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Informist, Wednesday, Nov. 6, 2024

 

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--Dr Reddy's CFO: Contribution from Nicotinell sales to begin Oct-Dec
--CONTEXT: Dr Reddy's CFO Narasimham's comments in interview with Informist
--Dr Reddy's: Integration of Nicotinell portfolio to be complete in 14 months
--Dr Reddy's CFO: Aim to maintain double digit sales growth in all regions
--Dr Reddy's CFO: India sales growth robust, surpassing industry growth
--Dr Reddy's CFO: Looking for brands, companies in US, India to buy
--Dr Reddy's CFO: Looking for brands, companies in emerging markets to buy
--Dr Reddy's: To leverage cash pile to acquire value accretive brands, cos
--Dr Reddy's: Open to sign in-licensing deals to strengthen portfolio
--Dr Reddy's CFO: Awaiting US FDA approval for 80 new products
--Dr Reddy's CFO: At least 20 new ANDAs are first-to-file category in US
--Dr Reddy's CFO: Awaiting US FDA approval for several key molecules
--Dr Reddy's CFO: New product approvals to drive future growth in US
--Dr Reddy's CFO: Expect launch of bio-similar Abatacept in Jan-Mar of FY27
--Dr Reddy's CFO: Price erosion to continue in US
--Dr Reddy's CFO: To expand injectable portfolio in US in next two quarters
--Dr Reddy's CFO: Have 15 molecules in GLP-1 or diabetes-related segment
--Dr Reddy's CFO: Creating new capacities to cater GLP-1 portfolio of pdts
--Dr Reddy's CFO: To make APIs, formulations for GLP-1 segment products
--Dr Reddy's CFO: Expect GLP-1 product launches 2026 onwards
--Dr Reddy's: Open to collaborate on marketing Liraglutide, Semaglutide
--CONTEXT: Liraglutide, Semaglutide are GLP-1 or diabetes-related products
--Dr Reddy's: Team working on identifying patent expiries, opportunities
--Dr Reddy's CFO: Growth in China market depends on tenders
--Dr Reddy's CFO: Will continue to file new pdts for China regulatory nod
--Dr Reddy's CFO: Expect commercial launch of CAR-T therapy in FY26
 

 

By Narayana Krishna

 

HYDERABAD - After having acquired numerous brands and companies in the last few years, Dr. Reddy's Laboratories Ltd. is not planning to take the foot off the gas anytime soon. The drug maker will continue to look for acquisition opportunities across key geographies of US, India, and emerging markets to augment its existing portfolio and drive growth.

 

"We want to buy brands so that we can integrate very easily, but if there are good opportunities with the right strategic fit, we can also look at the company as well," Chief Financial Officer M.V. Narasimham told Informist in an interview. The company has acquired at least two companies annually over the last three years, on an average, and signed a slew of in-licensing deals for various products and drug brands.  

 

But, Dr. Reddy's isn't done yet. The company wants to leverage its strong cash position to drive inorganic growth--but is not in a hurry to buy assets at higher valuations, Narasimham said. As of Sept. 30, Dr. Reddy's had a cash reserve of nearly INR 19 billion.

 

The drug maker is looking to enhance its presence in areas of bio-similars and injectables focussing on key therapies like diabetics, dermatology, and cancer after having bought out a few leading brands in the dermatology and neutraceuticals sector. The company will also focus on innovative and differentiated products, and digital platforms to buy in India, Narasimham said.

 

He said valuation multiples of target assets are very high sometimes in India as many companies are looking at this region for their presence. "India being a stable market, once you have any of the portfolio, it can continue to add to the top line as well as the bottom line. That's where each of the companies is focusing on the India market," he said.

 

The company is also looking for acquisitions in Europe if a suitable opportunity comes its way, he added.

 

JOURNEY AHEAD

For Dr. Reddy's, the immediate driver of sales growth is likely to be the recently acquired Nicotinell or nicotine replacement therapy portfolio from Haleon group, Narasimham said. "Our nicotine portfolio will also start coming into our financials from the next quarter (Oct-Dec) onwards," he said.

 

"Contribution from the nicotine portfolio will be meaningful. We are not talking about the numbers, but it is one of the biggest acquisitions and certainly this will have a meaningful top line as well."

 

The company reported earnings for the quarter ended September after market hours on Tuesday, which showed its consolidated net profit was down 15% on year at INR 12.56 billion even as revenue from operations rose 16.5% rose to INR 80.38 billion.

 

"We paid the acquisition considerations during the last week of September, and now the integration will happen in a phased manner; it may take close to the next 14 months. As per the agreement, they (Haleon) will continue to help till we build our platforms and everything," he said.

 

Narasimham said the company doesn't give financial guidance, but directionally, the focus will be to achieve year-on-year growth in each of its markets. The growth also depends on how well or quick the company can secure new product approvals.

 

US PLAY

After facing some slowdown in sales and price erosion, Dr. Reddy's is now actively working on product approvals and developing high-value products for the US market. "In the US, overall, we have 80 ANDAs (Abbreviated New Drug Applications) yet to get approval. Among them, there is a significant pipeline of Para-IV filings. Out of these, we believe 20-plus molecules are going to win FTF (first-to-file) opportunities," Narasimham said.

 

Among the total filings, several are key molecules with huge potential to drive future growth in the US, he said. The new product approvals are the key to US growth. "Some of the molecules I have mentioned are complex in nature. We believe that once we get approval of these molecules, we will have a first-to-market advantage, and then we can have decent sales from those molecules."

 

On the bio-similars front, Abatacept, one of the biggest molecules, is likely to be a large opportunity, he said. Abatacept, which is used to treat arthritis related immunity issues, is now in phase-III trials, and the company expects a US launch around Jan-Mar of FY27. "We believe, based on our current evaluation, that's going to be the first-to-market in both the US and Europe," he said.

 

However, Narasimham said price erosion in the US will continue, depending on the products and the competition.

 

Dr. Reddy's is also working on expanding its injectables portfolio in the US. Injectables give higher margins compared to oral solids, and nearly 25% of the current product portfolio is injectables. He said the market share of injectables is increasing in both the US and Europe, and the company is expanding its capacities to meet the demand.

 

The company expects a steep rise in its injectables share of the overall products within two quarters, he said.

 

METABOLIC PORTFOLIO

Dr. Reddy's is gearing up to capitalise on upcoming opportunities in Glucagon-like peptide-1, or GLP-1 medications, which are used to treat type-2 diabetes mellitus, obesity, and related conditions. Narasimham said the company is investing in this portfolio to seize the opportunity.

 

"We have close to 15 molecules. We have both oral and injectables. I think some of the peptide molecules are subject to patent expiry. But we have a full pipeline of products in this segment," he said.

 

Narasimham said the company is creating capacities for both formulation and active pharma ingredients for GLP-1 products. The company is preparing to launch the peptide portfolio whenever regulatory hurdles are cleared in both regulated and non-regulated markets across the globe.

 

He said that as of now, there is no product available in this category, and patent expiries are expected to begin by early 2026. Narasimham said that for emerging markets, there is no regulatory approval required for this category of products, but patent issues need to be considered.

 

Among all GLP-1 products, Dr. Reddy's is more focussed on two key products, Liraglutide and Semaglutide. Both are GLP-1 category products used to treat weight loss and blood sugar control.

 

In fact, Ozempic, a brand of semaglutide injections, has become the centre of attention across the world, because of its supposed weight loss benefits that a host of celebrities, especially in the US, are rumoured to have seen in the last couple of years. In several markets like India, where the drug is not yet launched, some doctors have acknowledged on podcasts and other digital platforms that client enquiries for Ozempic and similar drugs have shot through the roof.

 

"These two are going to be big opportunities across the globe. So we have the right product strategies for these two molecules. We are looking right from development and capacity creation in API, and we are focussing on formulations as well as potential collaborations," Narasimham said.

 

"The idea is how we can go to the market early compared to our competitors. We are exploring all dimensions, from development to reaching the market early." If all goes well, the company expects the launch of these two products in FY26, he said.

 

OFF-PATENT OPPORTUNITY

Dr. Reddy's has deployed a special team to identify patent expiries of important products to detect bigger opportunities amongst them. "Of course, Dr. Reddy's is also one of the beneficiaries. A lot of product expiries are lined up over the next five to six years, and there are many changes in portfolios as well," he said without specifying any size or target areas.

 

"Our portfolio team is continuously focusing on these opportunities. We see bigger opportunities in biosimilars. You will see biosimilar patent expiries happening in the future," he said.

 

In China, Dr. Reddy's does not expect any surprises in terms of revenue growth or launches as the market is highly regulated and tender-driven. However, the company will continue to file 14-15 new drug applications each year with the Chinese regulator.

 

On CAR-T cell therapy, Narasimham said the company expects its commercial launch in India in FY26. CAR-T cell therapy is used in treating multiple myeloma. The company's arm Aurigene Oncology Ltd. has already received the Drugs Controller General of India's nod for the therapy in October, he said.

 

On the National Stock Exchange, shares of Dr Reddy's closed at INR 1,302.10, up 2.4% from the previous close.  End

 

Edited by Ashish Shirke

 

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