK pipeline solely through
the efforts of its external alliances. The CEEDD effectively 'virtualises'
a portion of the GSK pipeline — from target to clinical proof of concept — by forming multiple risk-sharing/reward-sharing alliances.
Malvinder Mohan Singh, CEO and MD, Ranbaxy, said, "The agreement presents a
unique opportunity to demonstrate the India-centric advantages of high
quality research and development to deliver value at the cutting edge."
Maxine Gowen, Senior Vice President, Center of Excellence for External Drug
Discovery (CEEDD), GSK, said, "This expanded agreement furthers our CEEDD
strategy of building a strong pipeline through to clinical Proof of Concept
via external R&D collaborations."