Ranbaxy will demerge R&D operations by end of 2007

India-based pharmaceutical company Ranbaxy is planning to demerge its R&D operations and has said it will finalise the plans by the end of 2007.

Ranbaxy's board will soon take up the proposal detailing the structure.

Local media reports have said that the models under consideration include those followed by domestic rivals Sun Pharmaceuticals and Nicholas Piramal, which have already hived off their research operations in separate entities so far in 2007.

Other Indian companies anxious to divest risk, include Glenmark, which has demerged its generics business into a separate entity, while Dr Reddy's has formed a separate company, Perlecan Pharma, and has brought in ICICI Ventures and Citigroup Venture Capital to focus on drug development.

Ranbaxy will hive off drug discovery operations, where between nine and 10 investigational compounds will be transferred to the new entity. Generics research will continue to be part of the main company, while innovative research will be divested away.

Indian industry analysts estimate Ranbaxyís demerger to result in potential savings of around USD 25m in 2008. The company spent USD 85m on R&D in 2006, while in 2007 the figure of USD 100m has been quoted.

Ranbaxyís CEO, Malvinder Singh, said: ìThe proposed de-merger of our drug discovery research arm will provide greater flexibility and impetus to our drug discovery research programmes, while unlocking significant value for the company and its shareholders.î