Mumbai: Pharma major Ranbaxy Laboratories has signed a collaboration agreement with US-based Merck Co for drug discovery and clinical development of new products in anti-infective field.

Both firms would work together to develop clinically validated anti-bacterial and anti-fungal drug candidates, Ranbaxy said in a filing to the Bombay Stock Exchange.

"Ranbaxy will carry out drug discovery and clinical development through Phase IIa clinical trials, with Merck conducting development and commercialisation of drug candidates thereafter," the filing added.

As per the agreement, the collaboration would begin this year with an initial term of five years and can be extended mutually thereafter by the parties.

"Ranbaxy will be paid an undisclosed upfront sum, with the potential to receive payments totalling more than $00 million associated with the achievement of various research, development and regulatory approval milestones for each target included in the collaboration," the company added.

Ranbaxy is also eligible to receive significant royalties on worldwide net sales of any products commercialised under the agreement, it added.

Under the five-year Product Development Agreement (PDA), Ranbaxy will carry out anti-bacterial and anti-fungal drug discovery and clinical trials. Thereafter, Merck will conduct development and commercialisation of the drugs.

"This collaboration with Merck positions Ranbaxy to extend its capability set and move up the value chain for drug discovery and development," Ranbaxy CEO and MD, Malvinder Mohan Singh, said.

Commenting on the agreement, Merck's senior vice president of worldwide licensing and external research, Mervyn Turner, said, "By combining each other's strengths and resources both Merck and Ranbaxy are able to decrease development risk while sharing the potential reward".

Shares of Ranbaxy closed at Rs 494.20, up 5.27 per cent on the BSE.

Source : PTI