Ranbaxy Laboratories Ltd. has tie-up with global pharma major Merck & Co. to drug discovery and development. The strategic product development agreement calls for joint research to develop clinically validated anti-bacterial and anti-fungal drug candidates.

Ranbaxy will carry out early stages of drug discovery and clinical development and Merck will be responsible for later stage clinical trials and commercialization of drug candidates. The collaboration will begin this year with an initial term of five years.

The agreement turns Ranbaxy eligible for an undisclosed upfront sum, with the potential to receive payments totaling more than US $100 million associated with the achievement of various research, development and regulatory approval milestones for each target included in the collaboration. Ranbaxy is also eligible to receive significant royalties on worldwide net sales of any products commercialized under the agreement.