India’s largest drug maker by sales, Ranbaxy Laboratories Ltd and UK’s GlaxoSmithKline Plc (GSK) have shortlisted a molecule that could be developed into a new drug for treating respiratory inflammation, as part of their collaborative research agreement.
The drug, if successful, could earn over $100 million (Rs440 crore) for the Gurgaon drug maker in payments for research and double-digit royalties on worldwide sales. While Ranbaxy will conduct pre-clinical studies that will look into toxicology, animal testing and the first two phases of human trials, GSK can conduct final trials and commercialize the product, the companies said in a statement. According to global drug market tracking agency IMS Health, respiratory medicines—the third-largest drug category—had sales of $24.6 billion and grew at 10% last year.
“The deal may not mean big bucks for Ranbaxy in the short-term but it is a fairly de-risked model to partner and develop a new molecule with a global company,” said Nimish Mehta, assistant vice-president, Edelweiss Capital. Ranbaxy shares fell 3.2% to Rs341.30 on the Bombay Stock Exchange, whose benchmark index dropped 4.72% on Monday.
A Ranbaxy spokesman declined to say how close the company was to getting the first instalment of payment from GSK. A sector analyst said that while Ranbaxy could net a little from the milestone payments—with research spend eating away a good part of it—the big money will come from royalties in the American and European markets.
The research collaboration dates back to 2003 when both companies identified research programmes in respiratory and anti-infectives segments. The deal was expanded substantially in February this year to focus on metabolic disorders and cancer too, wherein Ranbaxy will take a drug to late development stage of human trials and earn $100 million in revenues for each drug if certain milestones are met, before GSK takes over. Nicholas Piramal India Ltd had struck a similar deal with US’ Eli Lilly and Co. earlier this year.
“This achievement reflects the discovery capabilities of Ranbaxy’s research team and the growing partnership between the two organizations in new drug research,” Pradip Bhatnagar, senior vice-president of new drug discovery at Ranbaxy, said in the statement.
The Indian drug maker currently has a new drug each for malaria, urological disorders and dyslipidemia, which is a disruption in the amount of lipids in the blood, in various stages of research and a number of pre-clinical leads in the anti-infective, inflammatory and urology segments. “This is a smart way of ramping up the pipeline without shouldering the entire research cost,” said a sector expert who did not want to be named.