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|Traded as||NSE: DRREDDY|
|Headquarters||Hyderabad, Andhra Pradesh, India|
|Revenue||$2.1 billion (2012)|
|Net income||$300 million (2012)|
|Traded as||NSE: DRREDDY|
|Headquarters||Hyderabad, Andhra Pradesh, India|
|Revenue||$2.1 billion (2012)|
|Net income||$300 million (2012)|
Dr. Reddy's Laboratories Ltd. (NSE: DRREDDY, BSE: 500124, NYSE: RDY) is an integrated pharmaceutical company focused on providing medicines through its three business segments: Global Generics segment, Pharmaceutical Services and Active Ingredients (PSAI) segment and Proprietary Products segment. The company was founded by Dr. Anji Reddy, who had previously worked in the publicly owned Indian Drugs and Pharmaceuticals Limited, of Hyderabad, India. Dr. Reddy's manufactures and markets a wide range of pharmaceuticals in India and overseas. The company has over 190 medications, 60 active pharmaceutical ingredients (APIs) for drug manufacture, diagnostic kits, critical care, and biotechnology products.
Dr. Reddy's began as a supplier to Indian drug manufacturers, but it soon started exporting to other less-regulated markets that had the advantage of not having to spend time and money on a manufacturing plant that would gain approval from a drug licensing body such as the U.S. Food and Drug Administration (FDA). By the early 1990s, the expanded scale and profitability from these unregulated markets enabled the company to begin focusing on getting approval from drug regulators for their formulations and bulk drug manufacturing plants in more-developed economies. This allowed their movement into regulated markets such as the US and Europe.
By 2007, Dr. Reddy's had six FDA plants producing active pharmaceutical ingredients in India and seven FDA-inspected and ISO 9001 (quality) and ISO 14001 (environmental management) certified plants making patient-ready medications – five of them in India and two in the UK.
In 2010, the family-controlled Dr Reddy's denied that it was in talks to sell its generics business in India to US pharmaceutical giant Pfizer, which had been suing the company for alleged patent infringement after Dr Reddy's announced that it intended to produce a generic version of Atorvastatin, marketed by Pfizer as Lipitor, an anti-cholesterol medication. Reddy's was already linked to UK pharmaceuticals multinational Glaxo Smithkline.
Dr. Reddy's originally launched in 1984 producing generic medications. In 1986, Reddy's started operations on branded formulations. Within a year Reddy's had launched Norilet, the company's first recognized brand in India. Soon, Reddy's obtained another success with Omez, its branded omeprazole – ulcer and reflux oesophagitis medication – launched at half the price of other brands on the Indian market at that time.
Within a year, Reddy's became the first Indian company to export the active ingredients for pharmaceuticals to Europe. In 1987, Reddy's started to transform itself from a supplier of pharmaceutical ingredients to other manufacturers into a manufacturer of pharmaceutical products.
The company's first international move took it to Russia in 1992. There, Dr. Reddy's formed a joint venture with the country's biggest pharmaceuticals producer, Biomed. They pulled out in 1995 amid accusations of scandal, involving "a significant material loss due to the activities of Moscow's branch of Reddy's Labs with the help of Biomed's chief executive". Reddy's sold the joint venture to the Kremlin-friendly Sistema group.
In 1993, Reddy's entered into a joint venture in the Middle East and created two formulation units there and in Russia. Reddy's exported bulk drugs to these formulation units, which then converted them into finished products. In 1994, Reddy's started targeting the US generic market by building state of art manufacturing facility.
Reddy's path into new drug discovery involved targeting speciality generics products in western markets to create a foundation for drug discovery. Development of speciality generics was an important step for the company's growing interest in the development of new chemical entities. The elements involved in creating a speciality generic, such as innovation in the laboratory, developing the compound, and sending the sales team to the market, are also stages in the development of a new specialty drug. Starting with speciality generics allowed the company to gain experience with those steps before moving on to creating brand-new drugs.
Reddy's also invested heavily in building R&D labs and is the only Indian company to have significant R&D being undertaken overseas. Dr. Reddy's Research Foundation was established in 1992 and dedicated to research in area of new drug discovery. At first, the foundation's drug research strategy revolved around searching for analogues. Focus has since changed to innovative R&D, hiring new scientists, especially Indian students studying abroad on doctoral and post-doctoral courses. In 2000, the Foundation set up an American lab in Atlanta, dedicated to discovery and design of novel therapeutics. The lab is called Reddy US Therapeutics Inc (RUSTI) and its main aim is the discovery of next-generation drugs using genomics and proteomics. Reddy's research thrust focused on large niche areas in western markets – anti-cancer, anti-diabetes, cardiovascular and anti-infection drugs.
Reddy's international marketing successes were built on a strong manufacturing base which itself was a result of inorganic growth through acquisition of international and national facilities. Reddy's merged Cheminor Drug Limited (CDL) with the primary aim of supplying active pharmaceutical ingredients to the technically demanding markets of North America and Europe. This merger also gave Reddy's an entry into the value-added generics business in the regulated markets of APIs.
By 1997, Reddy's was ready for the next major step. From being an API and bulk drug supplier to regulated markets like the USA and the UK, and a branded formulations supplier in unregulated markets like India and Russia, Reddy's made the transition into generics by filing an Abbreviated New Drug Application (ANDA) in the USA. The same year, Reddy's out-licensed a molecule for clinical trials to Novo Nordisk, a Danish pharmaceutical company.
It strengthened its Indian manufacturing operations by acquiring American Remedies Ltd. in 1999. This acquisition made Reddy’s the third largest pharmaceutical company in India, after Ranbaxy and Glaxo (I) Ltd., with a full spectrum of pharmaceutical products, which included bulk drugs, intermediates, finished dosages, chemical synthesis, diagnostics and biotechnology.
Reddy’s started exploiting Para 4 filing as a strategy in bringing new drugs to the market at a faster pace. In 1999 it submitted a Para 4 application for Omeprazole, the drug that had been the cornerstone of its success in India. In December 2000, Reddy’s had undertaken its first commercial launch of a generic product in the USA., and its first product with market exclusivity was launched there in August 2001. The same year, it also became the first non-Japanese pharmaceutical company from the Asia-Pacific region to obtain a New York Stock Exchange listing, ground-breaking achievements for the Indian pharmaceutical industry.
In 2001 when Reddy’s became the first Indian company to launch the generic drug, fluoxetine (a generic version of Eli Lilly and Company’s Prozac) with 180 day market exclusivity in the USA. Prozac had sales in excess of $1 billion per year in the late 1990s. Barr Laboratories of the U.S. obtained exclusivity for all of the approved dosage forms (10 mg, 20 mg) except one (40 mg), which was obtained by Reddy’s. Lilly had numerous other patents surrounding the drug compound and had already enjoyed a long period of patent protection. The case to allow genertic sales was heard twice by the Federal Circuit Court, and Reddy’s won both hearings. Reddy’s generated nearly $70 million in revenue during the initial six-month exclusivity period. With such high returns at stake, Reddy’s was gambling on the success of the litigation; failure to win the case could have cost them millions of dollars, depending on the length of the trial.
The fluoxetine marketing success was followed by the American launch of Reddy's house-branded ibuprofen tablets in 400, 600 and 800 mg sizes, in January 2003. Direct marketing under the Reddy’s brand name represented a significant step in the company’s efforts to build a strong and sustainable US generic business. It was the first step in building Reddy’s fully-fledged distribution network in the US market.
In 2001 Reddy’s completed its US initial public offering of $132.8 million, secured by American Depositary Receipts. At that time the company also became listed on the New York Stock Exchange. Funds raised from the initial public offering helped Reddy’s move into international production and take over technology-based companies.
In 2002, Reddy’s started its European operations by acquiring two pharmaceutical firms in the United Kingdom. The acquisition of BMS Laboratories and its wholly owned subsidiary, Meridian UK, allowed Reddy’s to expand geographically into the European market. In 2003 Reddy’s also invested $5.25 million (USD) in equity capital into Bio Sciences Ltd.
Auriegene Discovery Technologies, a contract research company, was established as a fully owned subsidiary of Reddy’s in 2002. Auriegene's objective was to gain experience in drug discovery through contract research for other pharmaceutical companies. Reddy’s entered into a venture investment agreement with ICICI Bank, an established Indian banking company. Under the terms of the agreement, ICICI Venture agreed to fund the development, registration and legal costs related to the commercialization of ANDAs on a pre-determined basis. Upon commercialization of these products, Dr. Reddy's pays ICICI Venture royalty on net sales for a period of 5 years.
By the early 2000s (decade), Reddy's had successfully grown into a fully integrated pharmaceutical company. It had been less than a decade since the beginning of its expansion in the mid-1990s. The company's growth so far had been founded on a targeted program of inorganic growth and investments in process R&D. It had chosen a "high risk-high gain" strategy for growth by going into direct competition with existing patent holders. A major challenge for Reddy’s in the early 2000s (decade) was to find ways to de-risk its overall strategy. The company elected to expand globally, and went on a spree of acquisitions.
In March 2002, Dr. Reddy’s acquired BMS Laboratories, Beverley, and its wholly owned subsidiary Meridian Healthcare, for 14.81 million Euros. These companies deal in oral solids, liquids and packaging, with manufacturing facilities in London and Beverley in the UK. Recently, Dr. Reddy’s entered into an R&D and commercialization agreement with Argenta Discovery Ltd., a private drug development company based in the UK, for the treatment of COPD.
With growing success in the generics market, Reddy’s also came to realize the need for developing marketing and distribution capabilities in the USA. Reddy’s was considering several options in 2003 for marketing their hypertension product. The company already had one tie-up with Pharmaceutical Resources, Inc. to market Fluoxentine 40 mg tablets. It also had a tie-up with Par Pharmaceuticals Inc., to produce and market over-the-counter drugs in the U.S. In addition to the United States, Reddy’s generics business had established a presence in the UK, which became a platform for expansion into other countries in Europe. Its API business had sales in over 60 countries, with the US and India being the most significant revenue contributors. The branded formulations business was active in over 30 countries and Reddy’s was a significant player in the Indian and Russian markets. The business planned to significantly increase its presence in China, Brazil and Mexico in the near future.
Dr. Reddy’s entered into a 10-year agreement with Rheoscience A/S of Denmark for the joint development and commercialization of Balaglitazone (DRF-2593), a molecule for the treatment of type-2 diabetes. Rheoscience holds this product’s marketing rights for the European Union and China, while the rights for the US and the rest of the world will be held by Dr. Reddy’s. Dr. Reddy’s conducted clinical trials of its cardiovascular drug RUS 3108 in Belfast, Northern Ireland, in 2005. The trials were conducted to study the safety and the pharmacokinetic profiles of the drug, which is intended for the treatment of atherosclerosis, a major cause of cardiovascular disorders.
Dr. Reddy’s entered into a marketing agreement with Eurodrug Laboratories, a pharmaceutical company based in Netherlands, for improving its product portfolio for respiratory diseases. It introduced a second-generation xanthine bronchodilator, Doxofylline, which is used for the treatment of asthma and chronic obstructive pulmonary disease (COPD) patients.
In 2004, Reddy’s acquired Trigenesis Therapeutics Inc; a US-based private dermatology company. This acquisition gave Reddy’s access to proprietary products and technologies in the dermatology sector.
Dr. Reddy’s Para 4 application strategy for generic business received a severe setback when Reddy’s lost the patent challenge in the case of Pfizer’s drug Norvasc (amlodipine maleate), a drug indicated for the treatment of hypertension and angina. The cost involved in patent litigation as well as the unexpected loss of the patent challenge affected Reddy’s plans to start speciality business in the US generic markets.
In March 2006, Dr. Reddy’s acquired Betapharm Arzneimittel GmbH from 3i for 480 million Euros. This is one of the largest-ever foreign acquisitions by an Indian pharmaceutical company. Betapharm is Germany’s fourth-largest generics pharmaceuticals, with a 3.5% market share, including 150 active pharmaceutical ingredients.
Reddy’s has promoted India’s first integrated drug development company Perlecan Pharma Pvt Ltd together with ICICI ventures capital fund management company Ltd and Citigroup Venture Capital International growth partnership Mauritius Ltd. The combined entity will undertake clinical development and out-licensing of new chemical entity assets.
Dr. Reddy's is presently licensed by Merck & Co. to sell an authorized generic version of the popular drug simvastatin (Zocor) in the USA. Since Dr. Reddy's has a license from Merck, it was not subject to the exclusivity period on generic simvastatin.
As of 2006, Dr. Reddy’s Labs crossed $500 million USD in revenues, flowing from their APIs, branded formulations and generics segments; the former two segments account for almost 75% of revenues. Dr. Reddy's deals in and manages all the processes, from the development of the API to the submission of finished dosage dossiers to the regulatory agencies.
In September 2005, Dr. Reddy's spun off its drug discovery and research wing into a separate company called Perlecan Pharma Private Limited. At the time, this was hailed as an innovative move, but in 2008, the company it had to be wound down due to funding constraints. Dr. Reddy's was the first Indian pharma company to attempt such an effort to de-couple risk of drug discovery from the parent company by creating a separate company with external source of funding. Perlecan Pharma was partially funded by ICICI Venture Capital and Citigroup Venture International, both of which held a 43% stake in Perlecan for an estimated $22.5 million. However, the company was forced to buy back the Perlecan shares from ICICI and Citigroup due to doubts regarding the commercial viability of the drug candidates that were in Perlecan's pipeline. At that point, Perlecan became a wholly owned subsidiary. In the board meeting of October 23, 2008, the company chose to amalgamate/absorb Perlecan, thereby making it an in-house research facility, as it was before 2005.
In 2009, the company did a U-turn and has handed over discovery research and related intellectual property to its Bangalore-based subsidiary, with the possibility of spinning it off as a different entity altogether. "The company may be hoping to find a strategic partner in the future to share the risks and research funding."
In June 2011, certain lots of Dr. Reddy's generic simvastatin tablets were recalled due to tablets having a "musty" or "moldy" smell.
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As of March 31, 2006 board members and senior executives included.