Dr Reddy’s capex likely at ₹700 cr in H2: CMD Prasad

NEW DELHI : Hyderabad-based pharmaceutical company Dr Reddy’s Laboratories Ltd (DRL), will invest ab out 700 crore for capacity expansion during the second half of the fiscal, G. V. Prasad, co-chairman and managing director of DRL told Mint.

This will be similar to the amount invested during the first half of the fiscal and will take the total capital expenditure (capex) for the year to about 1,400 crore. He emphasized that the money will be used largely for expanding its manufacturing facilities and some new facilities in India.

“Biologics is something we are expanding quite a bit, and some other portfolios as well,” Prasad said.

The company had a capex of about 1,100 crore in FY23, making it a 24% increase in FY24 from the year ago. In its Q2FY24 results, had announced that it will be looking to expand its India business through acquisitions and buyouts, licensing, and collaborations. “The funding for that will be through separate means and will not be part of any of the capex plans of the company,” he said, without disclosing the amount allocated.

DRL had, earlier in the year, been reported to be in the race to acquire US-based Biogen Biologics, as well as Cipla’s promoter’s stake. Prasad said at the moment, he won’t be commenting on any major acquisition-related “rumo-urs”.

The pharma major in its Q2FY24 results had attributed its growth to be primarily driven by pricing and new launches, signing an in-licensing agreement for Pyrotinib from Hengrui, and launching its direct-to-consumer e-commerce website along with five new products during the quarter. It also launched its first digital product, Neivio, for migraine care in India.

The company has been developing a portfolio for biosimilars and biologics through development deals for both, while also expanding its facilities. DRL received some observations for its facilities from the US Food and Drug Administration (USFDA) and it is responding to them, he said.

The biosimilar market in India is estimated to grow at a compounded annual growth rate (CAGR) of 22% to become $12 billion by 2025. This would represent almost 20% of the total pharmaceutical market in India.

The Company’s brand and generic cancer drug, Revlimid (lenalidomide) has been under scrutiny recently with a litigation filed in a US court over its sale.

“Revlimid is a transaction we did with the innovator to launch early, and a number of others have also launched. So, people feel that we are benefiting from it. So, we are fighting it along with everybody else, but we think we will win,” Prasad said while maintaining DRL’s stance on the situation.

The complaint filed by Mayo Clinic and Lifepoint Corporate Services “asserts claims under Federal and State antitrust laws and other State laws alleging that the defendants improperly restrained competition and maintained a shared monopoly in the sale of brand and generic Revlimid through their respective settlements of patent litigation,” it had said in the exchange filing.

Besides Dr. Reddy’s Laboratories, several other pharmaceutical companies have also been named in the complaint.

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Updated: 19 Nov 2023, 11:30 PM IST