Dr Reddy’s Laboratories may invest up to $400 million on R&D over 3-4 years in biologics and proprietary products where it sees a wave of big growth going forward.

“The R&D investments are likely to increase over the coming years. DRL may cumulatively invest in biologics in the range of $150 million to $200 million and proprietary products in the range of $150-200 million over next 3 to 4 years till these respective businesses become self-sufficient and cash accretive,” said a company source.

DRL had 21 active products in the proprietary products pipeline, of which six were in clinical development stage as on March 31, 2013, as per a filing with the US Food and Drug Administration last year.

The company had said that drugs currently in clinical development stage are targeted in the areas of cardiovascular disorders, psoriasis, pain, anti-infective atopic dermatitis/ psoriasis and migraine.

It said the new drug research on metabolic disorders/ cardiovascular disorders is in Phase-II while the remaining five drugs are in the clinical stage.

DRL vice chairman and managing director K Satish Reddy, without putting a number, said the future R&D focus of the company would be in biologics and proprietary products and expects them to add significant portion of company revenues after five years.

“The bigger investments in R&D are going in to biologics and proprietary products, which is the next big wave. So this will start adding significant portion of our revenues five years hence,” Reddy told PTI.

Reddy said as of now major portion of revenue comes from pure generic sales and currently the focus is on investing in science and technology for making complex generic drugs.

“Even within generics, we use science and technology to migrate to the next step which was complex generics and a lot of investment is in place and we have seen (in return) also in sales,” he added.

During Q3, as much as 30 per cent of DRL’s sales from the US were from complex injectables and related generics. R&D expenses during Q3 of FY 14 stood at ₹300 crore which was 8.4 per cent of the revenues in Q3 FY14 as compared to 7.1 per cent to revenues in Q3 FY13.

“R&D spend for the next financial year may go up to 9-10 per cent of the overall revenues of the company,” a senior official of DRL had earlier said.

In FY13, Dr Reddy’s invested approximately ₹767 crore in R&D activities, which accounted for 6.6 per cent of consolidated revenues, against ₹591 crore in FY2012, or 6.1 per cent of consolidated revenues.

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