The Hindu Business Line : Dr Reddy’s now on the prowl to buy domestic companies

Hyderabad, May 28 Pharma major Dr Reddy’s Laboratories has shifted its acquisition strategy to domestic Indian companies, after aggressively buying out three companies in the global arena over the last three months.

The targets for acquisitions at home would be formulations companies, said Mr K. Satish Reddy, Chief Operating Officer (COO) and Managing Director of the company.

“We intend to acquire companies that fit into our main therapeutic areas of gastroenteritis, pain management, cardiovascular and anti-infectives which give us complementary product portfolio in new formulations,” Mr Reddy told Business Line here.

Entities which are into newer therapeutic areas (for Dr Reddy’s) such as Central Nervous System (CNS) drugs would also be considered for acquisition, he added.

The reason for lack of interest in domestic acquisitions for the company till now was “high valuations” he said, while refusing to divulge further details of the target companies in this regard.

An acquisition in India would make sense for the company on two counts. “India is a good market to launch new products and there is cost advantage too. Further, the domestic pharma industry will now head for consolidation as there is no room for too many companies,” he observed.

Dr Reddy’s hunger for acquisitions has seen at least five foreign companies coming into its fold in the last three years. These are Dowpharma’s small molecule business in the UK, BASF’s contract manufacturing business and facility in the US, Jet Generici Srl in Italy (all in 2008), Betapharm in Germany (2006) and Roche’s API Business in Mexico (2005).

The strong presence of Dr Reddy’s in key markets such as the UK, Germany, Italy, Spain and the US (which has been possible through acquisitions) will also drive the company to focus on India. “India takes prime seat in our acquisition strategy though we also wish to expand in France and Portugal in due course,” Mr Reddy said.

The company’s business in India has been on a steady growth. Its revenues in India crossed $200 million in fiscal 2008 marking a 16 per cent increase over the previous fiscal year.

It also plans to launch 20 new products in India during the present fiscal year.