Dr Reddy’s says 50% of US revenues to come from complex drugs by 2021

Dr Reddy’s Laboratories aims to generate 50 percent revenues in the US from injectables, topicals and other complex dosage forms by 2021, according to the presentation made by the company at 36th JP Morgan Healthcare Conference early this month.

Currently, it derives 80 percent of revenues in the US from oral solids.

The US constituted little over 40 percent of Dr Reddy’s revenues of Rs 14,200 crores in FY18.

But the intense price competition among multiple suppliers for each generic product and consolidation of sales channels resulted in steep price erosion for generic drugs.

To beat the pricing pressure, Indian drugmakers such as Dr Reddy’s are investing in speciality and complex drug assets that have limited competition.

Dr Reddy’s said it expects specialised channels like oncology clinics, hospitals, and over-the-counter (OTC) to form 60 percent of its trade in the next three years.

At present, the retail channel is the predominant class of trade for the business contributing more than three-fifths of revenues. Though the products sold through specialised channels enjoy higher margins they will incur higher selling and marketing expenses.

The company is trying to shift part of its focus from traditional trade partners such as retailers, distributors and group purchasing organisations (GPOs ) to other stakeholders like patients, physicians and payors.

Even in manufacturing the company said it is working towards diversifying its manufacturing network, with almost 50 percent of revenues coming from partner manufacturing sites by 2021.

Currently, more than 70 percent of Dr Reddy’s revenues are reliant on internal manufacturing sites.The company added it is focusing on manufacturing rationalization, improving plant operating efficiency, R&D productivity and portfolio optimization as key priorities.