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Merck Signs
Research Pact
With Ranbaxy

Indian drug maker Ranbaxy Laboratories Ltd. and Merck & Co. of the U.S. signed a pact to discover and develop new drugs to treat infections caused by bacteria and fungi.

Ranbaxy will get an undisclosed upfront sum, with the potential to receive payments totaling over $100 million on each drug achieving various research, development and regulatory milestones.

Patent expirations, increased competition, rising drug-development costs and fewer drug discoveries are driving Western drug makers to seek partnerships with low-cost Asian players.

Indian drug makers, faced with slimmer profits from their traditional focus on making inexpensive generic copies of popular drugs, are leveraging their cost advantage and large pool of trained chemists to enter into research-and-development pacts with global drug majors.

Merck last year signed a pact with another Indian drug maker, Nicholas Piramal India Ltd., to discover and develop new cancer drugs.

Write to Rumman Ahmed at rumman.ahmed@dowjones.com

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