Ranbaxy and GlaxoSmithKline form alliance

Feb 6 2007

Ranbaxy Laboratories announced today that the Company and GlaxoSmithKline have signed a new, multiyear R&D agreement that modifies and expands the terms of their strategic alliance established in 2003 to provide Ranbaxy expanded drug-development responsibilities and further financial opportunities.

Under the original agreement, Ranbaxy conducted the optimization chemistry required to progress drug leads to the stage of candidate selection. Under the new agreement, Ranbaxy will advance leads beyond candidate selection to completion of clinical proof of concept. GSK thereafter will conduct further clinical development for each program and take resulting products through the regulatory approval process to final commercialization. Ranbaxy could receive over $100 Mn in potential milestone payments for a product developed by Ranbaxy and subsequently launched by GSK in multiple indications and up to double digit royalties on worldwide net sales. Ranbaxy 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 Ranbaxy, 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 Ranbaxy, it also conforms to the strategy 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 '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, Ranbaxy, 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."

Endorsing the development, Maxine Gowen, Senior Vice President, Center of Excellence for External Drug Discovery (CEEDD), GSK, said, "This expanded agreement builds on the success of the existing collaboration and furthers our CEEDD strategy of building a strong pipeline through to clinical Proof of Concept via external R&D collaborations."

Reflecting on the agreement, Dr Pradip Bhatnagar, Vice President, New Drug Discovery Research, Ranbaxy, 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."