Ranbaxy Pharmaceuticals Inc (RPI), the US subsidiary of leading drug maker
Ranbaxy has entered into an exclusive agreement with Canada's Cipher Pharmaceuticals Inc to develop and market Cipher's patented medicine Cip-Isotretinoin in the US market.

RPI has paid Cipher an initial upfront milestone payment of $ 1 million (Rs 4.2 crore) The agreement includes additional pre- and post-commercialisation milestone payments of up to $23 million (Rs 96.6 crore), contingent upon the achievement of certain milestone targets, a Cipher.

Ranbaxy said the agreement provides them a promising late-stage product into their dermatology portfolio. "We believe this product's unique attributes, particularly the more consistent absorption profile, would provide a significant advancement in the treatment of severe, nodular acne", a company official said.

CIP-Isotretnoin is a novel, patented formulation of isotretinoin, which is used in the treatment of severe nodular acne. The product received approvable letters from the US Food and Drug Administration in May 2006 and April 2007 in which the FDA requested that Cipher provide additional clinical safety data. Cipher and its advisors are currently in discussions with the FDA's Division of Dermatology and Dental Products regarding the appropriate design of a safety study, the release said.

Once the product is successfully commercialised, Cipher will also receive a royalty on net sales. In addition, RPI will reimburse Cipher for all costs associated with the clinical studies required to obtain FDA approval, up to a predetermined cap. Any additional development costs associated with initial FDA approval will be shared equally.

Ranbaxy currently markets a version of isotretinoin under the brand name Sotret. As of May 31, 2008, Sotret prescriptions exceeded 50 per cent of the total US market for isotretinoin and had a sales of $ 314 million for the 12 months ending 2008, the company quoted IMS Health data.

The deal, though of small size, turns interesting as it is a reversal of sorts for Indian drug companies known for outlicensing their own research products to multinational companies for further development and marketing in countries like the US.