* Merck, Dr. Reddy's to co-develop molecules
* Dr. Reddy's to lead early development, Phase I tests
* Merck to handle manufacturing, late-stage tests
* Merck shares up 0.7 pct, broadly in line with market
FRANKFURT, June 6 Germany's Merck KGaA
and India's Dr. Reddy's Laboratories Ltd have struck a
deal to develop cheap versions of biotech cancer drugs, seeking
to tap into a new market as patents on biotech medicines expire.
Up to now, complex biotechnology medicines, which are given
by injection, have been largely immune from generic competition,
unlike conventional chemical pills and capsules.
But the landscape is starting to change as patents end and
regulators establish guidelines for developing so-called
biosimilar versions of drugs, posing a threat to leading biotech
groups like Roche and Amgen.
In contrast to conventional chemical medicines, biotech
products are impossible to copy precisely, forcing generic
companies to develop biosimilars, which are close to the
original but need to be sold as separate medicines.
Merck is at risk from cheaper competitors to its multiple
sclerosis and cancer drugs and is hoping to hedge its bets by
developing its own biosimilars capability with Dr. Reddy's.
"Sharing know-how, risks and rewards is the right approach
to enter the emergent biosimilars market and will be a win-win
for both parties," Merck executive board member Stefan Oschmann
said in a statement on Wednesday.
Under their agreement, Merck and Dr. Reddy's will co-develop
molecules. Dr. Reddy's will then lead early product development
and testing before handing over to Merck for manufacturing and
Merck will handle commercialisation in most parts of the
world and will pay Dr. Reddy's royalties. In the United States
the two companies will co-commercialise the products on a
Europe has already approved some biosimilars, including
copycat versions of human growth hormone and the anaemia
treatment EPO. However, antibodies for diseases such as cancer
and rheumatoid arthritis are a much bigger commercial prize.
Companies racing to develop biosimilars include traditional
Big Pharma innovators, like Pfizer and Merck, as
well as generic drug manufacturers in the United States, Europe,
India, China and South Korea.
Merck said the investments needed for the collaboration were
already factored into its profit outlook. The move comes as
Merck tries to cut costs by 300 million euros ($374 million) a
year at its prescription drugs unit by 2014 following a series