Slow approvals in US concern for Dr Reddy's; Japan foray a positive move

Dr Reddy's Laboratories, the NYSE-listed Hyderabad-based pharma firm that has now crossed $1 billion revenues in the US market, has met many analysts' expectations on its growth numbers for the quarter ended March 2014. The company's revenues touched Rs 3,870 crore, a year-on-year growth of 11 per cent and for FY 15 the revenues stood at Rs 14,820 crore, a year-on-year growth of 12 per cent.

However, analysts still think the key challenge before the company is the slow process of approvals for new products in the US.

Some of the critical product approvals in the US have been held up because of the USFDA (US Food and Drug Authority) observations on the company's API (bulk drug) plant in Srikakulam in Andhra Pradesh, which came to light in November last year. The company has subsequently responded to the regulator and hopes to have the concerns sorted out.

Saumen Chakraborty, Dr. Reddy's CFO, told Business Today that the company was also moving in the direction of emerging among the top 10 pharma companies in domestic retail sales.

Currently at around 16th position in the Indian market, it hopes to figure among the top 14 in a year from now, according to Chakraborty, who is also the  President and Global Head of IT & BPE (Business Process Excellence). 

Analysts also feel the company's attempt to seriously foray into the Japanese market seems a positive move. Players like Lupin in India have already reaped the benefits of building a presence in the Japanese market, which is perceived as a market that is not easy to enter without a partner. Chakraborty says the company is developing a pipeline for Japan and is scouting for partners to commercialise them.

The company has also increased its Research & Development (R&D) expenditure by 41 per cent to Rs 1,740 crore in FY15.