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Bayer to cut royalty for Ranbaxys Cifran

Our Bureau

MUMBAI, Nov. 29

RANBAXY Laboratories royalties and milestone payments for its once-a-day ciprofloxacin drug - Cifran OD - will be cut marginally by Bayer AG.

When contacted, Ranbaxy spokesman confirmed the development but did not elaborate on it. However, sources said that the company is negotiating with Bayer AG on the said issue.

The once-a-day drug of the molecule ciprofloxacin was licensed to Bayer AG by Ranbaxy Laboratories Ltd in 1999. The total milestone payment is $65 million, of which the company has already received about $15 million as upfront payment.

Ranbaxy is expected to receive $30 million a year as milestone payment for the drug. The next milestone payment is expected after the phase III trials are completed, the sources said.

Ranbaxy and Bayer will work together on the development of 500 mg and one gram dosage forms of the drug.

Ranbaxy had negotiated an assured stream of revenue as Bayer was likely to combine Ranbaxys technology with its own.

Analysts said that the development was expected as news of a similar drug being developed would hit Ranbaxys payments.

Bayer has a drug similar to the one Ranbaxy has developed, which is currently undergoing clinical trials, and hence, the milestone payments to Ranbaxy was bound to be affected, said an analyst.

The earning prospects of Ranbaxy Laboratories will not be affected in the current and next fiscal year since the launch of the drug is expected only by mid-2003, she said.

However, a short-term negative sentiment in the stock markets is expected, she said.5The patent for ciprofloxacin is held by Bayer AG and expires in early 2003. 5Currently, the drug is marketed in twice-a-day form.