GlaxoSmithKline and Ranbaxy Laboratories have signed a new R&D alliance which could be worth over $100 million to the Indian drugmaker.

The agreement is an extension to a link-up established in 2003 between the two firms and the terms of that deal have been extended, says Ranbaxy, to provide the firm with “expanded drug-development responsibilities and further financial opportunities.”

Under the original agreement, Ranbaxy conducted the optimisation chemistry required to progress drug leads to the stage of candidate selection but will now be responsible for the completion of clinical proof of concept. In return, it could receive over $100 million in potential milestone payments up to double-digit royalties on worldwide net sales of any product that comes out of the alliance. Ranbaxy said it will retain the Indian rights to co-commercialize the products and the alliance will focus on “a wide range of therapeutics of interest to GSK,” including anti-infectives as well as metabolic, respiratory and oncology drugs.

Ranbaxy’s chief executive Malvinder Mohan claimed that the deal is “a great moment for our scientists” as it “presents a unique opportunity to demonstrate the India centric advantages of high-quality R&D to deliver value at the cutting edge.” He added the deal with GSK “is path-breaking and acknowledges the higher level of R&D maturity prevalent today in our state-of-the art labs in India.”

His views were echoed by Pradip Bhatnagar, vice president of new drug discovery research at Ranbaxy, who described it as “a win-win agreement for both companies.” He claimed that by collaborating with his “talented R&D team, GSK will be able to develop more products for patients faster and Ranbaxy will benefit from GSK’s vast drug discovery and development experience."

The two companies may be getting on well in the labs but the lawcourts are another matter and the announcement of the expanded alliance comes days after GSK said it intends to ask a US judge for a preliminary injunction to prevent Ranbaxy from marketing a generic version of the herpes drug Valtrex (valaciclovir).