Workers pour in raw material to product medicine capsules at Dr Reddy’s plant in Bachupally, Andra Pradesh. (Photographer: Amit Bhargava/Bloomberg News)

Price Erosion Symptoms: Dr Reddy’s Labs Plans To Launch Value-Added Drugs

Maintaining that pricing pressure will continue in the U.S. market, Dr. Reddy's Laboratories has said the company plans to launch several value-added products this fiscal to offset the persisting problem.

As part of the diversification and new market entry strategy, DRL plans to re-focus some of its Research and Development resources to service the high potential branded generics markets such as China, Russia and other emerging markets.

Also read: Dr. Reddy’s Continues To Exit Non-Core Businesses

"We believe that pricing pressures will continue to affect all players in generics in the U.S. Overcoming this necessitates a robust pipeline of complex formulations with limited competition a pipeline that allows your company to introduce several value-added products each year, and thus make up for price erosions on the earlier launched products," K Satish Reddy and GV Prasad, chairman and co-chairman respectively said in the latest annual report.

As many as 110 generic filings awaiting approval from the U.S. FDA and the company has to leverage this and ensure that they succeed in delivering these products, molecule by molecule, to the U.S. on the due dates, they said.

"Given the challenges in the U.S. market, we will continue our efforts to diversify our market presence," they said.

The drug maker said it will continue to focus on complex formulations primarily injectables and oral solid dosage forms as well as OTC brands in the medium term, and controlled substances under class II, and non-substitutable generics in the longer term, the report indicated with respect to North America generics.

Despite concerns about a trade war between the U.S. and China, it is not a surprise that China is still viewed as a huge market opportunity for the pharmaceutical industry, the report said.

Also read: Why Dr. Reddy’s Returned Best Gains Among Peers In Last One Year

"We have also grown well in China and expect it to be a relatively high growth market in the next few years," it said.

The strategy for growth in emerging markets is to continue improving the company's market share in chosen therapy areas, including expansion of biosimilars and the oncology portfolio.

"We will focus on scaling up in our major markets, which include Russia, China, Brazil, South Africa and Ukraine," it said.

The report further said the pharma major will attempt to further strengthen its presence presence in six chosen spaces-United States, India, Russia, China, Global Hospitals including Biosimilars, and the Global API business- to drive next level of growth.

"Our target is to attain self-sustainability for each of our business. Despite multiple headwinds being faced by the overall industry, we are cautiously optimistic of improving our performance in FY2020 by calibrating our levers which would suit the business environment better and, thus, guide us to better performance for the year ahead," DRL said.

Bloomberg Quint

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