Dr Reddy's eyes complex generics to retain profitability

After making its mark as a global generics giant, Dr Reddy's Laboratories Ltd is looking to move to the next level by developing complex generics, which attract little competition.

Building a sustainable product portfolio and maintaining double-digit growth with high margins is the path ahead, Kallam Satish Reddy, vice chairman and managing director of the Hyderabad-based drug maker, said.

Consequently, the company is scouting for acquisitions to strengthen its niche products portfolio. "Acquisition of technology backed company is our strategy. That is what we are going to do," said Reddy, who is also the son of the company's founder the late K Anji Reddy.

On guidance for 2014-15, Reddy said, "All I can say is growth is possible, I can also say it would be in double digits, but I can't give you any specific number."
The company's sales, which stood at $2.1 billion in 2012-13, is heading towards $2.2 billion by March.

The company is working with a clear strategy to sustain the current growth rate by developing complex generic products, besides the regular generic drugs, for the US market, Reddy said.

The pharmaceutical company has identified three-four segments related to new drug development to build its capabilities.

Generic drugs contribute 83% of Dr Reddy's Laboratories' sales, and more than half of this comes from the US.

Complex generics are copies of drugs which are difficult to synthesise or stabilise in formulations and hence require sustained efforts and higher investments.
"The attractiveness of that (normal generics) segment reduced considerably over a period of time. But, we saw the signals earlier. So, it was important that, basically sustain a business, it was important to move to the next step, and the next step was complex generics," he said.

Reddy said it is essential for the company to not depend just on generic drugs with exclusivity periods and invest in differentiated products.
"The complexity can be through the technology, complexity can be through development at the clinical side, which means basically looking at convenient dosage like that. It can be drug delivery system," Reddy said.--Cogencis