Pharma biz becoming complicated: Anji Reddy

The global pharmaceutical business is becoming more complicated than ever before. Older businesses are being challenged by competition and new verticals are coming into play. There will be new developments and alliances as well as new opportunities and challenges. In this environment, only the rapid, clever and nimble will win, according to K Anji Reddy, chairman of pharma major Dr Reddy's Laboratories (DRL).

DRL was effecting various changes to create a 'winning infrastructure', he said in the annual report 2009-10. He expected the company to earn a return on capital employed between 18 per cent and 22 per cent during 2010-11.

The company's EBITDA (earnings before interest, taxes, depreciation and amortisation) of Rs 1,582.8 crore was the highest among the pharmaceutical companies in India. The return on capital during 2009-10 was 17 per cent as against 14 per cent during 2008-09.

DRL figured in the top 10 generic companies in the US markets. Its revenues in Russian and CIS markets grew 25 per cent as against the market growth of eight per cent during 2009-10. This resulted in the gross sales from these markets touching the $200-million mark for the first time for the company, he said, adding revenues from the Indian market too increased 20 per cent in 2009-10 to cross the Rs 1,000-crore mark.

There were about 50 dossier filing in various markets under its alliance with GlaxoSmithKline (GSK) to develop and market select products across emerging markets outside India. The products would be manufactured by DRL and licensed and supplied to GSK in Latin America, Africa, West Asia and the Asia Pacific, excluding India, the chairman said.

“I hope that DRL will continue getting successful Phase III results (for its diabetes candidate Balaglitazone) and will be able to monetise this new molecule in the future,” he said.

“The balance sheet has been effectively cleansed of intangible and goodwill on account of betapharm. Cost and organisational rationalisations are being carried out in Germany,” he said adding this along with greater supply chain support from India would allow betapharm to do better in the future. The company in 2009-10 took a write down of intangible assets of Rs 332.3 crore and goodwill of Rs 514.7 crore.

The company has set a target of $3 billion (around Rs 13,800 crore) revenues by FY13. It has over 13,000 employees, including 2,600 outside India.