Merck Taps India For New Drug

Merck KGaA will pay the Mumbai-based drug company Glenmark Pharmaceuticals more than $30 million up front and as much as $240 million overall for rights to a diabetes drug now in Phase II clinical development. The deal highlights a role-reversing trend: Western pharmaceutical giants turning to Indian firms to help fill their drug pipelines.

Under the agreement, expected to close later this year, Merck will develop and commercialize Glenmark's GRC 8200 in North America, Europe, and Japan. Glenmark will retain rights in India, and the partners will share rights in the rest of the world. Glenmark will supply the active ingredient to Merck and receive royalties on any sales of the product.

According to Glenmark, GRC 8200 is a DPP-IV inhibitor, a class of diabetes drugs that stimulate insulin secretion by inhibiting the enzyme dipeptidyl peptidase IV. The firm cites analyst predictions that sales of DPP-IV inhibitors could exceed $11 billion per year.

Nailesh A. Bhatt, managing director of the New Jersey-based consulting firm Proximare, says Glenmark is one of a small but growing fraternity of Indian companies that are investing in original drug discovery. Indeed, he notes that the firm's 2004 and 2005 development agreements with Forest Laboratories and Teijin Pharma for its GRC 3886, an asthma treatment, were two of the first fruits of such efforts.

Like most Indian drug companies, Glenmark got its start by selling generics or copies of patented drugs. Bhatt says India's 2005 adoption of global patent rules forced such firms to look beyond this business model.

Indian providers of drug research services are also parlaying their know-how into in-house drug discovery efforts. In August, for example, service provider Suven Life Sciences formed a collaboration with Lilly focused on central nervous system disorders. Suven CEO Venkat Jasti called the deal "our first true research collaboration with a global pharmaceutical company."

And, Bhatt points out, Indian firms are being launched with the purpose of discovering new drugs. An example is year-old Advinus, headed by a former Bristol-Myers Squibb research executive.