Dr Reddy's calls off deal with Fujifilm

Deal called off by Dr Reddy's Labs citing Fujifilm's realighment of its strategy for pharmaceutical business

Dr Reddy's Laboratories Limited, the  Hyderabad-based generic pharmaceuticals major today called off  joint venture plans for generic drugs in Japan with Fujifilm Corporation, citing the latter's realignment of its strategy for pharmaceutical business.

In September 2011, Dr Reddy's had signed a memorandum of understanding (MoU) with Fujifilm to enter into an exclusive partnership in the generic drugs business for the Japanese market and to establish a joint venture in that country. Based on this, the two companies had conducted detailed studies on the establishment of a joint venture for developing and manufacturing generic drugs in Japan. However, as Fujifilm realigns its long-term growth strategy for the pharmaceutical business, both companies have entered into a mutual agreement to terminate the MoU.

“Unfortunately, we will not be able to partner with Fujifilm, specially for generic formulations business in Japan. However, I want to reinforce our commitment towards a planned entry into Japan to bring affordable and innovative drugs to more patients worldwide,” Dr Reddy's chairman and chief executive officer, G V Prasad, said.

Nevertheless, Dr. Reddy's added that the two companies would continue to explore partnership/alliance opportunities in other pharmaceutical business such as active pharmaceutical ingredient (API) development and manufacturing, contract research and development and manufacturing, and the development and marketing of super-generics.

Fujifilm too reiterated what Dr. Reddy’s had said. “In the long-term, we will be focusing more on priority fields such as new drugs in the cancer field, more value-added super generic, and bio-related business by using our core technologies: analysis technologies, original nanotechnology, and high reliability and high quality manufacturing technologies. Meanwhile, we will continue future collaboration with Dr Reddy's in other fields,” said Fujifilm director Takatoshi Ishikawa.

Incidentally, Dr Reddy's had signed the MoU with Fujifilm just two months after it terminated a business deal to acquire J B Chemicals & Pharmaceuticals for pharmaceutical prescription portfolio in Russia and other Commonwealth of Independent States countries on mutual understanding.

Many thought that Dr Reddy's strategy to partner with the Japanese company would provide the company with the long awaited breakthrough into the predominantly originator drug market, where many Indian generics players have so far failed to make any headway in selling their generic equivalents of those drugs to Japanese patients.

Japan constitutes just around $ 200 million of the $ 15 billion Indian pharmaceutical exports and most of it comes from the API business. Japanese people carry the notion that generics are not the same in quality terms with the innovator drugs. There has been a governmental effort at increasing the share of generics in total drug consumption to bring down the health care costs in Japan.

Japan is the world's second largest  pharmaceutical market.