Ranbaxy Signs a New R&D Agreement with GSK

Ranbaxy Laboratories Ltd on February 06, 2007 has announced that the Company and GlaxosmithKline (GSK) have signed a new multiyear R&D agreement that modifies and expands the terms of their strategic alliance established in 2003 to provide the Company expanded drug-development responsibilities and further financial opportunities.

Under the original agreement, the Company conducted the optimization chemistry required to progress drug leads to the stage of candidate selection. Under the new agreement, the Company will advance leads beyond candidate selection to completion of clinical proof of concept. GSL thereafter will conduct further clinical development for each program and take resulting products through the regulatory approval process to final commercialization.

The Company could receive over $100 Mn in potential milestone payments for a product developed by the Company and subsequently launched by GSK in multiple indications and up to double digit royalties on worldwide net sales. The Company will retain the right to co-commercialize the products in India. The new milestones and royalties will apply both to future drug discovery programs and to the two programs currently ongoing at the Company, that were commenced under the original agreement with GSK.

This expanded alliance envisages potential work in a wide range of therapeutics of interest to GSK, including anti-infectives and metabolic, respiratory and oncology products. While recognizing the performance and clinical-development capabilities of the Company, it also conforms to the remit of GSK's Center of Excellence for External Drug Discovery ("CEEDD"),

The CEEDD, created after the initial agreement between the Company and GSK, is a small, dedicated team that contributes to the GSK pipeline solely through the efforts of its external alliances. The CEEDD effectively 'virtualizes' a portion of the GSK pipeline; namely, from target to clinical proof of concept, by forming multiple risk-sharing / reward-sharing alliances.

Welcoming the expanded agreement with GSK, Malvinder Mohan Singh, CEO and MD, of the Company, said "This is a great moment for our scientists. 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. I believe the arrangement with GSK is path-breaking and acknowledges the higher level of R&D maturity prevalent today in our state-of-the art labs in India."

Reflecting on the agreement, Dr. Pradip Bhatnagar, Vice President, New Drug Discovery Research, of the Company said, "This is a win-win agreement for both Companies. By collaborating with Ranbaxy's talented R&D team, GSK will be able to develop more products for patients faster and Ranbaxy will benefit from GSK's vast drug discovery and development experience."

Source : Equity Bulls

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