India's leading drug maker Ranbaxy Laboratories [Get Quote] is likely to announce a drug discovery research tie-up with US drug manufacturer Merck soon. The research deal will be operationalised through Ranbaxy's de-merged research and development entity, Ranbaxy Life Science Research.

Ranbaxy CMD Malvinder Mohan Singh had hinted about a possible research tie-up with a global drug major a few weeks ago. Merck will be the second global drug company after GlaxoSmithKline [Get Quote] to sign a collaborative research agreement with Ranbaxy. According to sources, the collaboration with Merck will be in the area of early drug discovery.

Ranbaxy's ongoing research collaboration with GSK [Get Quote] also relates to the pre-clinical trial phase of the new drug, with significant milestone payment and post-commercialisation royalty possibilities.

Ranbaxy declined to make any comments on the development. The revenue implication of the deal for Ranbaxy is not clear.

For Merck, the research pact will be an expansion of its Indian presence in terms of collaborative R&D arrangements. The firm is having drug discovery pacts with Indian companies, including Advinus Therapeutics and Nicholas Piramal India [Get Quote].

Ranbaxy's decision to de-merge its research operations was intended at having more collaborative research programmes involving foreign drug discovery firms.

The rising cost of drug development in traditional research bases such as the US and Europe has forced global pharma firms to look at research tie-ups in low cost destinations.