Will consider inorganic growth opportunities but focus on R&D

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Published: August 6, 2015 12:37:06 AM

Dr Reddy's Laboratories (DRL) is planning to expand footprints in western European countries like France, Italy and Spain

Dr Reddy’s Laboratories(DRL) is planning to expand footprints in western European countries like France, Italy and Spain. To counter the slowdown in the US and macroeconomic challenges in Russia and Venezuela, the company plans to focus on complex generics, biosmilars and proprietary products. Speaking to Neha Bothra, co-chairman and chief executive of Dr Reddy’s GV Prasad, says the company will evaluate geographic expansion on its own and with partners. Excerpts:

Can you outline the strategy to achieve the goal of being counted among the top-10 global generic players?

We are a research and development (R&D) driven company with focus on science and technology and we have globalised our R&D capabilities with centres in India, Holland, the UK and the US. Driving R&D productivity and leveraging that to create products are our strategy. We will also consider inorganic growth opportunities but the main focus will remain on R&D.

Could you highlight some of the main focus areas for DRL at this point?

Our main business continues to be generics and the big markets include the US, Russia and India, so growing in these markets is a focus. Around 95% of our business is generics and this will continue for next few years with the addition of proprietary products, in the next three to five years, and biosimilars. We plan to accelerate the launch of biosimilars and proprietary business products in the emerging markets and other countries. But the big revenue driver is generics that would contribute about 80% to the total revenue.

Can you give us some idea on biosimilars’ pipeline, revenues and expected launch timeline?

Biosimilars will take some time to scale up in terms of revenues. At present, they are $50 million or so. As we register our products in various markets, we will see revenue growth. Our big revenue market will be the US, where we have partnered for the first few assets and will earn revenue streams from that.

Given pricing pressure in the US market coupled with the slower pace of drug approvals, how di you plan to grow your topline? Also, the currency depreciation in Russia and political situation in Venezuela have further challenged sales growth. How are you dealing with these worries?

In the US, our complex generics strategy is working out well and we are looking to revamp our quality management system. In Russia, we can’t do much about the weakening currency, but we are managing risk carefully, tweaking our pricing given the depreciation, so at least a small portion we will get back. And we remain committed to that market. In Venezuela, collecting payment is a challenge, which has not been coming in regularly. We are in touch with the government.

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