Dr. Reddy's Laboratories (NSE: DRREDDY), a leading global pharmaceutical company headquartered in India, announced on June 23 that it is entering the trade generics business in India with the launch of a new business unit, RGenX. To begin with, Dr. Reddy's trade generics will focus on acute segment products. This will be a model driven by channel partners wherein the retailer will sell medicines that are not dependent on specific recommendation by healthcare professionals. This recent development coupled with the steady progress Dr. Reddy's has made in recent years to penetrate the all-important Indian market has positioned the company well to grow alongside the booming Indian pharmaceuticals market.
A Growth Lever
Amid this changing regulatory landscape, Dr. Reddy's plans to expand its reach by making its drugs available across towns and cities in India, including rural areas. Staying true to the company's ESG goal of reaching over 1.5 billion patients by 2030, Dr. Reddy's will accelerate the pace at which its trade generic drugs are distributed through its channel partners in the coming months.
The India Opportunity
India is one of the fastest-growing economies in the world, and the country is home to a staggering 1.4 billion people, making it one of the most populous nations in the world. The Indian pharmaceutical industry, which was valued at $42.34 billion last year, is projected to grow exponentially through 2030 to be valued at $130 billion.
To make the most of the lucrative growth opportunities in India and to maintain its growth momentum in the coming years, Dr. Reddy's has announced a two-pronged strategy; Horizon 1 and Horizon 2. Under Horizon 1, the company plans to maintain its launch momentum, integrate and scale up recently acquired assets, work on improving life-cycle management of big brands, and productivity measures such as use of digital and analytics for better in-clinic engagement. The company will look into tapping into new business segments. Organic growth will be supplemented by inorganic routes wherever suitable – acquisitions that are a strategic fit and divestment of non-core assets to consolidate and strengthen its play. Under Horizon 2, Dr. Reddy's will mainly focus on innovation, including digital healthcare, biologics, and gene therapy as well as additional initiatives in the field of nutrition. The company will also look to position itself as the partner of choice in executing its India strategy.
Just recently, the company announced its foray into the child nutrition sector, with the launch of immune booster gummies. These newly released product will come in competition with other existing brands in the child immunity supplement sector, including Azveston Healthcare, HUL, and Himalaya, among others.
Erez Israeli, the CEO of the company, said on a recent earnings call that Dr. Reddy's will focus on collaborating with business partners in global healthcare hubs such as the U.S., China, and Israel to bring innovation to India. The executive also confirmed that the company is actively looking for M&A deals in India to accelerate its penetration of the Indian market to achieve its objective of becoming a top 5 pharmaceutical company in the nation by sales. India will not just be a target market for the company but also a technological enabler that facilitates the development of new drugs and technologies at competitive prices. Some of the recent deals involving India include a partnership with CardiaCare to develop wearable atrial fibrillation treatment devices, a deal with Junshi Biosciences to develop and commercialize Toripalimab to enhance the company's focus on oncology, and a licensing agreement with Theranica to market FDA-approved Nerivio in India.
Looking ahead, Dr. Reddy's is well-positioned to grow, aided, among other things, by its global footprint and the expanding business in India. The launch of a new business division to penetrate the trade generics market in India and its foray into areas such as child nutrition are steps forward in the company's India strategy and will open the doors for Dr. Reddy's to add new, and potentially fast-growing revenue streams to the business.
