India-based pharmaceutical company Dr Reddy’s Laboratories has agreed to a biosimilar deal with German pharmaceutical firm Merck KGaA, for the development of cheap copies of biotech cancer drugs.

Unlike conventional treatments, biotech drugs are impossible to copy exactly, with generic companies forced to develop close copies that need to be sold as separate products.

This had proven to be something of a barrier of entry for generic drug companies, but with patents beginning to lapse, regulators have established guidelines for the development of biosimilar versions of complex biotech medicines, posing a significant threat to leading biotech firms.

Merck has a portfolio of multiple sclerosis and cancer drugs that is at risk from cheap biosimilar copies, but will now develop its own biosimilars in collaboration with Dr. Reddy’s.

In accordance with the agreement, Merck and Dr. Reddy’s will co-develop molecules, with Dr. Reddy’s taking on the lead early product development and testing prior to Merck taking responsibility for manufacturing and late-stage trials. Merck will then handle commercialisation of the product, paying Dr. Reddy’s royalties.

However in the US, both companies will co-commercialise the drugs on a profit-sharing basis.

Merck executive board member Stefan Oschmann said: "Sharing know-how, risks and rewards is the right approach to enter the emergent biosimilars market and will be a win-win for both parties."