Orchid signs pact with Merck

Orchid Chemcials and Pharmaceuticals today said that it has entered into an arrangement with US drug maker Merck & Co Inc for discovery and development of novel anti-infective drugs which holds a potential revenue stream of over $100 million.
 
While the deal has been signed by the two parties with an undisclosed upfront payment from Merck to Orchid the flow of money to Orchid would depend on milestones achieved over the next five years, said K Ragavendra Rao, managing director of Orchid Chemicals.
 
The arrangement is such that at the end of the drug discovery cycle, Orchid will hold the global patent for the molecules with an exclusive arrangement with Merck for licencing for commercialisation. Orchid expects to manufacture the drugs while Merck will market it across the world. The potential market for a the drugs yet to be discovered is estimated at $1 billion annually.
 
Orchid Chemicals’ fully owned drug discovery subsidiary Orchid Research Laboratories Ltd (OPLL) will be undertaking the research and development of new drug(s) in the anti-infective therapeutic area. Orchid Chemcials’ chief scientific officer, B Gopalan will be heading this initiative. Gopalan, who specializes in new drug discovery, joined Orchid Chemicals six months back after three decades of experience in various drug companies includes Boots and Glenmark.
 
While the discovery of a commercially viable drug depends on successes at various stages of new drug discovery life cycle, Gopalan said that the chances are very high that Orchid will succeed in its efforts. Orchid executives said that Gopalan during his tenure in Glenmark headed a research team that managed to discover two drugs one each in the area of asthma and chronic obstructive pulmonary disease (related to lungs and common among smokers).
 
Rao further said that positive results can be expected within 18-36 months of start of research and discovery of a new molecule leading to a new drug also promises to deliver revenue for Orchid in the form of royalty from Merck.  Globally Merck has narrowed the areas it would focus for new drug discovery to 8-9 stream, down from 20-30 areas a few years back. Cost pressure and the ability companies like Orchid in low cost countries has been cited as reasons for such contract research work being outsourced by the MNC.
 
Apart from being a vendor for outsourced research, OPLL will also undertake research for its parent company and focus will be on anti-cancer, anti-inflammation, anti-diabetes, anti-obesity and anti-pain drugs. OPLL is a two year old company formed with a seed capital of Rs 15 crore from parent company Orchid Chemicals.
 
Rao said that going forward, Orchid hopes to sign more deals such as the one with Merck to lower the risks involved in new drug discovery.