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Dr. Reddy’s Plans To Double U.S. Product Portfolio In Five Years

Pharmaceutical major Dr. Reddy’s Laboratories Ltd. plans to double its U.S. product portfolio over the next five years.

This was one of the five core growth areas that the company highlighted in a meeting with analysts and investors recently, according to an Antique Stock Broking report.

The company wants to ensure that no commercial opportunity is wasted due to issues related to its manufacturing plants, the report added. Quality is likely to remain centre-stage and improvements have been made in this regard over the last two years.

Five Core Growth Areas

  1. Intensify efforts in complex generics and develop dossiers for world markets given the legacy strength in complex APIs.
  2. Double the number of marketed molecules in the U.S. in the coming years.
  3. Capitalise on the first-mover advantage in China.
  4. Break into top-10 drug makers’ by sales list in India.
  5. Keep enhancing the compliance processes at plants.

The management has indicated that the U.S. remains the focus area and the company is likely to launch 15 products annually with an aim to double the marketed products to 170 in the coming years, the report said. The company will focus more on oral solids and injectables in the U.S., while for China, the focus will be on the oncology segment.

Also read: U.S. Court Stops Dr. Reddy’s From Selling Generic Opioid Treatment Drug Suboxone

Given Dr. Reddy’s unrelenting focus on complex generics and a legacy of unique product launches, we believe the company is well-positioned to carry on the leadership in this space. In our view, Dr. Reddy’s is likely to merit a premium to its peers.
Antique Stock Broking Report

Here are the key highlights of the company’s strategy going ahead:

  • The management is looking to expand in the U.S. from retail to hospitals, renal clinics and other unexplored channels.
  • The management wants to break into the top 10 drugmakers by sales in India from the current rank of 16. The management is confident that it will continue to maintain the double-digit growth seen in the recent past in India.
  • The management is looking at cost containment as the quality issues have largely been taken care of. The management believes that the cost control impact will be visible in every quarter.
  • There is focus on resource allocation and monetising the biosimilars and proprietary products divisions.

Shares of the drugmaker declined over 2 percent to Rs 2,579 apiece, after rising little over a percent in opening trade today. The stock has risen 8 percent so far this year, compared to 8.8 percent gain in the NSE Nifty 50 Index.

While thirty-two of the 44 analysts tracking the stock have a bullish rating on the stock, it’s trading 10 percent above the Bloomberg consensus one-year target price.