The $1.7-billion pharma giant Dr Reddy?s Laboratories is rewiring its strategy. The company, which is better known for its exploits outside India ? most notably Russia and Germany ? wants to take its game to the next level in the branded generic segment in India and achieve its goal of earning a revenue of $3 billion by fiscal 2013.
Having narrowed its focus to four key markets ? North America, Europe, Russia and India ?the company wants to now concentrate on discovery-led innovation and manufacturing, especially in emerging markets such as India, with a stronger sales force and a slew of new products.
Dr Reddy’s wants to raise the bar from 18 billion finished dosage units in 2010-11 to 25 billion units in a period of three years. In the process, the company also wants to concentrate on the Indian market by targeting more chronic diseases, which are mostly volume driven. Emerging markets outside of North America, Europe and Japan, once attractive to the pharmaceutical industry for low-cost manufacturing and clinical trials, are now attractive pharmaceutical markets themselves.
Talking to FE, Umang Vohra, the company’s chief financial officer, said that revenue for the July-September quarter stood at $76 million, which represents a year-on-year growth of 9%. There is a gradual improvement in the current quarter?s growth, he said. ?On the operations front, we are taking the necessary steps internally to address some of the weaknesses, and we hope to do better in the forthcoming quarters. Most of our top brands did well, growing much above the average domestic business growth rates. Our biosimilars portfolio continues to do well, growing by 22% over the previous year. During the quarter, we launched three new products,? he said.
?We have seen a sequential improvement in the growth rate. Earlier, it was 6%. Now it is around 9%. Sales force realignment as well as brand promotion are the reasons for this. Over the last few years, as we have begun to demonstrate higher success from our limited competition or complex generic opportunities, there has been a conscious shift in our approach towards the generic R&D. The emphasis now is more towards quality and complexity of our filings rather than overall coverage of the patent expiries. Our objective is to increase the share of complex generics in our portfolio, and consequently we are calibrating our R&D spends in line with this,? he said.
Most of the investments in R&D will be towards product development for the US market and other geographies as well. The company has the process R&D for generics and active pharmaceutical ingredients or APIs, a biosimilars development programme, and proprietary products. A portion of it is new chemical entities (NCEs) but a large portion of it is differentiated formulations. It involves roping in contract research organisations, research worldwide as well as clinical development.
The company is also working on stabilisation of the field force and attrition besides therapy gaps and product positioning.
?Being a leader in the home market is an important priority. It is our core market and it is poised to grow to $40 billion from a current value of $15 billion in the next 10 years,? Vohra said. He said that the main challenge lay in planning growth intelligently so that medical representatives are placed in the best and most lucrative territories targeting chronic diseases.
Revenue for the global pharmaceutical contract manufacturing sector is expected to reach $64.07 billion in 2016. This is a great opportunity for API manufacturers from both India and China. Manufacturing of APIs is moving from established western markets to more emerging regions, particularly India and China, as the fluctuating prices of raw materials in these countries is a cause for concern for many API producers. When material costs are high, profit margins are eroded, a factor which could influence growth in the Asia-pacific API market.