Strides Arcolab Limited and Akorn Inc has announced the formation of a Joint Venture. The two companies had entered into a memorandum of understanding in April 2004 to enter into this Joint Venture. Akorn and Strides will each own 50 per cent of the Joint Venture. It will initially be capitalized with $2.5 million, which will be used to finance the preparation of ANDAs by Strides.

The Joint Venture will operate in the form of a new Delaware limited liability company, Akorn-Strides, LLC (A-S) under the terms of a Limited Liability Company Agreement (LLC Agreement) between Akorn and Strides. Strides will be responsible for developing, manufacturing and supplying products under an OEM Agreement (OEM Agreement) between Strides and A-S. Akorn will be responsible for sales and marketing of the products under an exclusive Sales and Marketing Agreement with A-S (Sales and Marketing Agreement) between Akorn and A-S.

Under the OEM Agreement, funds will be paid to Strides for financing the preparation, development and filing with the Food and Drug Administration (FDA) of ANDAs for generic drugs based on a mutually agreed development schedule. A-S will have exclusive rights to FDA approved generic drugs within the United States hospital, medical clinic, physician group and other wholesale drug markets. The Joint Venture has identified twenty generic injectable drugs slated for the first phase development projects, officials informed.

Under the Sales and Marketing Agreement, Akorn will market, advertise and sell FDA approved generic drugs in the United States supplied to A-S by Strides under the OEM Agreement. Akorn will be required to achieve, with respect to each generic drug, a minimum market share in the United States in order to preserve its exclusive marketing rights. Akorn will be paid a commission on the sales of these drugs.

Arthur S Przybyl, president and CEO of Akorn stated, "The formation of the Joint Venture with Strides Arcolab represents another milestone in our ongoing commitment to expand the breadth of our product portfolio for the United States hospital market. Initially, twenty products have been identified for development and manufacturing, which include both existing generic and patent expiring parenteral and lyophilized drugs. Akorn will utilize its existing sales and marketing distribution channel strategies in order to capture market share for these products."

Arun Kumar, managing director and Group CEO of Strides stated, "The conversion of the memorandum of understanding into definitive agreements is a major milestone in our strategy to be a leading player in the United States hospital market. Leveraging on Strides' aggressive product development and manufacturing skill sets and Akorn's marketing reach, the new pharmaceutical company will emerge as a significant provider of high quality parenteral and lyophilized drugs in the United States hospital segment."