Orchid Chem enters research collaboration with Merck

Chennai: Orchid Chemicals and Pharmaceuticals and Merck & Co have entered into a research collaboration and licence agreement to discover, develop and commercialise molecules essential for the treatment of bacterial and fungal infections.

Mr Raghavendra Rao, Managing Director, Orchid Chemicals said that under the terms of agreement, Orchid will be paid a sum upfront and is eligible to receive payments amounting to $ 100 million (about Rs 470 crore) associated with the achievement of various research and development milestones.

Orchid Research Laboratories, a wholly owned subsidiary of Orchid Chemicals, and Merck will work to identify and develop novel antibacterial and anti-fungal compounds as clinically valid drug candidates.

To a question on the company’s plans to market Tazobactum Pipercillin, an injectible antibacterial, which the company recently announced it would launch in the European market, he said the European market was considerably smaller when compared to the US market which is estimated at $500 million (about Rs 2,300 crore).

Orchid Chemicals and Pharmaceuticals had constructed a manufacturing facility two years back at an investment of $ 20 million (about Rs 95 crore) in Irunkattakottai to manufacture Tazobactum Pipercillin for the US market but it has been lying idle, according to a company spokesperson. Orchid hoped to produce and sell the injectable antibacterial in the US in February 2007 when the product patent expired.

But the innovator pharmaceutical company, Wyeth has been trying to extend the patent on technical grounds which Orchid has contested. At present the promoter’s stake in the company is at 17 per cent, they also have warrants which when converted to equity shares would increase the shareholding to 23 per cent.