1 Executive Summary – Dr. Reddy’s Laboratories is Raising its International Profile With The Long-Term Aim of Being A Discovery Led Company
2 An Introduction to Dr. Reddy’s Laboratories
2.1 Dr. Reddy's Laboratories is a Leading Indian Company Specialising in Generics, Bulk Active Ingredients and Drug Discovery
2.1.1 The Company Was Founded in 1984 by Chairman Dr Anji Reddy – His Entrepreneurial Drive is Still Prominent
2.1.2 Dr. Reddy’s Laboratories is Currently Expanding its Operations and Revenues Impressively
2.1.3 Exports Commenced in 1986 and Drug Discovery in Mid-1990s
2.1.4 Dr. Reddy’s has Been Quoted on the New York Stock Exchange Since 2001
2.1.5 Dr. Reddy’s is a Family-Run Business That Remains Close to Its Roots
2.2 Dr. Reddy’s Has An Interesting Range of Business Divisions
2.2.1 Dr. Reddy’s Conducts its Operations in Sites Across The World
2.3 Vision and Mission in Dr. Reddy’s
2.4 Dr Ready Collaborates With Other International Companies
2.5 Key Events in the Company’s History
2.6 Dr. Reddy’s Businesses
2.7 Dr. Reddy’s Specialises in Active Pharmaceutical Ingredients (API) and Branded Formulations
2.7.1 Branded Formulations Yielded the Highest Revenues for Dr. Reddy’s in 2005-2006
Leading Therapeutic Classes and Top 10 Products
2.8 Generics Constitute a Steadily-Expanding Market Opportunity
2.8.1 Expiry of Patents and Other Protection
2.8.2 Dr. Reddy’s Generics in the US and EU
2.8.3 Dr. Reddy’s Acquired Betapharm Group in Early 2006
2.8.4 Dr Reddy’s is Well-Placed to Seize Opportunities in the Strongly-Expanding World Generics Market
2.8.5 Teams in India, the US and Europe Will Be Crucial to the Success of Dr. Reddy’s Generics
2.9 Branded Formulations
2.9.1 The Branded Formulation Business has International Scope and Dedicated Sales Force
2.9.2 Global Brands
2.9.3 Oncology
2.10 Biologics Are a Core Competency of Dr. Reddy’s
2.11 Custom Pharmaceutical Services (CPS)
2.12 Discovery Pipeline
2.12.1 R&D Therapeutic Areas
2.12.2 Metabolic Disorders
2.12.3 Cardiovascular Disorders
3 Dr. Reddy’s Laboratories Is Responding To Challenges and Opportunities in The Market Through Ambitious Corporate Strategy
3.1 The World Pharmaceutical Market Continues to Grow, But Faces Mounting Challenges
3.2 The Continuing Success of International Pharmaceutical Companies is Dependent Upon Important Drivers and Restraints
3.3 Companies Are Gradually Changing Their Strategic Focus to Overcome Challenges in the Worldwide Market
3.4 Reduced Efficiencies in R&D Result in Concerns Over Thinning Pipelines
3.5 Driving and Restraining Forces Acting Upon Dr. Reddy’s Laboratories
3.5.1 A SWOT Analysis for Dr. Reddy’s Laboratories, 2007-2012
3.5.2 Dr. Reddy’s Has a Focussed Strategy To Cope with Market Conditions and Opportunities
3.6 All Business Divisions Will Show Strong Growth Throughout The Forecast Period
3.6.1 Branded Formulations Will Show the Greatest Change in Relative Contribution to Revenue From 2006-2012
3.6.2 Net Profits Increased Five-fold in 2006
3.7 Spectacular Increases in Corporate Revenue in Fiscal Year 2007 – Revenues Exceeded $1bn by End of Q3
3.7.1 First Quarter Results, 2007
3.7.2 Second Quarter Results, 2007
3.7.3 Third Quarter Results, 2007
3.7.4 Launch of Important US Generics in 2006 is Significant
3.7.5 Acquisition of German Generics Company Betapharm Boosts Fortunes in 2006
3.7.6 NCE Research and Development Concentrated in Spin-Off Company Perlecan Pharma
3.8 Increase in ANDA Filings in the US
3.9 Cost Containment in Europe Provides Major Opportunities for Dr. Reddy’s
3.10 In Branded Formulations Dr. Reddy is Concentrating on India and Russia
3.11 Dr. Reddy’s Has Grown Significantly Through Mergers and Acquisitions
3.11.1 Other Leading Indian Companies Are Prominent in Pharmaceutical Acquisition
3.11.2 Dr. Reddy’s Increased Presence in German Market through Acquisition of Betapharm
3.11.3 Custom Pharmaceutical Services Boosted by Acquisition of Roche’s API Business
3.11.4 Trigenesis Therapeutics Acquired to Provide Platform in Dermatology
3.11.5 Meridian Healthcare – Dr. Reddy’s First Overseas Acquisition
3.11.6 Merger with American Remedies
3.11.7 Merger With Cheminor Drugs
3.12 Regional Strategy
3.12.1 India Constituted the Largest Market for Dr. Reddy’s in 2005-2006
3.12.2 The Main Markets for Dr. Reddy’s Generics are the US and Europe
3.12.3 In the Branded Formulations market Dr. Reddy’s is focused on India and Russia
3.13 Little In-Licensing Performed Recently
3.14 Dr. Reddy’s Faces Strong Competition From Other Leading Indian Companies With Similar Aspirations
3.14.1 Ranbaxy – The Leading Indian Pharmaceutical Company is Performing Very Strongly
3.14.2 Ranbaxy Has a Vision Similar to that of Dr. Reddy’s – To Develop Novel Drugs Successfully
3.14.3 Ranbaxy’s R&D is Focussed on Anti-Infectives, Urology, Respiratory, Inflammatory and Metabolic Diseases
3.14.4 Heightened Rivalry In Indian Pharma with Ranbaxy and Cipla Linked to Bid for Merck Generics Unit
3.15 Patent Litigation Continues for Dr. Reddy’s Laboratories
3.15.1 Loss of AmVaz Case but Others Continue Over Leading Drugs
3.15.2 Plavix Challenge
3.15.3 At Risk Launch of Fexofenadine
3.16 Dr. Reddy’s has developed Key Strategic Alliances With Other Pharmaceutical Companies
4 Generics
4.1 Dr. Reddy’s Generics Division Will Achieve Strong Growth from 2006-2012
4.1.1 There Are Still Large Potential Gains in the Global Generics Market
4.1.2 Generics Will Remain Dr. Reddy’s Principal Strength and Revenue Generator Throughout the Foreseeable Future
4.2 The Main Markets for Dr. Reddy’s Generics are the US and Europe
4.2.1 Fiscal Year 2006 Revealed a Fall in US Revenues
4.2.2 In Europe Growth Continued Strongly Especially Through Acquisition of Betapharm
4.2.3 Price Reductions in Europe
4.2.4 Regulatory Formula on Retail Pricing in the Indian Market
4.3 Generics: Results from The First Three Quarters of Fiscal Year 2007
4.3.1 Quarter 1 2007
4.3.2 Quarter 2 2007
4.3.3 Quarter 3 2007
4.3.4 Improvement in the North American Generics Market is Significant
4.4 The Acquisition of Betapharm: Dr. Reddy’s is Ambitious for Greater Penetration of European Markets, Commencing With Germany
4.5 Battle to Launch Generic Amlodipine
4.6 US Generics Pipeline: Dr. Reddy’s a Vigorous Filer of ANDAs
4.6.1 17 DMFs Submitted to FDA During Fiscal Year 2006
4.6.2 ANDAs Submitted Leading To Tentative Approvals
4.6.3 Dr. Reddy’s is Entering the Race To Tap The Potentially Lucrative Biosimilars Market
4.7 Dr. Reddy’s Recently Launched Authorised Generic Versions of Proscar and Zocor
4.8 Settlement Of Imitrex Litigation with GSK Results in Future Authorised Generic for Dr. Reddy’s
4.9 180-Days of Marketing Exclusivity for Ondansetron Tablets
4.10 The Patents Act of 2005 Had a Profound Effect on The Indian Generics Market
4.11 Dr. Reddy’s Continues To Challenge Patents Vigorously
4.11.1 Clopidogrel bisulphate
4.11.2 Esomeprazole
4.11.3 Isotretinoin
4.11.4 Levetiracetam
4.11.5 Moxifloxacin
4.11.6 Ondansetron
4.11.7 Olanzapine
4.11.8 Rabeprazole
4.11.9 Risperidone
4.11.10 Sertraline
4.11.11 Sumatriptan
4.12 Generics Is a Market of Increasing Significance – This Area Will Remain the Principal Commercial Strength of Dr. Reddy’s from 2007-2012
5 Branded Formulations - Including Biotechnology and Critical Care
5.1 Branded Formulations Will Remain a Key Driver of Revenue Despite Being Overtaken by Generics
5.1.1 Expansion into Developing Markets will be a Cornerstone of Dr. Reddy’s Strategy
5.1.2 New Product Launches will Be Vital to Success for Branded Formulations
5.2 Results from The First Three Quarters of Fiscal Year 2007
5.2.1 Quarter 1 2007
5.2.2 Quarter 2 2007
5.2.3 Quarter 3 2007
5.3 Branded Formulations Was The Leading Business Unit in Dr. Reddy’s for Revenue Generation in 2006
5.4 The Branded Formulation Business has International Scope and Dedicated Sales Force
5.4.1 In Branded Formulations Dr. Reddy’s Focuses on India and Russia
5.4.2 The International Market for Branded Formulations Showed Strong Growth in 2006
5.5 Revenues in Critical Care and Biotechnology Increased by over 30% in 2006 – Further Steady Growth Expected
5.5.1 Dr. Reddy’s Will Become Increasingly Involved in Biotechnology
5.6 Perlecan Pharma
6 Custom Pharmaceutical Services (CPS)
6.1 Custom Pharmaceutical Services will Increase in Prominence from 2007-2012
6.1.1 Dr. Reddy’s CPS Division Will Benefit from Current Trends in the Global Pharmaceutical Market
6.1.2 CPS Will Benefit Greatly from the Recent Acquisition in Mexico With Significant Future Growth Likely
6.2 Strong Growth During the First Three Quarters of the 2007 Financial Year
6.2.1 Quarter 1 2007
6.2.2 Quarter 2 2007
6.2.3 Quarter 3 2007
6.3 Acquisition of Roche's API Business in Mexico Was a Major Development in Custom Pharmaceutical Services
7 Active Pharmaceutical Ingredients
7.1 Active Pharmaceutical Ingredients Will Show Moderately High Growth from 2007-2012
7.1.1 Expansion of The Product Range and Geographical Coverage Will Drive Growth in Dr. Reddy’s API Business
7.1.2 Dr. Reddy’s Relies Upon a Sound Patenting Strategy in APIs for Continuing Growth
7.2 Acquiring Roche’s API Business in Mexico Was a Stimulus For Dr. Reddy’s
7.3 Increase in Revenues from India in 2006 but Slight Decline in US
7.4 Active Pharmaceutical Ingredients: Results from The First Three Quarters of Fiscal Year 2007
7.4.1 Quarter 1 2007
7.4.2 Quarter 2 2007
7.4.3 Quarter 3 2007
7.5 India Constitutes an Increasingly Important Part of the Pharmaceutical Value Chain in Active Pharmaceutical Ingredients
8 Pipeline Developments in Dr. Reddy’s Laboratories
8.1 Dr. Reddy’s Spent 12% of its Annual Revenue on R&D in 2006
8.2 R&D Centred Upon NCE’s in Metabolic Disorders, Cancer, Cardiovascular, And Infectious Diseases
8.3 Dr. Reddy Has Several Important Lead Compounds With Potential For Commercial Success
8.4 Perlecan Pharmaceutical – A Spin-Out Company To Reduce Risk of NCE Development
8.5 Aurigene Discovery Technologies is Another Dr. Reddy’s R&D Venture
8.6 Alimentary Tract and Metabolism
8.6.1 Balaglitazone
8.6.2 DRF 11605
8.6.3 DRF 16536
8.7 Antineoplastics/Immunomodulating Agents
8.7.1 DRF 1042
8.7.2 Co-Development of DRF 1042
8.8 Cardiovascular System Agents
8.8.1 DRF 10945
8.8.2 RUS 3108
8.8.3 DRL 16805
8.9 Musculoskeletal System Agents
8.10 Respiratory System Agents
8.11 R&D Pipeline Products: Other Strategic Alliances
8.11.1 DRL 16536, DRL 11605, RUS 3108, DRL 10945
8.11.2 Generic Cancer Treatments
8.11.3 Argenta
8.11.4 Debiopharm
8.11.5 ICICI Venture Funds Management
8.11.6 Insulin Sensitising Agent – The Successor to DRF 4158
8.11.7 Leiner Health Products
8.11.8 Novo Nordisk
8.11.9 Rheoscience
9 The Indian Pharmaceutical Market
9.1 The Indian Pharmaceutical Market Will Expand Rapidly from 2005-2011
9.2 The Indian Pharmaceutical Market Will Benefit from Many Important Drivers
9.3 Potential for Growth In the Indian Market Is Exciting, But Poverty and Lack of Developments Remain Serious Hurdles
9.4 India Is the Second Fastest Growing Major Economy After China
9.5 Political And Economic Reforms Have Eased India’s Transition into the Modern, Globalised Economy
9.6 Widespread Poverty Remains a Major Problem in India - There is a Vast Potential Market for Pharmaceuticals But Usually Only Limited Resources for Purchasing Branded Drugs
9.7 India Has an Expanding Professional Class Which Serves As a Strong Driver of Growth in The Pharmaceutical Market
9.8 Domestic Companies Generated 75% of Sales in the Indian Pharmaceutical Market in 2005
9.8.1 Leading International Brands are Aimed at More Exclusive Market Niches Than Cheaper Domestic Products
9.8.2 India Has a Particularly Strong Generics Industry – With the Profile of That Sector Growing Internationally Despite Reduced Domestic Opportunities
9.8.3 The Re-Introduction of Patent Protection Will Increasingly Drive the Market for Branded Products, Especially Those From International Companies
9.8.4 Indian Companies Are Engaging in Joint Ventures and Spin-Off Ventures to Perform Original R&D
9.8.5 The Indian Pharmaceutical Sector is Attractive to Foreign Investors
9.9 State Governments Are Responsible for Providing Healthcare – However Patients Are Very Reliant on The Private Sector
9.9.1 The National Rural Health Mission (NRHM) Should Provide a Significant Boost to Public Healthcare
9.9.2 Physicians Often Make Prescribing Decisions Based Upon the Resources of the Patient
9.9.3 Changes to the Indian Pricing System are Imminent
9.9.4 The Government in Combination With the Gates Foundation Has Announced the Establishment of Public Health Institutes in India
9.10 India Currently Has A Fragmented Procedure for Drug Approval – The Establishment of a National Drugs Agency Should Rationalise the Process
9.11 India Is a Highly Attractive Location for R&D Activities
9.12 The Indian Pharmaceutical Market: Conclusions
10 Conclusions
10.1 Dr. Reddy's Laboratories is an International, Vertically-Integrated Pharmaceutical Company
10.2 Business Divisions Will Show Strong Growth Throughout The Forecast Period
10.3 Dr. Reddy’s Has a Focussed Strategy To Cope with Market Conditions and Opportunities
10.4 Efforts in NCE Development Point the Way to the Future for Dr. Reddy’s Laboratories
Appendices
List of Tables
Table 2.4 Dr. Reddy’s Net Revenues ($m) by Business Unit, 2005-2006
Table 2.5 Sales from Dr. Reddy’s Top Five Therapeutic Classes, June 2005 to June 2006
Table 2.6 Dr. Reddy’s Pharmaceuticals: Leading International Products, June 2005-June 2006
Table 2.1 Dr. Reddy’s Revenue Growth ($m), 2002-2006
Table 2.2 Pre-Tax and Net Profit ($m), 2002-2006
Table 2.3 Key Events in The History of Dr. Reddy’s Laboratories
Table 3.1 Revenue Generation ($bn) by the World Pharmaceutical Industry, 1999-2005
Table 3.2 A SWOT Chart for Dr. Reddy’s Laboratories, 2007-2012
Table 3.3 Revenue ($m) by Business Division, 2006-2012
Table 3.4 Compound Annual Growth (CAGR), 2006-2012
Table 3.5 Revenue Contribution (%) by Business Division, 2006 and 2012
Table 3.6 Dr. Reddy’s Net Profit ($m) and Proportion of Revenue (%), 2005 and 2006
Table 3.7 Dr. Reddy’s Net Revenue ($m) by Region, 2005-2006
Table 3.8 Top 5 Indian Pharmaceutical Companies: Revenues ($m) and Growth (%), Fiscal Year 2006
Table 3.9 Sales and Marketing Alliances With Other Pharmaceutical Companies
Table 4.1 Revenue ($m) from Dr. Reddy’s Generics, 2006-2012
Table 4.2 Contribution (%) to Total Revenue: Generics, 2006 and 2012
Table 5.1 Revenue ($m) from Dr. Reddy’s Branded Formulations, 2006-2012
Table 5.2 Contribution (%) to Total Revenue: Branded Formulations, 2006 and 2012
Table 5.3 Dr. Reddy’s Biotechnology and Critical Care Revenues ($m), 2005 and 2006
Table 5.4 Dr. Reddy’s Biotechnology and Critical Care Revenues ($m), 2006-2012
Table 6.1 Revenue ($m) from Dr. Reddy’s Custom Pharmaceutical Services, 2006-2012
Table 6.2 Contribution (%) to Total Revenue: Custom Pharmaceutical Services, 2006 and 2012
Table 7.1 Revenue ($m) from Dr. Reddy’s Active Pharmaceutical Ingredients, 2006-2012
Table 7.2 Contribution (%) to Total Revenue: Active Pharmaceutical Ingredients, 2006 and 2012
Table 8.1 Dr. Reddy’s Investment in R&D, Fiscal Years 2005 and 2006
Table 8.2 Research Pipeline for Dr. Reddy's, 2006
Table 8.3 Alimentary Tract and Metabolism Agents
Table 8.4 Antineoplastics/Immunomodulating Agents
Table 8.5 Cardiovascular System Agents
Table 8.6 Musculoskeletal System Agents
Table 8.7 Respiratory System Agents
Table 9.1 Pharmaceutical Revenues ($bn) for India, 2005-2011
Table 9.2 India: Fundamental Demographics and Healthcare Economics
List of Figures
Figure 2.1 Dr. Reddy’s Revenue Growth ($m), 2002-2006
Figure 2.2 Pre-Tax and Net Profit ($m), 2002-2006
Figure 2.3 Allocation of Scientific Personnel, 2006
Figure 2.4 Dr. Reddy’s Laboratories Total Revenue, 2005 and 2006
Figure 2.5 Net Revenue ($m) by Business Unit, 2005-2006
Figure 2.6 Revenue Contribution (%) by Business, 2005-2006
Figure 3.1 Revenue Generation ($bn) by the World Pharmaceutical Industry, 1999-2005
Figure 3.2 Total Revenue ($m), 2006-2012
Figure 3.3 Revenue Contribution ($m) by Business Division, 2006-2012
Figure 3.4 Revenue Contribution (%) by Business Division, 2006
Figure 3.5 Revenue Contribution (%) by Business Division, 2012
Figure 3.6 Dr. Reddy’s Net Profit ($m), 2005 and 2006
Figure 3.7 Dr. Reddy’s Net Profit as a Proportion (%) of Revenue, 2005 and 2006
Figure 3.8 Dr. Reddy’s Net Revenue ($m) by Region, 2005-2006
Figure 3.9 Revenue Contribution (%) by Region, 2005-2006
Figure 3.10 Top 5 Indian Pharmaceutical Companies – Revenues ($m), Fiscal Year 2006
Figure 3.11 Top 5 Indian Pharmaceutical Companies – Revenues Growth (%), Fiscal Year 2006
Figure 4.1 Revenue ($m) from Dr. Reddy’s Generics, 2006-2012
Figure 4.2 Contribution (%) to Total Revenue: Generics, 2006 and 2012
Figure 4.3 Dr. Reddy’s Generics: Revenue Contribution (%) by Region, 2006
Figure 5.1 Revenue ($m) from Dr. Reddy’s Branded Formulations, 2006-2012
Figure 5.2 Contribution (%) to Total Revenue: Branded Formulations, 2006 and 2012
Figure 5.3 Branded Formulations: Revenue Contribution (%) by Therapy Area, 2005-2006
Figure 5.4 Branded Formulations: Revenue Contribution (%) by Region, 2006
Figure 5.5 Dr. Reddy’s Biotechnology and Critical Care Revenues ($m), 2006-2012
Figure 6.1 Revenue ($m) from Dr. Reddy’s Custom Pharmaceutical Services, 2006-2012
Figure 6.2 Contribution (%) to Total Revenue: Custom Pharmaceutical Services, 2006 and 2012
Figure 7.1 Revenue ($m) from Dr. Reddy’s Active Pharmaceutical Ingredients, 2006-2012
Figure 7.2 Contribution (%) to Total Revenue: Active Pharmaceutical Ingredients, 2006 and 2012
Figure 7.3 Active Pharmaceutical Ingredients: Revenue Contribution (%) by Region, 2006
Figure 9.1 Pharmaceutical Revenues ($bn) for India, 2005-2011
Figure 9.2 World Market Share (%) for India – 2005 and 2011 Compared
Figure 9.3 Breakdown (%) of India's GDP by Sector, 2005
Figure 9.4 Sales of Leading Companies in the Indian Market, 2004
Figure 9.5 Leading Therapeutic Areas ($m) In the Indian Pharmaceutical Market, 2005
Figure 9.6 A Breakdown (%) of the Indian Government's Budget for Healthcare, 2006-2007
Figure 10.1 Dr. Reddy’s Total Revenue, 2006-2012
Figure 10.2 Revenue by Business Division, 2006-2012