UK drug giant GlaxoSmithKline this morning said it is to buy the research arm of Croatia’s Pliva for up to $50 million in cash.

The deal, which is expected to close by the end of April, will see Pliva receive an upfront payment of $35 million and milestone payments totalling $15 million as early-stage drug development projects move into the clinic. It could also garner royalties on marketed medicines.

GSK says it will take on board all 130 employees currently housed at the research institute, of which it gains full ownership. The firm is hoping to build on the success of its product pipeline after scoring the best financial results since its formation six years ago, reporting last week an operating profit for the full-year 2005 up 16% (all figures at constant exchange rates) to £6.9 billion ($12 billion), and earnings per share jumping 18% to 82.6 pence.

And GSK doesn’t appear to be resting on its laurels. Its pipeline is already stuffed with 146 clinical development projects, including 16 filed or in late-stage trials, of which six are waiting for a green light to market this year. So the purchase of Pliva’s R&D arm should help buoy the firm’s enviable position even more, particularly in the area of antibiotics, as the institute is renowned for its research into anti-infective macrolide compounds.

Pliva says the sale will allow it to focus fully on its generics business, with the company’s chief executive Zeljko Covic noting: “We will continue to invest strongly into generics research and development, where we currently employ about 450 dedicated R&D employees.”

Last year, the firm sold off Sanctura (trospium), an overactive bladder treatment – marking its exit from the proprietary drugs business – and said focusing on generics will make it much more competitive and boost its market position. Then, in August, it signed a deal with Canada's Legacy Pharma to sell the central nervous system unit of its branded drugs subsidiary, Odyssey Pharmaceuticals, for $62.5 million.