The contract is worth up to $110m for the Indian firm's Research & Development unit, in addition to royalties on sales if any compounds spawned out of the alliance reach commercialisation, as well as marketing rights in certain regions. Both NPIL and Lilly will independently but simultaneously carry out early clinical development programmes on two different compounds directed against the same target. After an evaluation of the proof-of-concept data, one or more of the drug candidates will be chosen to progress through to the clinical stages. No specifics were forthcoming on the type of studies being undertaken, except that the two firms are collaborating together to develop a number of drugs for a range of different disease indications. The idea behind this particular partnership is a sharing of the risk and reward that comes hand in hand with drug development, designed so as to "improve the probability of success of the programme". Robert Armstrong, Lily's vice president of global external R&D said that this approach is a "is a prime example of the innovative risk-sharing relationships that Lilly is building around the globe". The arrangement is similar to one that it forged with NPIL back in January 2007, which, according to Swati Piramal, NPIL's director of strategic alliances and communications, "has seen benefits accruing to both partners in terms of cost, quality and time". "These partnerships are a win-win for both companies", he added. Indeed, the pharma industry appears to be scrambling of late to foster new and innovative partnerships with external providers 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. NPIL is one of a handful of dominant drug manufacturers in the Indian space who have recently spun out separate and dedicated R&D divisions in order to fill a gap in the market and tap into what is a growing area of business in the country. Big pharma companies are already showing an interest in these new offshore R&D resources. In November Merck & Co. turned to NPIL for its latest research collaboration. The firm is now assisting Merck in creating new drugs for two of the pharma giant's chosen oncology targets, in a deal worth up to $175m per target in milestone payments, as well as royalties on any product sales. NPIL is 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. In a similar vein to Lilly, Merv Turner, senior vice president of Worldwide Licensing and External Research at Merck, said at the time 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".