Merck & Co is teaming up with South Korea's Hanwha Chemical Corp to develop and commercialise a biosimilar of Pfizer and Amgen's rheumatoid arthritis and psoriasis blockbuster Enbrel.

Under the terms of the agreement, which runs until the end of 2024, Merck will conduct clinical development on the copy of Enbrel (etanercept) and be responsible for manufacturing of the biosimilar, called HD203. Upon marketing approval, Merck will sell HD203 globally, except in Korea and Turkey where Hanwha has retained marketing rights.

In return, Hanwha will bank an upfront fee and will be eligible for additional payments associated with technology transfer and regulatory progress, plus tiered royalties. Specific financial terms of the agreement have not been disclosed, although the Wall Street Journal claims the pact is worth around $720 million.

HD203 is currently in a Phase III study in Korea to evaluate its equivalence to Enbrel in combination with methotrexate in patients with RA. Clinical trials have yet to be initiated in the USA, the firms stated.

Noting that Hanwha "has established outstanding biopharmaceutical development capabilities", Michael Kamarck, president of Merck BioVentures, said Enbrel is "widely considered to be one of the most important biosimilar molecules". He added that "this candidate represents a valuable addition to our broad biosimilars portfolio".

Enbrel is a big earner. For the first quarter, Amgen reported $875 million in North American sales of the drug, up 9%, while Pfizer posted an 8% increase in turnover (outside North America) to $870 million. Enbrel goes off-patent in the USA in October next year but will not face competition for some time as there is still no system in place across the pond to approve biosimilars.