Dr Reddy’s to push complex products, increase R&D spend

Pharmaceutical major Dr Reddy’s Laboratories (DRL) is planning to increase its research and development budgets over the next two quarters to focus more on the complex products.

The company has already tried its hand on such products in the form of fondaparinux and fexofenadine.

“We do not want to limit ourselves just to the opportunities coming up through patent expiries. We will focus more on limited competition and complex molecules,” Satish Reddy, DRL’s managing director, said. According to him, the company would invest 7% of the sales towards R&D going forward, an increase from the current 6%.

However, he refused to share the details of the limited competition and complex molecules being developed by the company. “There are few such compounds. But we will not be able to disclose those details at this point of time,” he said.

For the second quarter ended September 2011, the company recorded Rs2,267.9 crore in revenue, up 21% from Rs1,870.4 crore in the corresponding period of the previous fiscal. Its net profit stood at Rs307.8 crore as against Rs286.7 crore in the year-ago period.

The company’s North American revenues during the quarter stood at Rs630 crore which was primarily led by new product launches in the last 12 months and an improvement in market share in key products. Revenues from Russia and other CIS markets stood at Rs340 crore during the quarter.

Though showing signs of improvement over the first quarter, the growth in the Indian market still remained lower. The revenues from the Indian market during the quarter stood at Rs350 crore as against Rs320 crore in the corresponding period of the previous financial year. “We are slowly coming out of the issues that we were facing during the first quarter and we should be able to see improvement in the next couple of quarters,” Reddy said.

The European market, with Germany as a key component, continued to record a slower growth. Revenues from Germany  saw a decline from Rs163 crore in Q2 of fiscal 2011 to Rs118 crore in the last quarter. “The AOK supplies have begun in June 2011 and the full impact of these supplies would be felt in the second half of the current year,” he said.

The pharma major’s Mexico facility, which is under an import ban by the US FDA, is likely to go through a re-audit shortly. “Our response to the notice given by the FDA is under review. We expect a re-inspection to happen in the next couple of months. However, the net impact of the import ban is not high,” GV Prasad, the company’s vice-chairman and CEO, said.