MC Interview | Dr Reddy's looking to jump ranks in domestic market, eyes M&As in chronic segment

M.V. Narasimham, Chief Financial Officer, Dr. Reddy’s

In an exclusive interview, Dr Reddy's CFO, M.V. Narasimham, discussed the company's strategy to improve its ranking in the Indian Pharmaceutical Market (IPM) and its key growth drivers. Currently ranked 10th, the company aims to reach the 5th position within the next five years. Narasimham emphasised four key growth levers to drive this move: brand planning, collaborations, innovation, and inorganic growth.

Narasimham also outlined the company’s growing presence in the chronic segment, with acquisitions like Cidmus, and noted the strategic importance of biosimilars, with launches of Abatacept, Denosumab, and Rituximab in the pipeline. Despite Revlimid's impact, these new therapies are expected to drive future growth. He also highlighted the company’s progress in its PSAI business, particularly in the CDMO space, where Dr Reddy's sees significant potential, especially with the Biosecure Act.

Edited excerpts from the interview:

Currently, Dr Reddy's is ranked 10th in the IPM. Do you plan on improving that rank, and what major growth drivers do you anticipate for this improvement?

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. This quarter, we are close to double-digit growth. Even if we exclude our recent vaccine portfolio, we are at 18% growth. With the vaccine portfolio, it’s higher, but excluding it, we are still close to double-digit growth, which is more than the market’s growth.

To achieve this growth, we’re focusing on a few areas. First, within our existing portfolio, we’ve identified some major brands and are working on changing our promotional strategies, restructuring teams, and driving better growth. Second, we are looking at collaborations, such as the one with Sanofi, and continuing to seek similar partnerships. Third, innovation is key for us. We are focused on bringing innovative assets into the India business. For example, next year we’ll be launching CAR-T, which comes from our Aurigene portfolio. We are building the infrastructure for it and expect a launch in FY26.

These three elements—brand planning, collaborations, and innovation—are crucial to achieving double-digit growth. The fourth lever is inorganic opportunities. We’re looking for acquisitions, but we are cautious about inflated multiples. We aim for acquisitions that provide a good return on investment without burdening our P&L.

As of now, we’re ranked 10th, but over the next five years, we aim to move up to the fifth position.

Regarding M&As, analysts have been waiting for big acquisitions in the domestic market. While we’ve seen some smaller M&As, the big ones haven’t materialized yet. In which areas do you plan to grow through M&As?

We are primarily focused on chronic therapies, where we believe we are in a good position, especially in oncology, dermatology, and dental. We are always looking to expand in these areas, but our acquisition criteria are clear: no overlap with our 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.

We also have a significant partnership in nutraceuticals with Nestlé. This collaboration has great potential in India, and we believe it will become a major growth driver.

As for the timeline, we’ve already commercialized this quarter. The portfolio team is currently evaluating brands, after which we’ll undergo R&D and regulatory approvals. We expect momentum in this portfolio in the near future.

Now, regarding therapy segments, which areas do you see having better growth prospects in the coming years?

We’re focusing on the chronic segment, where we are not yet the leader. We’ve strengthened our position by acquiring Cidmus. In addition, we’re dominant in areas like dermatology, dental, and oncology, and nutraceuticals are also a priority for us.

You also mentioned three major upcoming launches: Abatacept, Denosumab, and Rituximab. What revenue potential do you expect from these, and will they offset the loss of Revlimid's incremental opportunity?

Regarding biosimilars, we’ve already launched six biosimilars in India and emerging markets. In the US, we had an initial partnership with Fresenius for Pegfilgrastim, which has already been commercialized. In Europe, we’ve out-licensed the same product. We also recently received approval for Rituximab in Europe and plan to launch it ourselves there soon. In the US, we’ve out-licensed it to Fresenius and expect approval by the end of this year or early next year.

Abatacept is also a promising product, and we’re currently in phase 3 trials. We expect to submit our BLA (Biologics License Application) with the FDA by December 2025 and launch by FY27. In the meantime, we’re building the necessary capabilities in the US and Europe for its launch.

Alongside Abatacept, we’re planning to launch Denosumab in FY26. This is a strategic approach to ensure that our teams are fully prepared for both launches. We are also exploring additional licensing opportunities to continue building our biosimilars portfolio in the US.

Lastly, regarding the PSAI business, particularly in light of the Biosecure Act, what are your thoughts on this opportunity?

In PSAI, we have two businesses: CDMO and pure API. In the CDMO space, we’ve seen significant opportunities even before the Biosecure Act. We operate through our separate subsidiary, Aurigene Pharmaceutical Services Limited, and have added biology capabilities. We are actively pursuing opportunities in this space and are confident in its growth potential.