G. Naga Sridhar

Hyderabad, Oct. 29 Dr Reddy’s Laboratories Ltd is pinning hopes on winning an over-$3.5-billion sick fund tender in Germany next month to increase its revenue and profitability in the market there.

The tender, the first Europe-wide tender by Germany’s largest health insurance fund Allgemeine Ortskrankenkasse (AOK), is for generic procurement contracts for 64 active pharmaceutical ingredients.

“We are bidding for the tender and optimistic about the result. It will make a big difference to us in the European revenues in particular and global revenues in general,” Mr Saumen Chakraborti, Chief Financial Officer, Dr Reddy’s Laboratories Ltd, told Business Line here.

The value of the tender is €2.3 billion ($3.5 billion approximately).

Tender Lifeline

Apparently, the tender is vital for Dr Reddy’s, which is struggling to make its German subsidiary profitable for the last two years.

In the second quarter ended September 2008, Betapharm revenues had, however, grown by 68 per cent at $60 million but the company still has a long way to go to turn profitable.

“Though the full turnaround of Betapharma is imminent, there will be more clarity on the profitability of German markets only after the completion of bidding of AOK tender in the second half of November,” Mr Chakraborti said.There is a possibility of Dr Reddy’s bidding for all 64 drugs on its own instead of roping in partners. “This is a vital aspect and I cannot disclose our strategy,” he added.

(This article was published in the Business Line print edition dated October 30, 2008)
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