Dr Reddy's Laboratories is aiming to move up to the fifth rank in the Indian pharma market within the next five years, the company's chief financial officer, M.V. Narasimham, said in an exclusive interview with Moneycontrol.
Highlighting Dr Reddy's strategy to climb from its current 10th position in the domestic pharma market, Narasimham outlined four key drivers—brand planning, collaborations, inorganic growth opportunities, and innovation—as pivotal to achieving double-digit growth and advancing up the rankings.
Despite its stellar performance in the US market in recent quarters, primarily banking on the solid contributions from the star cancer drug Revlimid, Dr Reddy's has largely underperformed the growth in the Indian pharma market. After hiving off some brands to other drugmakers, Dr Reddy's had also been on the lookout for inorganic growth opportunities to drive momentum in its domestic portfolio. On the way, it acquired Sanofi India's vaccine portfolio, which has helped it deliver double-digit domestic growth in the quarter gone by.
"The India market continues to be our focus, and in recent times, we've lagged behind the market growth. We’ve always believed the India market will grow at double digits, and we've consistently said that our growth will outperform the market," Narasimham said in the interaction.
Expanding further on Dr Reddy's strategy for growth, Narasimham stated that the drugmaker has first identified major brands and is revamping its promotional strategies, restructuring teams, and aiming for stronger growth in those select areas. Secondly, the drugmaker is also pursuing collaborations, such as its partnership with Sanofi and its nutraceuticals joint venture with Nestlé.
Thirdly, the company is focused on innovation as it plans to introduce some of its innovative assets into the domestic market, for which it is already building the necessary infrastructure.
The fourth lever is inorganic opportunities. "While we’re actively exploring acquisitions, we are cautious about inflated multiples and are seeking deals that offer strong returns without burdening our P&L," Narasimham said. Dr Reddy's currently has a cash balance of Rs. 1,133 crore on its books as per the July-September quarter, up over 37 percent from the end of FY24.
As for inorganic opportunities, Narasimham stated that Dr Reddy's is eyeing M&As in the chronic therapies space, where it sees strong prospects. "We are primarily focused on chronic therapies, where we believe we are in a good position, especially in oncology, dermatology, and dental," he said.
Aside from that, the company is also looking to expand in areas with no overlap with its existing portfolio, strong growth potential, and long-term value. "We prefer acquiring brands rather than companies, and we would integrate them into our portfolio for immediate growth," Narasimham added.
The company also remains focused on areas like dermatology, dental, oncology, and nutraceuticals, which remain a priority for Dr Reddy's.
Also Read | Lack of strong launch pipeline keep brokerages neutral over Dr Reddy's Labs
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
