Ranbaxy in talks with Bayer for licensing ciprofloxacin delivery system

Ranbaxy Laboratories has signed an agreement with Bayer AG of Germany for supplying a novel drug delivery system, or NDDS, for a ciprofloxacin drug molecule which is a modification of the German major's $ 1.3-billion blockbuster drug Ciprobay.

Ranbaxy has applied for a US product patent for its ciprofloxacin NDDS. The deal with Bayer is likely to materialise only if Ranbaxy obtains a product patent.

According to informed sources, Bayer will pay upfront a 'milestone' payment of more than $ 45 million to Ranbaxy followed by royalties calculated as a percentage of sales, which are likely to bring in an additional $40 million from year 2002 onwards. Sources say the royalty level could be five per cent of the sales.

Compared to the currently available twice-a-day dosage regimen of ciprofloxacin, Ranbaxy's novel drug delivery system is likely to be easier to use. The deal assumes significance for Bayer as ciprofloxacin is its main pharmaceutical product, contributing to a third of its pharma sales. The product is going off patent in 2001 in the US and in 2003 in Germany.

Industry experts say that Bayer would be anxious to introduce a patented dosage form in the international market just before the market is flooded with generic copies of the old product. This would help Bayer to retain a part of its dominance in the highly competitive generics market.

The deal, if it materialises, will be the first of its kind involving a licensing arrangement by an Indian company for a novel drug delivery system.