Dr. Reddy’s Laboratories' mergers and acquisitions strategy will prioritise financially sound branded assets within the pharmaceutical and consumer health segment, the company's Chief Financial Officer, M V Narasimham, told Moneycontrol.
Last year's acquisition of Haleon's global NRT business (excluding the US) on September 30, 2024, for over Rs 5,000 crore, has “exceeded” expectations, with the branded business set to expand to approximately 45 percent of its total portfolio.
This shift underscores a strategy that values the longevity of branded assets, which can thrive for decades over the price-erosion-prone generics business common in the US and Europe.
Narasimham said the company would steer clear of new verticals like medical devices or diagnostics, focusing instead on opportunities that strategically fit its portfolio in key geographies like India, Europe, and other emerging markets.
"The top priority for capital allocation is branded businesses, followed by innovative assets," Narasimham said.
Narasimham said the company’s acquisition principle would be to target assets whose earnings must outweigh the cost of financing the deal.
"We don't want to bother the P&Ls at this point of time, because wherever the multiples are high...we look at, okay, let it move on," he said.
Dr. Reddy's reported revenues of Rs 8,545 crore for the quarter ended June 30, 2025, an 11 percent increase from the Rs 7,698 crore posted in the same quarter last year. EBITDA for Q1 FY26 stood at Rs 2,278 crore, a 5 percent increase year-over-year, while net profit grew 2 percent to Rs 1,418 crore. The company ended the quarter with a net cash surplus of Rs 2,922 crore.
Europe nicotine brands acquisition 'exceeding' expectations
The acquisition of the Nicotine Replacement Therapy (NRT) portfolio serves as a prime example of the company’s strategy in action. The deal has been a significant growth driver, contributing to the European business’s 142 percent year-over-year revenue surge in the first quarter. The acquired NRT business alone contributed Rs 669 crore in sales during the quarter, in a quarter that otherwise pulled down sales in North America due to the loss of exclusivity of anti-cancer generic Revlimid.
Narasimham confirmed that the asset is already profitable and performing "better than our expectations". The integration is proceeding on schedule.
Operations in the UK were integrated on May 1, 2025. Nordic countries, including Denmark, Norway, and Sweden, came into the fold on July 1, 2025. The company expects 80 percent of the NRT business's sales to be under its control by December 2025, with a full transition to be completed by March 2026.
Looking ahead, Dr. Reddy’s plans to expand its newly acquired NRT portfolio into more countries once the integration is complete.
Dr Reddy's Haleon's deal includes brands such as Nicotinell globally, and local brands like Nicabate in Australia, Thrive in Canada, and Habitrol in New Zealand and Canada. The product formats involved include lozenges, patches, and gums. The acquired business operates in over 30 countries across Europe, Asia, and Latin America. This acquisition is seen as a strategic move to expand Dr. Reddy's presence in consumer healthcare and strengthen its global OTC business with established brands. The acquired business was profitable, generating approximately GBP 217 million in revenue in 2023.
The Hyderabad-based company will be launching a biosimilar in the US in partnership with German drugmaker Fresenius Kabi. It also intends to launch future biosimilars in the US and Europe on its own, signaling greater confidence in its own commercial capabilities.
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!
