Dr. Reddy's And Merck Serono Partner On Biosimilars

Includes: MKGAY, RDY
by: The Burrill Report

India's Dr. Reddy's Laboratories (NYSE:RDY) and Geneva-based Merck Serono (subsidiary of Merck KGaA (OTCPK:MKGAY)) have agreed to a global partnership to develop, manufacture and sell biosimilar cancer therapies. Dr. Reddy's has launched four biosimilars to date, while Merck Serono is taking its first steps in the space. Its partnership with Merck Serono, which will focus on creating monoclonal antibodies, will expand its presence in the biosimilar space in select emerging markets.

"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," says Stefan Oschmann, Merck Serono's CEO, citing the benefits of pairing Merck's development, manufacturing, and commercialization expertise with Dr. Reddy's experience in biosimilars and generics. Dr. Reddy's will lead early product development and initial clinical trials of compounds covered by the agreement. Once early-stage trials are complete, Merck Serono will take over manufacturing of the compounds and lead late stage development.

Merck will lead global commercialization of any products of the partnership outside the United States, excepting select emerging markets where Dr. Reddy's maintains exclusive rights or the companies will share commercialization responsibilities. Dr. Reddy's will receive royalty payments from Merck Serono upon commercialization. Within the United States, the companies will co-commercialize products and share profits, they say.

Biosimilars are highly similar to already-approved biologics. Following the creation of approval pathways for biosimilars in the United States and Europe, biotechnology and pharmaceutical companies alike are racing to develop strong biologics development, manufacturing and commercialization capabilities.

Biologics accounted for $138 billion in sales during 2010 sales, according to IMS Health. The healthcare consultancy estimates that by 2015, the global market for biosimilars will reach $1.9 to $2.6 billion annually, as governments worldwide turn to biosimilars to help lower spending. That market opportunity and the complexities of accessing it in a cost-effective manner has resulted in numerous partnerships, including tie-ups between Samsung and Biogen Idec, Amgen and Watson, and Baxter and Momenta.

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