Galapagos, the Belgian biotechnology company, is to acquire UK-based selective drug discovery company Inpharmatica for €12.5m.

The acquisition includes assets of an estimated €6m in cash and there is also a potential earn out of up to €6.6m based on pre-agreed commercial milestones. 

The all-share deal will see Inpharmatica become part of Galapagos' own drug discovery business, BioFocus DPI, and is expected to lead to the downsizing of management, sales and administrative staff. Galapagos said it expects the acquisition to produce immediate synergies of around €1.5m per year. 

Founded in 1998, Inpharmatica employs around 35 people at its locations in London and Cambridge. The company reported an operating loss of €11.9m in 2005.