How a change in proprietary strategy is yielding results for Dr Reddy's

As reduced commercialisation costs add to profitability, the growth in India and emerging markets is also encouraging

As part of its strategy to rationalise costs, Dr Reddy’s Laboratories recently announced it has divested two proprietary neurology brands. The company had already divested four dermatology proprietary products in 2018-19 (FY19). 

Under the current agreement with Upsher-Smith Laboratories, LLC, the company will receive $70 million upfront and $40.5 million in near-term milestones.  Further, it will continue to receive sales-based royalty on a quarterly basis.

Analysts say that the sales proceeds of $110 million in upfront consideration and milestone payments should eventually finance proprietary products’ research & development (R&D) expenditure for the next two years — a step towards making