India’s Dr Reddy’s has reportedly inked a deal with Merck & Co that will allow the generics firm to sell copycat versions of Merck’s one-time blockbusters, the prostate cancer drug Proscar (finasteride) and the cholesterol lowerer Zocor (simvastatin), in the USA following patent expiry.

The news, reported in India’s Economic Times, says that Dr Reddy’s will start marketing the so-called “authorised generics” after the 180-day exclusivity period awarded to first-to-file generics companies has completed.

There is a growing trend for branded pharmaceutical corporations to link up with manufacturers of copycat drugs to forge such deals, which allows the branded major at least some measure of control over the generic erosion of its top products as well as to sidestep expensive litigation cases.

Dr Reddy’s is currently hovering around its 52-week high of $27.65 on the New York Stock Exchange after reporting a solid set of third quarter results towards the end of last month. Revenues were up 25% to 5.9 billion rupees ($133.3 million), while net profit jumped significantly from 40 million rupees in the like year-earlier quarter to a staggering 628 million rupees.

And the newsflow is continuing apace: this morning the Indian company said it has joined forces with the UK’s Argenta Discovery to develop a new, undisclosed, approach to the treatment of chronic obstructive pulmonary disease. Although no financial details have been released, the companies did say that the deal stretches from preclinical through to Phase IIa, at which point they have the option to license out the compound or continue its development internally.

2006 is set to be a difficult year for Merck. After the furore of Vioxx (rofecoxib) and the ensuing litigation, it is expected to lose patent protection this June for Zocor which - despite not meeting targets for 2005 - still reaped a not-insignificant $4.4 billion during the year, down 16%. The company expects to lose $2 billion from its 2006 top line as a result of generic competition to this product. Proscar is also expected to lose patent protection in 2006.