Ranbaxy To Get $15 M Less From Bayer For Cipro

Bayer AG has decided to prune the size of the milestone payment to Ranbaxy for its once-a-day ciprofloxacin brand, Cipro OD, from $55 million to $40 million. At the same time, it has also reduced its percentage for royalty payments to be given on the sales of Cipro OD.

Currently, the patented molecule is undergoing phase-III trials in the US. Bayer AG has also developed its own formulation of once-a-day ciprofloxacin and now can source cipro from two different sources.

Analysts say that Bayer's decision could result in higher volumes at a lower price for Ranbaxy and may not eventually adversely impact the company's topline growth.

The stock price at both the Bombay and National Stock Exchanges remained flat, closing at Rs 752, up 0.62 per cent on the BSE and 0.8 per cent on the NSE.

An analyst with a broking firm said, "Now the uncertainty of whether Ranbaxy will receive the payment for the licensing of cipro is killed."

A Ranbaxy spokesperson said, "This is a fallout of the renegotiation of the license agreement. Now we will surely get this amount. Ranbaxy is assured of the payment and therefore is a very positive development." "The phase-III trials are doing well and the molecule is active," he added.

Cipro OD was licensed to Bayer in 1999. Earlier, in 2001, there were rumours that Bayer may not give the milestone payments as the German pharma company was researching a similar formulation.

Part of the licensing agreement was that Ranbaxy would retain the rights to market cipro in India, CIS countries and some parts of the Middle East.

The global patent for ciprofloxacin is held by Bayer and the patent expires in 2003. It is estimated to be around $1.3 billion.

For Cipro OD , Ranbaxy also has a domestic tie-up with Cipla and Glaxo to market the Cipro OD in India. It will manufacture the dosage form for Cipla and Glaxo and each will market it under its own brand name.