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Lilly forges risk-sharing R&D alliance with India's Zydus

Published on 06/04/09 at 10:30am

Eli Lilly has forged a research collaboration with India's Zydus Cadila that sees the two companies combine their efforts in the area of cardiovascular research and development.

The venture is one of a growing number of cases in which Asian companies share the financial risk in discovery as well as the potential financial rewards with a western partner, rather than providing R&D services according to a conventional outsourcing model.

Under the terms of the six-year agreement, Zydus will discover and develop drug candidates against a novel target. It will carry out drug discovery, lead identification and optimisation, and conduct preclinical studies and clinical trials up to proof-of-concept (phase II) testing.

Lilly will provide chemical starting points for new drug candidates, as well as expertise and feedback regarding toxicology, ADME (absorption, distribution, metabolism and excretion) studies, chemistry, biology, clinical and regulatory aspects. It will also have the option to licence any resulting molecules at different stages.

In return for its efforts Zydus would receive potential milestone payments of up to $300 million, as well as royalties on sales upon successful launch of any compounds derived from the research programme.

The trend towards a risk-sharing model was highlighted in a report published last year by the Ewing Marion Kauffman Foundation. This suggested that "as a result of the movement of research to their countries, Indian and Chinese scientists are rapidly developing the ability to innovate and create their own intellectual property".

One of the authors of that report, Vivek Wadhwa of Duke University, said that these types of deals are increasing. "Western companies prefer this [approach] given their deteriorating financial status," he told Pharmafocus. "What Indian companies like is the upside."

In addition to reducing R&D spend, another driver is the high calibre of scientists operating in India and China. Last year scientific citations for researchers based in Asia-Pacific countries outnumbered those for US researchers for the first time.

Lilly has been particularly active in forging R&D collaborations with Indian companies. It has a 50:50 joint venture in place with Jubilant Organosys of Bangalore that will see the Indian firm develop drug candidates from Lilly's early-stage pipeline, as well as alliances with Suven Life Sciences and Piramal.

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