New Delhi: Ranbaxy Laboratories (RLL) and GlaxoSmithKilne (GSK) have extended their four-year-old drug-development agreement.

The new agreement modifies and expands the terms of the strategic alliance the two entered in 2003 to provide Ranbaxy expanded drug-development responsibilities and further financial opportunities. Under the original agreement, Ranbaxy carried out the chemical tests required to take drug leads being developed to the stage of candidate selection.

Under the new agreement, Ranbaxy will advance beyond mere candidate selection, going right up to the stage of completion of clinical proof of the efficacy of the drug concerned. GSK will then go in for further clinical development of each programme and take the resulting products through the regulatory approval process to final commercialisation.

Ranbaxy is likely to receive substantial milestone payments for products it develops, which are subsequently launched by GSK, and up to double-digit royalties on worldwide net sales.

Ranbaxy will retain the right to co-commercialise the products in India.

The new milestones and royalties will apply both to future drug discovery programmes and to the two programmes currently in progress at Ranbaxy, that were started under the original agreement with GSK.