GlaxoSmithKline plc (GSK) has reached has purchased Pliva's proprietary R&D arm renowned for its research into macrolides, in Zagreb, Croatia in a deal worth $50 million.

Under the terms of the agreement, Pliva will receive an upfront payment of $35 million and, conditional on the entry of certain early stage projects into clinical development, contingent payments totalling up to $15 million.

Pliva will receive contingent royalty-based consideration pending commercialisation of certain assets. GSK will take on all 130 employees of the Pliva Research Institute and will gain full ownership of the company, including all intellectual property and certain other assets such as an oncology early-stage clinical asset and pre-clinical compounds emerging from the macrolide research.

The closing of the transaction is expected to occur during April 2006, subject to obtaining necessary regulatory approvals.

Allan Baxter, senior vice president of drug discovery at GSK, said, "We are delighted to take this opportunity to expand GSK's successful R&D model which will benefit from the unique capabilities of the team at the research institute. This centre of excellence will strongly complement and enhance our specific expertise and commitment to the discovery of new chemical entities across several therapeutic areas through application of unique platform technologies."

Zeljko Covic, chief executive officer, Pliva, commented, "We are pleased to have delivered upon our promise of exiting the proprietary segment in this relatively short period of time. This will allow us to now fully focus on our generics business."