Hyderabad-based pharmaceutical major Dr Reddy’s Laboratories Limited has signed an agreement with GlaxoSmithKline (GSK), one of the world’s leading research-based pharmaceutical and healthcare companies, to buy the latter’s oral penicillin manufacturing facility at Tennessee in the US.
The financial terms of the acquisition were not disclosed. The transaction is expected to be closed within the first half of calendar 2011.
The deal, an extension to the strategic alliance that Dr Reddy’s already had with GSK to develop and market select products across emerging markets outside India, also involves transfer of rights to Dr Reddy’s for Augmentin and Amoxil drug brands in the US, while GSK will retain its existing rights for these brands outside the US.
According to DRL President (Global Generics Business) Abhijit Mukherjee, these manufacturing capabilities did not previously exist with the company, and the acquisition would, therefore, allow it to enter the US penicillin-containing anti-bacterial market.
“The acquisition is in line with our strategy to significantly scale up our generics business in North America, while providing an opportunity to explore additional synergy with our other businesses,” Mukherjee stated in a press release on Wednesday.
Dr Reddy’s, on June 15, 2009, had entered into a partnership with GSK, under which the latter would gain access to the Hyderabad-based company’s diverse portfolio and future pipeline of more than 100 branded pharmaceuticals in fast-growing therapeutic segments such as cardiovascular, diabetes, oncology, gastroenterology and pain management.
Under the terms of the agreements, the products will be manufactured by Dr Reddy’s and will be licensed and supplied to GSK in various emerging markets such as Africa, West Asia, Latin America and Asia Pacific excluding India. Revenues will be reported by GSK and will be shared with Dr Reddy’s according to the agreed terms. In certain markets, products will be co-marketed by Dr Reddy’s and GSK.
Dr Reddy’s scrip is currently trading at Rs 1,777 on the BSE, up 0.87 per cent over the previous close of Rs 1,761.75.
