PPD deal worth $44 m for Ranbaxy

BANGALORE: The recent in-licensing deal between Indian pharma major Ranbaxy and PPD, a Nasdaq-listed contract research organisation (CRO), could be worth up to $44 million for the Gurgaon-based company, the Wilmington, North Carolina-based CRO has said.

In its form 8-K filings with Securities and Exchange Commission (SEC), PPD has also admitted to paying Ranbaxy $250,000 as a one-time licence fee.

PPD (2006 sales $1.24 billion) is one of the world’s leading CROs along with Quintiles and Covance. CROs specialise in global clinical trials to test the efficacy and commercial viability of molecules.

In-licensing refers to the arrangement by which one contracting party buys the right to use a patent from another. Such deals are not the usual cup of tea for CROs. Not surprisingly, the Ranbaxy deal involving development and marketing of a statin compound targeting dyslipidemia has been entered into by Pharmaco Investments, a wholly-owned arm of PPD.

In a recent webcast announcing the deal, PPD chief executive officer Fred Eshelman has conceded that the R&D expenses for marketing Ranbaxy’s compound would be too much for the subsidiary to bear on its own. The company, therefore, is seriously looking at a strategic partner for the unit, he admitted.

“If we do not find a partner by the end of 2007, we will have to look at restructuring our compound partnering division in order to avoid having to alter our financial guidance,” he was quoted as saying.

When contacted, a Ranbaxy spokesperson refused to comment on the development. The $44-million would include milestone and royalty payments made to Ranbaxy by PPD on way to a regulatory okay.

Ranbaxy will also receive an unspecified termination payment from PPD if the latter were to unilaterally call off the deal.

georgy.thomas@timesgroup.com