The Hindu Business Line : Dr Reddy’s acquires Dow’s molecule biz

Hyderabad, April 1 Dr Reddy’s Laboratories Ltd has announced that it has entered into a definitive agreement with The Dow Chemical Company to acquire a portion of Dowpharma Small Molecules business associated with its UK sites in Mirfield and Cambridge.

The financial terms and conditions of the transaction are not being disclosed at this point in time. The transaction is scheduled to close on April 30 pending regulatory approval.

The acquisition will include the relevant business, customer contracts, associated products, process technology, intellectual property, trademarks as well as the transfer of the facilities at Mirfield and Cambridge in the UK.

The two sites and the business of Dow Chemical Company, the $54-billion diversified chemical company, which delivers a broad range of products and services to customers across 160 countries, employ around 80 people.

Dr. Reddy’s will, as per the press release issued here today said, also have a non-exclusive licence to Dow’s Pfenex Expression Technology™ for bio-catalysis development.

Mr K. Satish Reddy, Managing Director & Chief Operating Officer, Dr. Reddy’s Laboratories, said: “The proprietary chiral and bio-catalysis technology at the Cambridge site and the scale-up capability in the Mirfield site will add significant value to the company”, the release added.

This is the third acquisition that the Hyderabad-based pharma major has made in the last three years. In November, 2005 Dr Reddy’s acquired the manufacturing facilities of Roche in Mexico for $59 million. In March, 2006, it made its biggest buy, when it acquired the German company Betapharm for Euro 480 million.

The Vice-Chairman and CEO of Dr Reddy’s, Mr G.V. Prasad, described the acquisition of Dowpharma small molecules business as more akin to the company’s Mexican business in terms of bringing in synergies.

He told Business Line that the acquisition also brings a business of $25 million, in addition, the Research and Development Centre at Cambridge, which has about 20 researchers, a host of patents and intellectual properties.

A bigger advantage that Dr Reddy’s could gain is the good platform that Dowpharma has in chiral chemistry, as well as leverage it for the company’s API (active pharmaceutical ingredients) business, he said.

Dr. Reddy’s does have expertise in making chiral molecules, but follows the classical methods. The synergy would give added strengths. It will also bring strengths in industrial synthesis of complex prostaglandins and carbohydrate chemistry. These newer capabilities will add to the existing R&D and commercial infrastructure to position Dr. Reddy’s as a leading provider of Custom Pharmaceutical Services globally, Mr Prasad added.