Dr. Reddy’s to Invest in Biologics, Proprietary Medicines

Dr. Reddy’s (DRRD) Laboratories Ltd., India’s second-biggest drugmaker by revenue, will invest about $320 million over the next four years to develop its portfolio of biologic and proprietary medicines, Chief Operating Officer Abhijit Mukherjee said.

Dr. Reddy’s, which gets 80 percent of sales from generic drugs, plans to seek permission to sell two proprietary medicines in the U.S. within the next year, Mukherjee said in a June 17 interview. The Hyderabad-based company also obtained approval from the U.S. Food and Drug Administration to start clinical trials for two biosimilars, or copies of biotechnology therapies, he said.

“Unless we create a position for the future, the growth of profitability is going to be challenged,” Mukherjee said. “Unless people are investing in the future, one should be worried of what the plan is.”

Dr. Reddy’s is competing against bigger drugmakers such as Novartis AG (NOVN) and Pfizer Inc. (PFE) to develop biosimilar treatments before patents expire on best-selling biotechnology medicines. A partnership the Hyderabad-based company struck with Merck KGaA’s Merck Serono unit in 2012 to develop cheaper copies of biologic cancer drugs could yield products in Europe in four years, Dr. Reddy’s Chairman Satish Reddy said in 2013.

“It will take some doing to enter the biggest markets, U.S. and Europe,” says Hitesh Mahida, an analyst at Antique Stock Broking. “Getting an approval will be the biggest challenge.”

Biotechnology and proprietary drugs contribute 2 percent to Dr. Reddy’s sales. The company defines proprietary drugs as new formulations of currently marketed drugs or combinations of complementary drugs and technologies that enhance safety, efficacy or both.

The company’s shares were trading at 2,438.95 rupees, up 0.7 percent, at 1:11 p.m in Mumbai. The stock has fallen 3.9 percent this year compared to a 20 percent gain in the benchmark S&P BSE Sensex index.

To contact the reporter on this story: Sharang Limaye in Hyderabad at slimaye@bloomberg.net

To contact the editors responsible for this story: Arijit Ghosh at aghosh@bloomberg.net Phil Serafino, Thomas Mulier

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