Dr. Reddy's Market Outlook, Forecasts and Analysis to 2012

Table of Contents

1 Executive Summary - Dr. Reddy' s Laboratories is Raising its International Profile With The Long-Term Aim of Being A Discovery Led Company

2 An Introduction to Dr. Reddy' s Laboratories

• 2.1 Dr. Reddy' s Laboratories is a Leading Indian Company Specialising in Generics, Bulk Active Ingredients and Drug Discovery
  • 2.1.1 The Company Was Founded in 1984 by Chairman Dr Anji Reddy - His Entrepreneurial Drive is Still Prominent
  • 2.1.2 Dr. Reddy' s Laboratories is Currently Expanding its Operations and Revenues Impressively
  • 2.1.3 Exports Commenced in 1986 and Drug Discovery in Mid-1990s
  • 2.1.4 Dr. Reddy' s has Been Quoted on the New York Stock Exchange Since 2001
  • 2.1.5 Dr. Reddy' s is a Family-Run Business That Remains Close to Its Roots
• 2.2 Dr. Reddy' s Has An Interesting Range of Business Divisions
  • 2.2.1 Dr. Reddy' s Conducts its Operations in Sites Across The World
• 2.3 Vision and Mission in Dr. Reddy' s
• 2.4 Dr Ready Collaborates With Other International Companies
• 2.5 Key Events in the Company' s History
• 2.6 Dr. Reddy' s Businesses
• 2.7 Dr. Reddy' s Specialises in Active Pharmaceutical Ingredients (API) and Branded Formulations
  • 2.7.1 Branded Formulations Yielded the Highest Revenues for Dr. Reddy' s in 2005-2006 Leading Therapeutic Classes and Top 10 Products
• 2.8 Generics Constitute a Steadily-Expanding Market Opportunity
  • 2.8.1 Expiry of Patents and Other Protection
  • 2.8.2 Dr. Reddy' s Generics in the US and EU
  • 2.8.3 Dr. Reddy' s Acquired Betapharm Group in Early 2006
  • 2.8.4 Dr Reddy' s is Well-Placed to Seize Opportunities in the Strongly-Expanding World Generics Market
  • 2.8.5 Teams in India, the US and Europe Will Be Crucial to the Success of Dr. Reddy' s Generics
• 2.9 Branded Formulations
  • 2.9.1 The Branded Formulation Business has International Scope and Dedicated Sales Force
  • 2.9.2 Global Brands
  • 2.9.3 Oncology
• 2.10 Biologics Are a Core Competency of Dr. Reddy' s
• 2.11 Custom Pharmaceutical Services (CPS)
• 2.12 Discovery Pipeline
  • 2.12.1 R&D Therapeutic Areas
  • 2.12.2 Metabolic Disorders
  • 2.12.3 Cardiovascular Disorders

3 Dr. Reddy' s Laboratories Is Responding To Challenges and Opportunities in The Market Through Ambitious Corporate Strategy

• 3.1 The World Pharmaceutical Market Continues to Grow, But Faces Mounting Challenges
• 3.2 The Continuing Success of International Pharmaceutical Companies is Dependent Upon Important Drivers and Restraints
• 3.3 Companies Are Gradually Changing Their Strategic Focus to Overcome Challenges in the Worldwide Market
• 3.4 Reduced Efficiencies in R&D Result in Concerns Over Thinning Pipelines
• 3.5 Driving and Restraining Forces Acting Upon Dr. Reddy' s Laboratories
  • 3.5.1 A SWOT Analysis for Dr. Reddy' s Laboratories, 2007-2012
• 3.5.2 Dr. Reddy' s Has a Focussed Strategy To Cope with Market Conditions and Opportunities
• 3.6 All Business Divisions Will Show Strong Growth Throughout The Forecast Period
  • 3.6.1 Branded Formulations Will Show the Greatest Change in Relative Contribution to Revenue From 2006-2012
  • 3.6.2 Net Profits Increased Five-fold in 2006
• 3.7 Spectacular Increases in Corporate Revenue in Fiscal Year 2007 - Revenues Exceeded $1bn by End of Q3
  • 3.7.1 First Quarter Results, 2007
  • 3.7.2 Second Quarter Results, 2007
  • 3.7.3 Third Quarter Results, 2007
  • 3.7.4 Launch of Important US Generics in 2006 is Significant
  • 3.7.5 Acquisition of German Generics Company Betapharm Boosts Fortunes in 2006
  • 3.7.6 NCE Research and Development Concentrated in Spin-Off Company Perlecan Pharma
• 3.8 Increase in ANDA Filings in the US
• 3.9 Cost Containment in Europe Provides Major Opportunities for Dr. Reddy' s 3.10 In Branded Formulations Dr. Reddy is Concentrating on India and Russia
• 3.11 Dr. Reddy' s Has Grown Significantly Through Mergers and Acquisitions
  • 3.11.1 Other Leading Indian Companies Are Prominent in Pharmaceutical Acquisition
  • 3.11.2 Dr. Reddy' s Increased Presence in German Market through Acquisition of Betapharm
  • 3.11.3 Custom Pharmaceutical Services Boosted by Acquisition of Roche' s API Business
  • 3.11.4 Trigenesis Therapeutics Acquired to Provide Platform in Dermatology
  • 3.11.5 Meridian Healthcare - Dr. Reddy' s First Overseas Acquisition
  • 3.11.6 Merger with American Remedies
  • 3.11.7 Merger With Cheminor Drugs
• 3.12 Regional Strategy
  • 3.12.1 India Constituted the Largest Market for Dr. Reddy' s in 2005-2006
  • 3.12.2 The Main Markets for Dr. Reddy' s Generics are the US and Europe
  • 3.12.3 In the Branded Formulations market Dr. Reddy' s is focused on India and Russia
• 3.13 Little In-Licensing Performed Recently
• 3.14 Dr. Reddy' s Faces Strong Competition From Other Leading Indian Companies With Similar Aspirations
  • 3.14.1 Ranbaxy - The Leading Indian Pharmaceutical Company is Performing Very Strongly
  • 3.14.2 Ranbaxy Has a Vision Similar to that of Dr. Reddy' s - To Develop Novel Drugs Successfully
  • 3.14.3 Ranbaxy' s R&D is Focussed on Anti-Infectives, Urology, Respiratory, Inflammatory and Metabolic Diseases
  • 3.14.4 Heightened Rivalry In Indian Pharma with Ranbaxy and Cipla Linked to Bid for Merck Generics Unit
• 3.15 Patent Litigation Continues for Dr. Reddy' s Laboratories
  • 3.15.1 Loss of AmVaz Case but Others Continue Over Leading Drugs
  • 3.15.2 Plavix Challenge
  • 3.15.3 At Risk Launch of Fexofenadine
• 3.16 Dr. Reddy' s has developed Key Strategic Alliances With Other Pharmaceutical Companies

4 Generics

• 4.1 Dr. Reddy' s Generics Division Will Achieve Strong Growth from 2006-2012
  • 4.1.1 There Are Still Large Potential Gains in the Global Generics Market
  • 4.1.2 Generics Will Remain Dr. Reddy' s Principal Strength and Revenue Generator Throughout the Foreseeable Future
• 4.2 The Main Markets for Dr. Reddy' s Generics are the US and Europe
  • 4.2.1 Fiscal Year 2006 Revealed a Fall in US Revenues
  • 4.2.2 In Europe Growth Continued Strongly Especially Through Acquisition of Betapharm
  • 4.2.3 Price Reductions in Europe
  • 4.2.4 Regulatory Formula on Retail Pricing in the Indian Market
• 4.3 Generics: Results from The First Three Quarters of Fiscal Year 2007
  • 4.3.1 Quarter 1 2007
  • 4.3.2 Quarter 2 2007
  • 4.3.3 Quarter 3 2007
  • 4.3.4 Improvement in the North American Generics Market is Significant
• 4.4 The Acquisition of Betapharm: Dr. Reddy' s is Ambitious for Greater Penetration of European Markets, Commencing With Germany
• 4.5 Battle to Launch Generic Amlodipine
• 4.6 US Generics Pipeline: Dr. Reddy' s a Vigorous Filer of ANDAs
  • 4.6.1 17 DMFs Submitted to FDA During Fiscal Year 2006
  • 4.6.2 ANDAs Submitted Leading To Tentative Approvals
  • 4.6.3 Dr. Reddy' s is Entering the Race To Tap The Potentially Lucrative Biosimilars Market
• 4.7 Dr. Reddy' s Recently Launched Authorised Generic Versions of Proscar and Zocor
• 4.8 Settlement Of Imitrex Litigation with GSK Results in Future Authorised Generic for Dr. Reddy' s
• 4.9 180-Days of Marketing Exclusivity for Ondansetron Tablets 4.10 The Patents Act of 2005 Had a Profound Effect on The Indian Generics Market
• 4.11 Dr. Reddy' s Continues To Challenge Patents Vigorously
  • 4.11.1 Clopidogrel bisulphate
  • 4.11.2 Esomeprazole
  • 4.11.3 Isotretinoin
  • 4.11.4 Levetiracetam
  • 4.11.5 Moxifloxacin
  • 4.11.6 Ondansetron
  • 4.11.7 Olanzapine
  • 4.11.8 Rabeprazole
  • 4.11.9 Risperidone
  • 4.11.10 Sertraline
  • 4.11.11 Sumatriptan
• 4.12 Generics Is a Market of Increasing Significance - This Area Will Remain the Principal Commercial Strength of Dr. Reddy' s from 2007-2012

5 Branded Formulations - Including Biotechnology and Critical Care

• 5.1 Branded Formulations Will Remain a Key Driver of Revenue Despite Being Overtaken by Generics
  • 5.1.1 Expansion into Developing Markets will be a Cornerstone of Dr. Reddy' s Strategy
  • 5.1.2 New Product Launches will Be Vital to Success for Branded Formulations
• 5.2 Results from The First Three Quarters of Fiscal Year 2007
  • 5.2.1 Quarter 1 2007
  • 5.2.2 Quarter 2 2007
  • 5.2.3 Quarter 3 2007
• 5.3 Branded Formulations Was The Leading Business Unit in Dr. Reddy' s for Revenue Generation in 2006
• 5.4 The Branded Formulation Business has International Scope and Dedicated Sales Force
  • 5.4.1 In Branded Formulations Dr. Reddy' s Focuses on India and Russia
  • 5.4.2 The International Market for Branded Formulations Showed Strong Growth in 2006
• 5.5 Revenues in Critical Care and Biotechnology Increased by over 30% in 2006 - Further Steady Growth Expected
  • 5.5.1 Dr. Reddy' s Will Become Increasingly Involved in Biotechnology
• 5.6 Perlecan Pharma

6 Custom Pharmaceutical Services (CPS)

• 6.1 Custom Pharmaceutical Services will Increase in Prominence from 2007-2012
  • 6.1.1 Dr. Reddy' s CPS Division Will Benefit from Current Trends in the Global Pharmaceutical Market
  • 6.1.2 CPS Will Benefit Greatly from the Recent Acquisition in Mexico With Significant Future Growth Likely
• 6.2 Strong Growth During the First Three Quarters of the 2007 Financial Year
  • 6.2.1 Quarter 1 2007
  • 6.2.2 Quarter 2 2007
  • 6.2.3 Quarter 3 2007
• 6.3 Acquisition of Roche' s API Business in Mexico Was a Major Development in Custom Pharmaceutical Services

7 Active Pharmaceutical Ingredients

• 7.1 Active Pharmaceutical Ingredients Will Show Moderately High Growth from 2007-2012
  • 7.1.1 Expansion of The Product Range and Geographical Coverage Will Drive Growth in Dr. Reddy' s API Business
  • 7.1.2 Dr. Reddy' s Relies Upon a Sound Patenting Strategy in APIs for Continuing Growth
• 7.2 Acquiring Roche' s API Business in Mexico Was a Stimulus For Dr. Reddy' s
• 7.3 Increase in Revenues from India in 2006 but Slight Decline in US
• 7.4 Active Pharmaceutical Ingredients: Results from The First Three Quarters of Fiscal Year 2007
  • 7.4.1 Quarter 1 2007
  • 7.4.2 Quarter 2 2007
  • 7.4.3 Quarter 3 2007
• 7.5 India Constitutes an Increasingly Important Part of the Pharmaceutical Value Chain in Active Pharmaceutical Ingredients

8 Pipeline Developments in Dr. Reddy' s Laboratories

• 8.1 Dr. Reddy' s Spent 12% of its Annual Revenue on R&D in 2006
• 8.2 R&D Centred Upon NCE' s in Metabolic Disorders, Cancer, Cardiovascular, And Infectious Diseases
• 8.3 Dr. Reddy Has Several Important Lead Compounds With Potential For Commercial Success
• 8.4 Perlecan Pharmaceutical - A Spin-Out Company To Reduce Risk of NCE Development
• 8.5 Aurigene Discovery Technologies is Another Dr. Reddy' s R&D Venture
• 8.6 Alimentary Tract and Metabolism
  • 8.6.1 Balaglitazone
  • 8.6.2 DRF 11605
  • 8.6.3 DRF 16536
• 8.7 Antineoplastics/Immunomodulating Agents
  • 8.7.1 DRF 1042
  • 8.7.2 Co-Development of DRF 1042
• 8.8 Cardiovascular System Agents
  • 8.8.1 DRF 10945
  • 8.8.2 RUS 3108
  • 8.8.3 DRL 16805
• 8.9 Musculoskeletal System Agents
• 8.10 Respiratory System Agents
• 8.11 R&D Pipeline Products: Other Strategic Alliances
  • 8.11.1 DRL 16536, DRL 11605, RUS 3108, DRL 10945
  • 8.11.2 Generic Cancer Treatments
  • 8.11.3 Argenta
  • 8.11.4 Debiopharm
  • 8.11.5 ICICI Venture Funds Management
  • 8.11.6 Insulin Sensitising Agent - The Successor to DRF 4158
  • 8.11.7 Leiner Health Products
  • 8.11.8 Novo Nordisk
  • 8.11.9 Rheoscience

9 The Indian Pharmaceutical Market

• 9.1 The Indian Pharmaceutical Market Will Expand Rapidly from 2005-2011
• 9.2 The Indian Pharmaceutical Market Will Benefit from Many Important Drivers
• 9.3 Potential for Growth In the Indian Market Is Exciting, But Poverty and Lack of Developments Remain Serious Hurdles
• 9.4 India Is the Second Fastest Growing Major Economy After China
• 9.5 Political And Economic Reforms Have Eased India' s Transition into the Modern, Globalised Economy
• 9.6 Widespread Poverty Remains a Major Problem in India - There is a Vast Potential Market for Pharmaceuticals But Usually Only Limited Resources for Purchasing Branded Drugs
• 9.7 India Has an Expanding Professional Class Which Serves As a Strong Driver of Growth in The Pharmaceutical Market
• 9.8 Domestic Companies Generated 75% of Sales in the Indian Pharmaceutical Market in 2005
  • 9.8.1 Leading International Brands are Aimed at More Exclusive Market Niches Than Cheaper Domestic Products
  • 9.8.2 India Has a Particularly Strong Generics Industry - With the Profile of That Sector Growing Internationally Despite Reduced Domestic Opportunities
  • 9.8.3 The Re-Introduction of Patent Protection Will Increasingly Drive the Market for Branded Products, Especially Those From International Companies
  • 9.8.4 Indian Companies Are Engaging in Joint Ventures and Spin-Off Ventures to Perform Original R&D
  • 9.8.5 The Indian Pharmaceutical Sector is Attractive to Foreign Investors
• 9.9 State Governments Are Responsible for Providing Healthcare - However Patients Are Very Reliant on The Private Sector
  • 9.9.1 The National Rural Health Mission (NRHM) Should Provide a Significant Boost to Public Healthcare
  • 9.9.2 Physicians Often Make Prescribing Decisions Based Upon the Resources of the Patient
  • 9.9.3 Changes to the Indian Pricing System are Imminent
  • 9.9.4 The Government in Combination With the Gates Foundation Has Announced the Establishment of Public Health Institutes in India 9.10 India Currently Has A Fragmented Procedure for Drug Approval - The Establishment of a National Drugs Agency Should Rationalise the Process
• 9.11 India Is a Highly Attractive Location for R&D Activities
• 9.12 The Indian Pharmaceutical Market: Conclusions

10 Conclusions

• 10.1 Dr. Reddy' s Laboratories is an International, Vertically-Integrated Pharmaceutical Company
• 10.2 Business Divisions Will Show Strong Growth Throughout The Forecast Period
• 10.3 Dr. Reddy' s Has a Focussed Strategy To Cope with Market Conditions and Opportunities
• 10.4 Efforts in NCE Development Point the Way to the Future for Dr. Reddy' s Laboratories

Appendices

List of Tables

• Table 2.1 Dr. Reddy' s Revenue Growth ($m), 2002-2006
• Table 2.2 Pre-Tax and Net Profit ($m), 2002-2006
• Table 2.3 Key Events in The History of Dr. Reddy' s Laboratories
• Table 2.4 Dr. Reddy' s Net Revenues ($m) by Business Unit, 2005-2006
• Table 2.5 Sales from Dr. Reddy' s Top Five Therapeutic Classes, June 2005 to June 2006
• Table 2.6 Dr. Reddy' s Pharmaceuticals: Leading International Products, June 2005-June 2006
• Table 3.1 Revenue Generation ($bn) by the World Pharmaceutical Industry, 1999-2005
• Table 3.2 A SWOT Chart for Dr. Reddy' s Laboratories, 2007-2012
• Table 3.3 Revenue ($m) by Business Division, 2006-2012
• Table 3.4 Compound Annual Growth (CAGR), 2006-2012
• Table 3.5 Revenue Contribution (%) by Business Division, 2006 and 2012
• Table 3.6 Dr. Reddy' s Net Profit ($m) and Proportion of Revenue (%), 2005 and 2006
• Table 3.7 Dr. Reddy' s Net Revenue ($m) by Region, 2005-2006
• Table 3.8 Top 5 Indian Pharmaceutical Companies: Revenues ($m) and Growth (%), Fiscal Year 2006
• Table 3.9 Sales and Marketing Alliances With Other Pharmaceutical Companies
• Table 4.1 Revenue ($m) from Dr. Reddy' s Generics, 2006-2012
• Table 4.2 Contribution (%) to Total Revenue: Generics, 2006 and 2012
• Table 5.1 Revenue ($m) from Dr. Reddy' s Branded Formulations, 2006-2012
• Table 5.2 Contribution (%) to Total Revenue: Branded Formulations, 2006 and 2012
• Table 5.3 Dr. Reddy' s Biotechnology and Critical Care Revenues ($m), 2005 and 2006
• Table 5.4 Dr. Reddy' s Biotechnology and Critical Care Revenues ($m), 2006-2012
• Table 6.1 Revenue ($m) from Dr. Reddy' s Custom Pharmaceutical Services, 2006-2012
• Table 6.2 Contribution (%) to Total Revenue: Custom Pharmaceutical Services, 2006 and 2012
• Table 7.1 Revenue ($m) from Dr. Reddy' s Active Pharmaceutical Ingredients, 2006-2012
• Table 7.2 Contribution (%) to Total Revenue: Active Pharmaceutical Ingredients, 2006 and 2012
• Table 8.1 Dr. Reddy' s Investment in R&D, Fiscal Years 2005 and 2006
• Table 8.2 Research Pipeline for Dr. Reddy' s, 2006 Table 8.3 Alimentary Tract and Metabolism Agents
• Table 8.4 Antineoplastics/Immunomodulating Agents
• Table 8.5 Cardiovascular System Agents
• Table 8.6 Musculoskeletal System Agents
• Table 8.7 Respiratory System Agents
• Table 9.1 Pharmaceutical Revenues ($bn) for India, 2005-2011
• Table 9.2 India: Fundamental Demographics and Healthcare Economics

List of Figures

• Figure 2.1 Dr. Reddy' s Revenue Growth ($m), 2002-2006
• Figure 2.2 Pre-Tax and Net Profit ($m), 2002-2006
• Figure 2.3 Allocation of Scientific Personnel, 2006
• Figure 2.4 Dr. Reddy' s Laboratories Total Revenue, 2005 and 2006
• Figure 2.5 Net Revenue ($m) by Business Unit, 2005-2006
• Figure 2.6 Revenue Contribution (%) by Business, 2005-2006
• Figure 3.1 Revenue Generation ($bn) by the World Pharmaceutical Industry, 1999-2005
• Figure 3.2 Total Revenue ($m), 2006-2012
• Figure 3.3 Revenue Contribution ($m) by Business Division, 2006-2012
• Figure 3.4 Revenue Contribution (%) by Business Division, 2006
• Figure 3.5 Revenue Contribution (%) by Business Division, 2012
• Figure 3.6 Dr. Reddy' s Net Profit ($m), 2005 and 2006
• Figure 3.7 Dr. Reddy' s Net Profit as a Proportion (%) of Revenue, 2005 and 2006
• Figure 3.8 Dr. Reddy' s Net Revenue ($m) by Region, 2005-2006
• Figure 3.9 Revenue Contribution (%) by Region, 2005-2006
• Figure 3.10 Top 5 Indian Pharmaceutical Companies - Revenues ($m), Fiscal Year 2006
• Figure 3.11 Top 5 Indian Pharmaceutical Companies - Revenues Growth (%), Fiscal Year 2006
• Figure 4.1 Revenue ($m) from Dr. Reddy' s Generics, 2006-2012
• Figure 4.2 Contribution (%) to Total Revenue: Generics, 2006 and 2012
• Figure 4.3 Dr. Reddy' s Generics: Revenue Contribution (%) by Region, 2006
• Figure 5.1 Revenue ($m) from Dr. Reddy' s Branded Formulations, 2006-2012
• Figure 5.2 Contribution (%) to Total Revenue: Branded Formulations, 2006 and 2012
• Figure 5.3 Branded Formulations: Revenue Contribution (%) by Therapy Area, 2005-2006
• Figure 5.4 Branded Formulations: Revenue Contribution (%) by Region, 2006
• Figure 5.5 Dr. Reddy' s Biotechnology and Critical Care Revenues ($m), 2006-2012
• Figure 6.1 Revenue ($m) from Dr. Reddy' s Custom Pharmaceutical Services, 2006-2012
• Figure 6.2 Contribution (%) to Total Revenue: Custom Pharmaceutical Services, 2006 and 2012
• Figure 7.1 Revenue ($m) from Dr. Reddy' s Active Pharmaceutical Ingredients, 2006-2012
• Figure 7.2 Contribution (%) to Total Revenue: Active Pharmaceutical Ingredients, 2006 and 2012
• Figure 7.3 Active Pharmaceutical Ingredients: Revenue Contribution (%) by Region, 2006
• Figure 9.1 Pharmaceutical Revenues ($bn) for India, 2005-2011
• Figure 9.2 World Market Share (%) for India - 2005 and 2011 Compared
• Figure 9.3 Breakdown (%) of India' s GDP by Sector, 2005
• Figure 9.4 Sales of Leading Companies in the Indian Market, 2004
• Figure 9.5 Leading Therapeutic Areas ($m) In the Indian Pharmaceutical Market, 2005
• Figure 9.6 A Breakdown (%) of the Indian Government' s Budget for Healthcare, 2006-2007
• Figure 10.1 Dr. Reddy' s Total Revenue, 2006-2012
• Figure 10.2 Revenue by Business Division, 2006-2012

American Remedies

• Apotex
• Argenta
• Aurigene Discovery Technologies
• Barr
• Bayer AG
• Benzex Laboratories
• Betapharm
• BMS Laboratories
• Boehringer Ingelheim
• Bristol-Myers Squibb
• Cheminor Drugs
• Cipla
• Citigroup Venture Capital
• ClinTec International
• Daiichi Karkaria
• Debiopharm
• Dr. Reddy' s Laboratories
• Eisai
• Eli Lilly
• Falcon
• Gland Pharmaceutical
• GlaxoSmithKline
• Group Pharmaceutical
• Growth Partnership Mauritius Ltd
• Hexal
• ICICI Venture Funds Management
• Ivax
• Johnson & Johnson
• Leiner Healthcare
• Matrix
• Merck & Co
• Merck KGaA
• Meridian Healthcare
• Mylan
• Nicholas Piramal
• Novartis
• Novo Nordisk
• Par Pharmaceutical
• Perlecan Pharma
• Pfizer
• Pliva
• Prasco
• Ranbaxy
• Ratiopharm
• Reddy Cheminor
• Rheoscience
• Roche
• Sandoz
• Sanofi-Aventis
• Sanofi-Synthelabo
• Schering-Plough
• Schwartz Pharma
• Stada
• Standard Organics Limited
• Sun Pharmaceutical
• Teva
• Torrent
• Trigenesis Therapeutics
• UCB
• Watson Pharmaceuticals