Mumbai: Indian drug maker Glenmark Pharmaceuticals Ltd’s shares rose 3.54% to close at Rs230.05 on Bombay Stock Exchange on Monday after the company announced a drug licensing deal with US-based Medicis Pharmaceutical Corp. The benchmark Sensex index rose 1.09%.

The scrip lost 23.53% since January on slow sales growth because approvals for the firm’s generic drugs in the US market were delayed and a couple of molecules it had developed and licensed out to foreign drug makers were returned. The Sensex has risen nearly 72% since 1 January.

In the latest deal, Medicis has agreed to pay $5 million (Rs23.05 crore) to Glenmark for developing a treatment for acne.

Glenmark will receive additional payments if it achieves specific development milestones and royalty if the product reaches market.

Glenmark’s chief executive officer and managing director Glenn Saldanha said both the companies have extensive experience in the dermatological market segment and “this collaboration will allow us to bring a promising new treatment alternative to patients”.

Glenmark’s share prices are significantly linked with it discovering and developing new drugs because the company had in the past three years earned considerable revenue by licensing out new drugs to foreign drug makers for upfront payments that were followed by milestone payments.

However, two such deals in the recent past with Forest Laboratories Inc. and Eli Lilly and Co. faced setbacks as the new molecules were returned to Glenmark on grounds of insufficient development progress.

The Mumbai-based drug maker had also licensed out a diabetes molecule to German drug maker Merck KGaA in 2006. This molecule, too, was returned as Merck discontinued its diabetes portfolio in 2008. Since then, there have been no fresh deals from Glenmark.

The company also said on Monday that its generic drugs subsidiary in the US, Glenmark Generics Inc., has settled all lawsuits with Medicis relating to a patent challenge on generic versions of Medicis’ Vanos skin cream and Loprox skin gel.

The settlement will enable Glenmark to market and distribute its generic version Vanos under licence from the US company from December 2013. Glenmark will also have a licence to launch a generic version of Loprox immediately as the product will be sourced from Medicis.

A Glenmark official said on condition of anonymity that the company is exploring opportunities to licence out the newly patented acne-treating antibiotic to firms in the European market.