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Hyderabad, Sept. 29

A DAY after floating the country's first integrated drug development company, Dr Reddy's Laboratories has entered into a co-development and commercialisation agreement with the Denmark-based Rheoscience A/S for joint development and commercialisation of Balaglitazone (DRF-2593), a molecule for the treatment of type-2 diabetes.

Under the terms of the agreement, Rheoscience will fund all costs associated with the phase-III clinical trials of DRF-2593 and Dr Reddy's will pay Rheoscience a pre-determined amount towards its share of the development costs.

Rheoscience will retain marketing rights in the European Union and China, while Dr Reddy's will have the rights for the US and rest of the world. Rheoscience needs to obtain all necessary regulatory approvals on behalf of Dr Reddy's in the US. On receiving final approval from the USFDA, Dr Reddy's will make a pre-determined milestone payment to Rheoscience.

In a press release here on Thursday, Dr Reddy's said the agreement would be valid for 10 years from the date of commercialisation. However, the company did not disclose the financial terms and conditions.

Under the agreement, if the partners choose to commercialise the product on their own, then the partners have to pay each other a staggered royalty on the sales. However, if the partners choose to commercialise the product through a third party, then each partner is entitled to share a pre-determined percentage of the net proceeds of commercialisation received by it with the other partner. Dr Reddy's said it will also retain the right to supply clinical development and commercial quantities on arms-length basis.

Commenting on the co-development deal, Dr Reddy's Chief Executive Officer, Mr G.V. Prasad, said, "This deal provides Dr Reddy's with an opportunity to commercialise new commercial entities (NCEs) in key markets, thereby transforming Dr Reddy's into an innovation-driven business."

(This article was published in the Business Line print edition dated September 30, 2005)
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