Hutchison China MediTech (Chi-Med), the mainland subsidiary of Hutchison Whampoa that is listed on London's Alternative Investment Market, yesterday announced its collaboration with US-based global pharmaceutical giant to develop Western drugs for treating cancer and inflammation.

Under the drug discovery and development agreement, Hutchison MediPharma Ltd. (Shanghai) , Chi-Med's wholly-owned unit that focuses on drug research, will be responsible for the discovery phase activities.

"In the development project, Chi-Med mainly contributes our skills, technologies and manpower for identifying and selecting several clinical candidates. In other words, we provide human resources only," Chi-Med chief executive Christian Hogg told The Standard.

Eli Lilly will provide financial support for the project. It will give Hutchison MediPharma upfront payments, including the annual R&D fee. 

MediPharma will also receive milestone payments - bonuses granted to parent Chi-Med when significant progress has been made during the drug development process - from Eli Lilly.

Milestone payments each time will range from US$20 million (HK$156 million) to US$29 million.

Eli Lilly will also provide MediPharma with potential royalties on worldwide sales of any commercialized products resulting from the collaboration.

Eli Lilly will take over the project's later part - the development phase - after Chi- Med assumes its primary responsibility for the discovery phase.

"It usually takes about eight to 12 years for a new drug to launch in the market," said Samantha Du, chief scientific officer for Chi-Med and managing director of MediPharma.