Dr Reddy’s Laboratories (DRL) is exploring the option of demerging its domestic formulations business and unlocking value. Several multinational drug firms have already begun talks on a potential deal for the Rs 1,000 crore businesses. The promoters have a 25.7 per cent stake in DRL and investment bankers said they were expecting a significant premium to the current sales. The move comes about a month after US-based Abbott acquired the domestic formulation business of Piramal Healthcare for $3.7 billion.
Dr Reddy’s is involved in almost all aspects of generic drug business, like bulk drugs and formulations, and even research. It had a turnover of Rs 7,000 crore in the year ended March 2009, and is now the second largest Indian drug company.
The market is abuzz with Glaxo Pharmaceuticals being in the fray, though the company said it has no such plan. Glaxo is among the top five players in domestic business and can scale up its business to the second spot after the Abott-Piramal healthcare combine, if it could succeed in acquiring the domestic business of DRL. GSK and Dr Reddy’s have a long-standing relationship in business and better understanding of the systems of both companies. Last June, GSK had entered into an exclusive long-term outsourcing agreement with DRL to supply a diverse portfolio and future pipeline of more than 100 branded pharmaceuticals in the fast growing therapeutic segments such as cardiovascular, diabetes, oncology, gastroenterology and pain management.
Dr Reddy's has at least half-a-dozen branded generic drugs that are among the top selling drugs in the domestic market. These include Omez, which treats an upset stomach, pain killer Nice, heart disease drugs such as Stamlo and Atocor, one of the first indigenously developed biosimilar drug named Revitex and anti-baldness drug Mintof.
DRL has a very attractive business proposition, as their corporate culture is similar to multinationals in terms of governance, manufacturing systems and practices and for such assets, buyers do not mind paying even valuations like nine or 10 times of the turnover, as happened in the case of Piramal Healthcare
| Company Name | CMP |
|---|---|
| Sun Pharma Inds. | 1777.65 |
| Dr. Reddys Lab | 1194.55 |
| Cipla | 1465.65 |
| Lupin | 2043.30 |
| Zydus Lifesciences | 944.25 |
| View more.. | |
MoneyWorks4Me rating and ranking of funds for SIP is available to subscribers only. Moneyworks4Me is not a rating and ranking agency, however it is required that users have a way of selecting funds and building a Portfolio. The method used by it are described below to enable users to understand the logic behind the rating and ranking Subscriber will find more details on this in the various content made available from time to time. In case you need more please write to besafe@moneyworks4Me.com
MoneyWorks4Me rates and ranks mutual funds based on the following data-driven system:
Funds ranking in screeners: Performance Consistency and Quality are two parameters used for ranking funds for SIP. The ranking as follows GG, GO, GR, OG, OO, OR, RG, RO and RR.
With the same color-coded funds, the one with the higher Average 3-year rolling returns (over 5 to 10 years), the number that appears in the Performance tag, ranks higher.
Here is the summary:
The third tag Upside Potential is not relevant for SIP. It is relevant for lumpsum investments in Mutual Funds.
Make an informed decision for Stocks
Invest using an intelligent system with powerful data-driven tools that help you identify opportunities and make informed buy-hold-sell decisions
Buy quality Stocks when they are available at reasonable prices and supported by an upward price trend and Sell when they are Overvalued using the Decizen Rating System. Covers 3500+ stocks
Claim your FREE 15-day access to the most practical investing handbook.
Hurry, limited to the first 10 users today!
FREE Become a savvy and confident
stock investor.
Hurry, limited to the first 10 users today!
Download APP
