Hyderabad-based pharmaceutical major Dr Reddy's Laboratories has decided to buy back the shares of Perlecan Pharma Private Limited, its demerged arm, for $18 million (about Rs 72 crore) from ICICI Ventures and Citigroup. The decision was taken at the pharma firm’s board meeting here on Monday.
While both ICICI Ventures and Citigroup have a 43 per cent stake each in the company, Dr Reddy's holds the remaining 14 per cent.
"The buyback is in line with our overall strategy for research and development,” said Dr Reddy’s vice-chairman and chief executive officer G V Prasad.
Dr Reddy's had hived off the company earlier and sold the demerged entity’s stake for $22.5 million. The issue of ICICI Ventures and Citigroup pulling out of the demerged entity has been in the news for quite some time now.
According to Prasad, the company would buy back the shares from ICICI Ventures and Citigroup with its own money. Giving the guidance for the year, he said the company’s revenues would grow at around 25 per cent. On the dollar gaining strength, he said this had impacted the company significantly, as most of its revenues came from exports. Though North America and European markets did well, the Indian market did not perform on expected lines. "The key brands did not grow as we thought they would,” Prasad said.
The cash and cash equivalents were less this year as the company had to meet the acquisitions expenses for Dow Chemical’s Dowpharma Small Molecules business in Mirfield and Cambridge, UK, and BASF’s pharmaceutical contract manufacturing business in Shreveport, US.
On reports that the US FDA was inspecting the company’s plants here, Prasad said inspections had always happened and they were not against it. The US FDA was also looking to set up offices in China and India, he added.
