 "Dr Reddy’s Laboratories")
With an eye on breaking into the top five players’ list in the domestic pharmaceuticals industry, Dr Reddy’s Laboratories (DRL) is entering new areas — from trade generics to child nutrition.
As part of its Horizon 2 strategy, the next leg of growth will come from cell gene therapy, new chemical entities and immuno-oncology assets, apart from legacy growth drivers like branded generics and biosimilars, among others.
After foraying into trade generics last month, DRL has now entered the child immunity market, which is estimated to be about Rs 1,600 crore in size and growing in double digits.
Analysts think that these new entries may help the company navigate multiple risks in the Indian branded market.
On Thursday, DRL launched CeleHealth Kidz Immuno Plus Gummies in India — a medical nutrition product that it aims to position as “science-based and clinically-proven.”
DRL entered into adult nutrition in 2019. It also has a presence in hospital nutrition as well as general health and wellness products.
A DRL spokesperson told Business Standard: “We estimate the child immunity market across formats such as syrups, tablets, chewables and melts to be around Rs 1,600 crore. Some existing players in the child immunity supplements space are Haleon (Centrum Kids), Azveston Healthcare (Nutri Bears), HUL (Horlicks Nutri Gummies), Himalaya (Septilin) and Apex (Zincovit).”
“Specifically, within the kids nutrition space, we will look to develop our presence in the areas of child growth & development, digestive, immunity, brain & cognitive development through clinically-proven science-based innovative products,” the spokesperson added.
DRL already has a dedicated team for nutraceuticals and has brands like Celevida (metabolic), Celevida Maxx (hospital nutrition), CeleHealth (general wellness) and Celevida Liv (gastro-intestinal), among others.
“Our products are reaching customers through retail, hospital and e-commerce routes. In 2021, we inaugurated a dedicated nutraceuticals R&D centre in Hyderabad. We see nutraceuticals as an important medium to long-term growth,” the spokesperson said.
Earlier in June, DRL had forayed into trade generics and launched a dedicated division called RGenX.
Trade generics are medicines not sold via a prescription, but pushed directly to the trade. DRL targets to reach 1.5 billion patients by 2030 and trade generics will play a key role in that.
M V Ramana, chief executive officer (CEO), India and emerging markets, DRL, had said: “India is a key focus market for us. Today’s announcement is a continuation of our effort to build a well-rounded business in India.”
Kunal Randeria, analyst at Nuvama Research, said that DRL’s entry into trade generics could help it work through several risks it perceives in the Indian branded market — for example, the possibility of more of the market switching to trade generics (Russia took 10 years to make a 30 per cent switch). Other advantages are lesser competition from online players and in case of a possible shift to generic names (in prescriptions).
Nuvama noted in a report: “DRL has bifurcated short-term and long-term growth drivers to Horizon 1 and 2, respectively. Legacy drivers such as branded generics, generic-generic, including complex products in the US, API and a few biosimilar launches should drive near-to medium term growth. In the longer run, a combination of new drivers such as NCEs (new chemical entities), nutraceuticals, cell gene therapy and CDMOs (contract development and manufacturing organisations) will build on existing growth drivers such as biosimilars.”
DRL CEO Erez Israeli had indicated in the Q4 conference call that it had signed some strategic licensing deals in April from the Horizon 2 perspective — with Cardiacare — for its wearable atrial fibrillation treatment.
They also include a pact with Therania for a wearable in migraine management, tie-up with WZTL to bring its third generation CAR T asset (chimeric antigen receptor T cell therapy) for clinical trials to India and with Junshi Bioscience to bring Toripalimab (cancer therapy) to India and other markets.
“We are investing in development and trials of these digital therapeutics, CAR T and biosimilar assets, in keeping with our stated Horizon 2 strategy. We see them as future growth drivers,” Israeli had said.
According to IQVIA, DRL is ranked number 10 at MAT (moving annual turnover) March 2023 level.
“India remains our priority market and we are committed to growing this business at a healthy rate,” Israeli had said.
DRL has also divested some non-core assets from the India business recently — some dermatology brands were sold off for Rs 275 crore to Eris Lifesciences in March.
According to Nuvama, DRL’s four-year CAGR (compound annual growth rate) for the India market is 11.9 per cent. It is 15.9 per cent for Ajanta Pharma and 13.6 per cent for Torrent Pharmaceuticals.
