By notching up a turnover of Rs 6,509 crore or $1.51 billion for FY07, the Hyderabad-based company has displaced arch rival Ranbaxy Laboratories ($1.34 bn CY2006).
HYDERABAD: It took 22 years for Kallam Anji Reddy to take Dr Reddy’s Laboratories to the pole position in Indian pharma.
The doyen of Indian generics says the company will remain there for the next 12 months at least.
By notching up a turnover of Rs 6,509 crore or $1.51 billion for FY07, the Hyderabad-based company has displaced arch rival Ranbaxy Laboratories ($1.34 bn CY2006).
“While I do not know how long we will remain there, I have no worry about being a billion dollar plus company hereon, just on the strength of our core business.”
He said he did a quick check and found that Dr Reddy’s is now among the top 50 companies globally and among the top 10 generics companies in the world.
Son-in-law G V Prasad who is also the vice chairman and CEO, interjected: “I would like to add that we are also the most profitable Indian pharmaceuticals company this year.”
The company beat the street estimates to notch up a net profit figure of Rs 325 crore, nearly twice street forecast of around Rs 176 crore.
Full year profit rose 483% to Rs 933 crore from Rs 160 crore.
However, the patriarch struck a note of caution stating the numero uno tag would be difficult to hold on to after this fiscal, though it may regain it once again thereafter.
“Next year, that is 2008-09, we will be the No. 2 as we may not have many upsides,” he said.
“You can’t expect dowry from the father-in-law, which in this case is the generics business, every year,” he added, in a lighter vein.
It is not difficult to understand why.
Revenues from acquisitions and associates companies, as also authorised generics, were the prime driver for earnings in the 12 months ending March 31, 2007.
Revenues from authorised generics contributed 24% and acquisitions added another 21% to the total revenues in FY07.
“There is no authorised generic product this year,” Prasad said, while it is anybody’s guess if the company will go in for another larger acquisition to add to its size in a hurry this year.
“However, the long-term business outlook remains robust,” Prasad said.
He was seeking to allay fears on the street that the performance of Dr Reddy’s German acquisition, betapharm, and the pricing scenario in Germany would drive down the company during current year.
The company will post robust number on the basis of core business alone, which clocked revenues upwards of $1 billion in FY07.
Though Dr Reddy’s does not usually give a guidance, Prasad was confident the company would grow 20-25% during the current year.
“Though there are pricing pressures in the German market due to regulatory changes still it is more profitably than many other markets”, Prasad stressed. However, Dr Reddy’s is putting in place measures to increase or at least negate the pressure on betapharm.
For starters it has negotiated a new non-exclusive supply agreement with Salutas, a subsidiary of Hexal while it has also decided to shift the production of key products to Dr Reddy’s manufacturing network. The attempt would be to shift at least the top 10 products which add to the profitability of the company, Prasad added.
“Despite price erosion in the European markets we have been able to hold on to our sales in value terms through key new product launches and higher volumes in existing products, Satish Reddy, managing director and COO, said.
8 new molecules for mega bucks
And then if one has the patience to wait for a few years the company is set for multi-billion dollar opportunities in with its discovery led research set for fruition on various fronts.
There are eight new chemical entities (NCE)s including five at the clinical stage, in development, Kallam Anji Reddy said, giving out the latest on some of them.
Dr Reddy’s is filing an Investigational New Drug Application (IND) later this month for phase III trials in Denmark for Balaglitazone, a type 2 diabetes drug it is co-developing Danish firm Rhoescience. Balaglitazone is the only molecule to be discovered by an Indian company.
Patents on existing drugs in the same class are expiring in 2011 and balaglitazone has bright prospects for outlicensing, he added.
An IND has already been filed in Europe for cancer drug DRF 1042 and is currently being reviewed by the authorities and is likely to enter phase III clinical trial soon, he added.
Likewise RUS 3108 an atherosclerosis drug has completed phase I trials and will enter Phase II soon, he added.
“We will not be content with developing just one molecule. Internally we have decided we will take at least three molecules further in development”, he asserted.
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