Dr Reddy's shopping for US brands

Dr Reddy's Laboratories is looking at acquiring specialty drug brands in the US, and is widening its focus on the segment, according to G V Prasad, executive vice-chairman and chief executive officer of the company.

"We have $200 million in cash," Prasad said. He, however, did not specify as to how much of that money would be earmarked for acquisitions.

"The last two quarters have been difficult for Dr Reddy's. Profits were down, as we continued to invest in building a generics business," Prasad said.

"Now, we see the specialist segment as a growth area because profitability in it will be on a long-term basis," he said. "I am not worried about the drop in profits, but I am confident about the future because of the strategies we are implementing at the moment. We have the cash to make such acquisitions, and we are evaluating some products," Prasad said.

He, however, declined to give a timeframe for the acquisition.

Dr Reddy's decision to go in for buy outs appears to have gathered steam after a US court ruled in February this year, that the patent extension covering Pfizer's Norvasc (amlodipine besylate) was applicable to Dr Reddy's AmVaz (amlodipine maleate) as well. AmVaz was expected to be Dr Reddy's first major push in the specialty drug business in the US.

"Our two core businesses, bulk and branded formulations, were funding the generics business, which involves a lot of time and expense," Prasad said. "The money is there in generics, but it has become a gold rush. It is getting increasingly commodified."

Prasad said Dr Reddy's short-term strategy will be to continue its focus on generics. The company has 24 first-to-file abbreviated new drug applications in the US.

"Our long-term strategy has three parts. The first is acquisition of specialty brands, because it is a niche and an innovative business. It will give us a branded franchise," Prasad said. The second part of the strategy is to expand into areas such as dermatology. "We acquired Trigenesis in May. Trigenenis will help us get a footing in a niche but growing area such as dermatology." "The third part is to grow our organic drug pipeline. This will help us in emerging as a discovery-led pharma company," he said.