Interview: Dr Reddy's Laboratories chairman lays out acquisition roadmap

Dr Reddy's Laboratories chairman GV Prasad speaks to Shereen Bhan of CNBC TV18 on the company's acquisition plans in India in the coming years. Prasad also sheds light on competitive pressures in the market, which makes it important to have an efficient cost and margin structure.

Here's what he spoke about the company's growth strategy:

• Since the pricing environment is only going to get far more challenging as you progress, so when you talk about improvement in structure, productivity, gains, how much more can you eke out on those fronts given the intensity of the competitive pressure that you are expected to encounter?

So, the reality is, it is a competitive market. Companies that have a cost structure will be able to survive the competitive pressures and continue being there. But there’ll be pressure on margins, and the only way to overcome that is to find opportunities which are niche, which are differentiated and which have less competition, while we continue to play in that regular generic space.

And beyond that, we can look at areas such as biosimilars, speciality generics, and even OTCs (over the counters). These are the segments of the market which are less prone to severe competitive pressures. 

• Since you talked about exploring the areas with less competitive pressures, over what time horizon are you likely to monetise the pipeline of the 25 complex filings of the US?

We have been working on these products for a while. And these are difficult products - they are challenges in terms of technology, manufacturing and various aspects of bioequivalents and categorisation. We do have a significant number in the pipeline. You will start seeing launches each year, starting from this year onwards. This will help us maintain margins and growth.

• What can we expect as far as India is concerned? What about acquisitions? With the significant amount of cash on books at this point in time, are you going to be acquisitive, geography-specific or is it going to be an underlying growth driver as a strategy going forward?

India is a prime target for us to do inorganic growth. This is our home market, we want to increase our ranks here. So we are putting a lot of capital into M&A in India. If you see the last 2-3 years, they have been programmatic in terms of acquiring small brands and businesses in the Indian market. We’ll continue to drive that.

We are also finding other areas of growth, like you put in nutraceuticals. Even with the digital things that we’ll be experimenting with, the focus will be India. India will get a lot of attention from the management team. We’ll also have more capital allocated to the region, and we’ll also drive many of our innovation initiatives in India first.