It's a new direction for the pharmaceutical giants, who have teamed up with Chi-Med, a company that uses traditional Chinese medicine as an under-exploited reservoir for the development of novel drugs for the global pharmaceutical market. Plants, particularly those that have been used as traditional medicines, have a long-established record of efficacy and safety. Under the terms of the agreement, the primary goal is to leverage the expertise of both Merck and Chi-Med in oncology research. Financial details of the collaboration were not disclosed. This collaboration will also be an opportunity to address important unmet medical needs by accessing natural products, a rich source of diversified chemical components with drug-like properties. "Over the last four years, we have established a solid R&D organization that has brought two candidates into US phase II clinical studies in the oncology and auto-immune areas," said Christian Hogg, CEO of Chi-Med. "We are delighted to partner with Merck to broaden our research activities in the oncology area. Merck has a good record of achievement in the development and commercialisation of oncology products such as Erbitux. In addition, we believe this collaboration further validates Chi-Med's drug discovery capability." From 1999 to 2004 the Chinese pharmaceutical market grew at a compound annual growth rate ("CAGR") of 20 per cent from $15.1bn (€11.8bn) to $37.2bn. The company currently has two candidates in clinical development in both the US and China. HMPL-002, a radiosensitiser for head and neck and non-small cell lung cancer (NSCLC), is in Phase I/II in the US and in proof of concept in China. HMPL-004, an inhibitor to a group of inflammatory cytokines, for treatment of inflammatory bowel diseases, including Crohn's Disease and Ulcerative Colitis, is in Phase II in the US and in proof of concept in China. "We are delighted to complement and enrich our oncology research with this collaboration. It will also allow us to extend our interaction with the emerging Chinese pharmaceutical industry that builds on the long-standing tradition and knowledge of Traditional Chinese Medicine combined with modern scientific technology," said Dr. Ulrich Betz, Preclinical R&D, Head of Strategic Innovation and Research Portfolio Management for Merck. "We are looking forward to a productive collaboration with Chi-Med."