Sun Pharmaceuticals needs to be complimented. Not for the rate of its successful acquisitions but for attempting to do something that no Indian company has done before.

Indian pharmaceutical companies are known globally for their low cost of production and reverse engineering of patented products. New product discoveries and taking them to a commercial scale is barely known. The few firms that have ventured in the high-cost, high-risk game of new molecule discovery are yet to come out with a viable product.

On account of the high cost of research, Indian companies like Glenmark out-licensed the drug they developed in the initial stages for a fee. The high cost involved in later phases of drug development meant that Indian companies looked for a deep-pocketed strategic partner who would not only finance the research but also help them market the product globally.

What Sun Pharma has done is the exact opposite – it entered into a licensing agreement with German multinational Merck’s investigational therapeutic antibody candidate, Tildrakizumab, to be used for treatment of plaque psoriasis.

As per the agreement Sun Pharma will acquire worldwide rights to the product for use in all human indications fromMerck in exchange for an upfront payment of $80 million. Moreover, Sun Pharma will fund Merck for clinical development and regulatory activities going forward. Upon product approval, Sun Pharma will be responsible for regulatory activities, including subsequent submissions, pharmacovigilance, post-approval studies, manufacturing and commercialisation of the approved product.

This bold move by Sun Pharma announces the company’s entry into the global market, if not on the research front but surely on the marketing front. In a report, Morgan Stanley says that “Sun has clearly taken on significantly higher financial risks to build future pipeline but at the same time, it has addressed a key investor concern- scaling up its business beyond generics.”

JM Financial says that the product, if successful, will help Sun Pharma tap a $1 billion plus opportunity. A Johnson and Johnson product in the treatment of plaque psoriasis has sales of $1.5 billion.

But for Sun Pharma the risk will not be restricted to the $80 million it has paid. Morgan Stanley says that Sun Pharma will end up spending $250-300 million before the product reaches the market. But irrespective of the cost involved, Sun Pharma’s move showcases the fact that the company is willing to take bold steps to become a global player.