NPIL will assist Merck in creating new drugs for two of the pharma giant's chosen oncology targets, in a deal worth up to $175m (€119m) per target in milestone payments, as well as royalties on any product sales. NPIL will be responsible for the entire drug discovery program, from hits to leads through to preclinical candidate selection, followed by preclinical and clinical studies to demonstrate proof-of-concept. Merck will then have the option to advance the most promising candidates into late stage trials and commercialisation. Merv Turner, senior vice president of Worldwide Licensing and External Research at Merck, said that the agreement is part of the firm's strategy of "building global alliances that expand and advance Merck's pipeline, especially in countries such as India with rapidly expanding drug discovery competencies". Indeed, the pharma industry appears to be scrambling of late to foster new partnerships across the globe, for a range of functions, particularly IT, manufacturing and clinical trials, and lately research and development (R&D) - once held sacred as a core function - is also increasingly being entrusted to companies in exotic locations. However, it has been Asia, rather than India, which has been a popular beneficiary of such investment in the preclinical arena, as the region is more well-recognised for this particular expertise. Merck itself is already well-established in Singapore, and recently sent company scouts to South Korea, looking for potential drug discovery deals with biotech companies in the country. And Merck is not the only big pharma firm showing interest there and acting on it - Pfizer recently announced it would invest around $300m into South Korean R&D over the next five years. In neighbouring China, the country's emergence as a favourite destination for outsourcing and offshoring drug development has been reflected in a flurry of activity in this field in recent times. In August, for example, China's Hutchison MediPharma, Chi-Med's R&D subsidiary, bagged a drug discovery and development agreement with drug heavy Eli Lilly. Together, the two firms will focused on drug targets in oncology and inflammation at Hutchinson's facilities in Shanghai. China's attractive cost base was a factor in Lilly's decision to partner with the firm. Although detailed financial terms were not disclosed, Hutchison will receive an upfront payment, annual R&D support fees, along with milestone payments of up to $20m-$29m per candidate at certain time-points and potential royalties on worldwide sales of any commercialised products. Hutchison will also have the option to take control of any candidates that Lilly rejects. Meanwhile, Novartis, which initially displayed a preference for India over Asia, took an about turn in August when it announced it would pull millions of planned investment dollars out of India in reaction to intellectual property (IP) fears, leaving China as the cat that got the cream. In November last year Novartis announced plans to splash its cash in Asia, intending to invest $100m (€79m) in China and an even larger sum, INR5bn (€90m), in India to establish large new R&D centres. But things have since gone sour for Novartis in India, who now plans to invest more in countries where it has IP protection after losing a long-running patent dispute in the country. It appears, however, with this latest deal in India, that Merck does not share Novartis' concerns. The country, which traditionally has not been strong in the preclinical forum, is now slowing starting to gain these capabilities and tackle various regulatory-related issues. Leading the way are three of the country's pharma bigwigs - Mumbai-based NPIL and its domestic rivals Dr. Reddy's Laboratories and Sun Pharmaceuticals Industries, all who now have spun out R&D units into separate companies in the last few months in a quest to establish themselves as serious preclinical players, so as not to miss the boat.