Dr Reddy’s to exit small generic drug markets abroad

Dr. Reddys Laboratories Ltd. | Pharmaceuticals & Drugs | Healthcare | BSE: 500124 | NSE: DRREDDY

20 Mar 2009 Evaluate

Pharma major Dr Reddy’s Laboratories Ltd has decided to exit from the small distributor-driven markets in its global generics business. It would now focus more on key markets. Besides the domestic market, the Hyderabad-based company, as part of a realigned global generics/finished dosages strategy, will increase its focus on the US, Russia & CIS and Germany which accounted for 90 per cent of the global generics revenue (for nine months ended December 2008).

The move is construed as a cost-cutting exercise from the pharma major. It would, however, continue operations in 10-15 markets wherein the company’s finished dosages sales are growing. The company will, however continue to scan opportunities and attractiveness of international markets in line with its business strategy.

The exercise would also result in reduction of complexity of operations on one hand and help in significantly enhanced customer service and market share on the other. The markets being exited would have an overall contribution of less than one per cent to the topline. While the markets from which it plans to exit have not been disclosed they could include the Philippines and Sudan going by the revenues the company earns from these markets.

According to sources, the company hopes to compensate the loss of revenues due to exiting from these markets, with a corresponding cut in the operational and marketing expenses. Already, Dr Reddy’s has made India its global manufacturing hub after shifting manufacturing of key molecules from Betapharm (Germany) to India. crack crack