Dr. Reddy’s Laboratories is making plans to expand its business through mergers and acquisitions.

Dr. Reddy’s Laboratories has stated that one of its goals is to be among the top five pharmaceutical companies in India. This objective will be accomplished primarily through mergers and acquisitions (M&A) of chronically relevant brands, companies, and in-licensing deals, as well as through the expansion of its nutraceutical and over-the-counter (OTC) product lines.

The corporation has not established a timeframe, but they have stated that they want to accomplish the goal in the “foreseeable future.”

It has been climbing the ranks consistently and is now at number 10 at the moment. About five years ago, it had the sixteenth spot in the ranking. India’s contribution to the company’s overall sales of Rs 21,439 crore in 2021-22 was approximately a fifth, or Rs 4,196 crore. Despite this, the company’s domestic business has clocked a 17 percent compound annual growth rate over the past four financial years, which is significantly higher than the industry average of 9-10 percent.

GV Prasad, chairman of Dr. Reddy’s Laboratories, stated in an interview with ET that the company’s management will dedicate its focus, attention, and a large portion of its financial allocation towards India.

According to Prasad, our goal is to place in the top five in the rankings.

“On an organic curve, you will never be able to get there” (top five). We are open to mergers and acquisitions, but only at the appropriate priceā€¦ & supported by a natural manner of execution Prasad said that all of the levers needed to be pulled.

According to him, participants in the private equity market have contributed to an increase in the values of the assets.

“Everything happens in cycles. They come and they depart,” was what he had to say.

According to Prasad, the business is in a good position to make acquisitions because it does not have any outstanding debt, has a cash surplus of 1,500 crore, and has a net cash flow of 2,000 crore. He stated that the organisation will be aiming for an EBITDA margin of 25 percent as well as return on capital invested in order to take care of future investments.

US Generics
Regarding the US generics business, which accounts for about 35 percent of the company’s sales, Prasad said that price erosion is a more structural part of the business due to increasing competition, and that success will depend on the ability to develop products which have less competition because of technological barriers or any other complexity. The generics business in the United States accounts for about 35 percent of the company’s sales.

“Price is the single most important factor in US company. Products that are generic are classified as commodities. When new competitors enter the market, demand remains unchanged, but the supply landscape shifts. According to Prasad, “a large number of Indian enterprises have entered the market, which has led to the commoditization of many items.” “The recipe for success in this venture couldn’t be easier. That’s it: being the first to market, launching on day one, having a cost structure that allows you to compete, having a supply chain that is resilient and adaptable, and having a successful business model.

Dr. Reddy’s Laboratories is getting ready to compete with other companies despite having more than 175 drugs in the pipeline, of which forty percent are either sterile or injectable. The business has already submitted patent applications for 90 different products, while the other inventions are now being developed. The business carries a line-up of 25 complicated medicines, some of which include drug-device combos, peptides, long-acting injectables, and ready-to-use formulations.

It has disclosed six key peptide pipeline products, including semaglutide (an anti-diabetes medication), teriparatide (a hormonal treatment for osteoporosis), octreotide (an anti-diarrhea medication), liraglutide (an anti-diabetes medication), regadenoson (a cardiac therapy medication), and dasatinib (anti-cancer). At addition to this, it is working on a series of biosimilars, such as pegfilgrastim, rituximab, tocilizumab, and abatacept, which are all in different phases of research. Pegfilgrastim is now being evaluated for use.

According to Prasad, the company is investing in areas that will serve as long-term growth drivers such as biosimilars, cell-gene therapy, contract development and manufacturing of small and large molecules, immuno-oncology new chemical entities (NCEs) through its subsidiary Aurigene Discovery, nutraceuticals, and digital services.

According to Prasad, “We Will Explore Businesses That Are Adjacent To Our Existing Businesses Where We Can Leverage Our Current Marketing Presence And Incumbency.” “We Will Explore Businesses That Are Adjacent To Our Existing Businesses.”

Unpredictable New Developments
According to Prasad, it is yet impossible to quantify the impact that the introduction of ecommerce, online pharmacies, and other direct-to-consumer platforms would have on the pharmaceutical industry.

“All of a sudden, you are able to observe a variety of companies in each market. In the United States, American billionaire Mark Cuban has been directly serving patients by providing them with generic pharmaceuticals at prices that are cheaper than those of existing players. There is a new participant joining the game. Over-the-counter products have already been made available for purchase on Amazon. They are planning to start selling prescription medications at some time in the future. PharmEasy, 1mg, and a few more may be found in this area, he explained.

“I don’t know how the negotiating power will be formed by these new forces; I don’t know whether they will be able to replace items; I don’t know if they will build their own brands. We don’t know. However, we want to be prepared for it in the event that it takes place,” he stated.

In addition to the growing factors that are disruptive, Prasad identified regulation, inflation of raw materials and logistical costs, emerging market currency volatility, and pricing restrictions as important hazards for any pharmaceutical firm.

In spite of the fact that wildlife photography and bird watching are two of Prasad’s favourite pastimes, he is placing a strong emphasis on environmental projects. He has big goals in mind for the firm, such as using renewable electricity in an amount equal to one hundred percent, being carbon neutral in direct operations by the year 2030, and becoming water-positive by the year 2025. He said, “Why can’t businesses have sustainability goals if even governments can have them?”

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