Dr. Reddy's Laboratories Stock

Dr. Reddy’s Laboratories Limited operates as an integrated pharmaceutical company operating in multiple geographies, such as India, Mexico, the United States, and the United Kingdom.

Segments

The company operates through Global Generics; Pharmaceutical Services and Active Ingredients (‘PSAI’); and Others segments.

Global Generics

This segment consists of the company’s business of manufacturing and marketing prescription and over-the-counter finished pharmaceutical products ready for consumption by the patient, marketed under a brand name (branded formulations) or as generic finished dosages with therapeutic equivalence to branded formulations (generics). This segment includes the operations of the company’s biologics business.

Pharmaceutical Services and Active Ingredients

This segment primarily consists of the company’s business of manufacturing and marketing active pharmaceutical ingredients and intermediates, also known as ‘API’, which are the principal ingredients for finished pharmaceutical products. Active pharmaceutical ingredients and intermediates become finished pharmaceutical products when the dosages are fixed in a form ready for human consumption, such as a tablet, capsule or liquid using additional inactive ingredients. The company also serves its customers with incremental value added products, including semi-finished and finished formulations, which are included in this segment. This segment also includes the company’s pharmaceutical services business, which provides contract research services and manufactures and sells active pharmaceutical ingredients in accordance with the specific customer requirements.

Others

This segment consists of the company’s other business operations, which includes the company’s wholly-owned subsidiaries, Aurigene Oncology Limited (‘AOL’) and SVAAS Wellness Limited (‘SVAAS’), and the company’s Proprietary Products business. AOL is a discovery stage biotechnology company developing novel and best-in-class therapies in the fields of oncology and inflammation. AOL works with established pharmaceutical and biotechnology companies through customized models of drug-discovery collaborations. SVAAS is in the business of providing digital healthcare and information technology enabled business support services. The company’s Proprietary Products business focuses on the research and development of differentiated formulations and is expected to earn revenues arising out of monetization of such assets and subsequent royalties, if any.

The company’s key markets include the United States, India, Russia and other countries of the former Soviet Union, and Europe.

Strategy

The company’s strategy is guided by its core purpose of accelerating access to affordable and innovative medicines, because ‘Good Health Can’t Wait’.

To maximize the company’s impact and reach more patients, the company’s growth strategy is built on three pillars: market leadership in the company’s chosen spaces; operational excellence and continuous improvement to drive productivity; and patient focused innovation.

Through the company’s business operations, it:

Develop, formulate, manufacture, and sell a portfolio of high-quality generic versions of expensive innovator medicines products at an affordable price to address the unmet needs of the patients.

Create strong value brands leveraging the company’s field force in the branded generics business.

Provide a portfolio of complex, differentiated, high quality and affordable active pharmaceutical ingredients for the company’s customers backed by strong chemistry and synthesis skills.

Offer a strong value proposition through cost leadership, backward integration, best in class customer service, and a strong compliance track record for the company’s customers.

Create differentiated, relevant, and clinically proven products in a wide range of food, supplements, and beverage categories to improve the patients’ health outcomes and improve their quality of life.

Continue to build innovative, differentiated digital-first models for a wider range of products to address the unmet needs of the patient and enhanced customer engagement.

The company’s strengths in science and technology range from synthetic organic chemistry, formulation development and biologics development to small molecule based drug discovery. Furthermore, the company’s wholly owned subsidiary, AOL, is a specialized biotechnology company engaged in discovery and early clinical development of novel, best in class therapies to treat cancer and inflammatory diseases. Such expertise enables the company to deliver first-to-market, difficult-to-make products with an industry leading intellectual property and technology leveraged product portfolio.

Product and Service Offerings

Global Generics

Through the company’s branded and unbranded drug products, the company intends to offer affordable alternatives to highly-priced innovator brands, both directly and through key partnerships.

Branded Generics

The company seeks to have a portfolio that is strongly focused on delivering first-to-market, differentiated products to doctors and patients. Many of the company’s brands hold significant market shares in the molecule and therapy areas where they are present. The company has also entered into strategic partnerships with third parties to sell the company’s products in markets where the company has not established its own sales and distribution operations.

Unbranded Generics

The company intends to ensure that its development capabilities remain strong and enable the company to deliver products that are first to market, tough-to-make and technologically challenging.

Biologics

The company’s biologics business seeks to accelerate access to biosimilar products globally through process development and relevant clinical research. The company was the first company to launch a biosimilar version of rituximab in 2007, and has launched multiple biosimilar products in India and other key markets.

The company’s vertical integration and process innovation helps to ensure that quality products are always available to patients.

Pharmaceutical Services and Active Ingredients (‘PSAI’)

The company’s PSAI segment is consisted of its API business and the company’s pharmaceutical services business. Through the company’s API and pharmaceutical services businesses, the company intends to offer technologically advanced product lines and niche product services through partnerships internally and externally.

The company’s product offerings in its API business are positioned to offer intellectual property and technology-advanced products to enable launches ahead of others at competitive prices.

Through the company’s pharmaceutical services business, the company intends to offer niche product service capabilities, technology platforms, and competitive cost structures to innovator and biotechnology companies.

Others

The company’s Others segment consists of various other business operations, including the company’s wholly-owned subsidiaries, AOL and SVAAS and the company’s Proprietary Products business. AOL is a specialized biotechnology company engaged in discovery and early clinical development of novel, best in class therapies to treat cancer and inflammatory diseases. SVAAS is an integrated care network to provide services to outpatient (‘OPD’) customers with a cashless and seamless user experience, all born from a need to provide an ecosystem of hassle free healthcare. The company’s Proprietary Products business focuses on the research, development, and commercialization of differentiated formulations by building a pipeline of high value, globally relevant products in therapeutic areas of high unmet need. These pipeline products are commercialized through partnerships to maximize value.

Beyond the above current businesses, the company started its ‘Horizon 2’ growth initiative to meaningfully improve the lives of patients by addressing unmet/unarticulated patient needs across the illness-to-wellness spectrum beyond generics, and to enable access to affordable and innovative solutions. This is in line with the company’s intention to reach 1.5 billion plus patients by 2030. Externally, the company sees trends with multiple whitespaces in healthcare access, equity and quality that can be meaningful opportunities (e.g., condition management, care platforms, clinically proven nutrition products, and digital therapeutics solutions). The company’s Horizon 2 initiative is a structured approach to build innovative patient-centric healthcare solutions for opportunities existing in these white-spaces and in the process create and capture value for the organization.

In some cases the company is scaling up its existing business and in others the company is venturing into new spaces. The company’s Horizon 2 business ventures are in different life cycle stages and include digital platforms, direct to consumer channels and nutraceuticals, among others.

Principal Areas of Operations

Global Generics segment

The revenue increase was in all the four business geographies of this segment: North America (the United States and Canada), Europe, India and ‘Emerging Markets’ (which is consisted of Russia, other countries of the former Soviet Union, Romania and certain other countries from the company’s ‘Rest of the World’ markets, primarily consisting of Brazil, South Africa, China, Vietnam, Colombia, Australia and Myanmar ).

The production processes for finished dosages of generics are similar, to a certain extent, regardless of whether the finished dosages are to be marketed to highly regulated or less regulated markets. In many cases, the processes share common and interchangeable facilities and employee bases, and use similar raw materials. However, differences remain between highly regulated and less regulated markets in terms of manufacturing, packaging and labeling requirements and the intensity of regulatory oversight, as well as the complexity of patent regimes.

While the degree of regulation in certain markets may impact product development, the company is observing increasing convergence of development needs throughout both highly regulated and less regulated markets. As a result, when the company begins the development of a product, the company may not necessarily target it at a particular market, but will instead target the product towards a cluster of markets that will include both highly regulated and less regulated markets.

The company is one of the leading generic pharmaceutical companies in the world. With the integration of all the markets where the company is selling generic pharmaceuticals into the company’s Global Generics segment, the company’s front-end business strategies in various markets and the company’s support services in India are increasingly being developed with a view to leverage the company’s global infrastructure.

The following is a discussion of the key markets in the company’s Global Generics segment.

India

In India, the company’s key therapeutic categories include gastro-intestinal, cardiovascular and anti-diabetic, dermatology, oncology, respiratory, stomatology, urology, nephrology and pain management.

As of March 31, 2023, the company had a total of 387 branded products in India.

Sales, Marketing and Distribution Network

The company generates demand for its products through its 7,793 sales representatives (which include representatives engaged by the company on a contract basis through a service provider) and front line managers, who frequently visit doctors to detail the company’s related product portfolio. They also visit various pharmacies to ensure that the company’s brands are adequately stocked.

The company sells its products primarily through clearing and forwarding agents to approximately 5,900 wholesalers who decide which brands to buy based on demand. The wholesalers pay for the company’s products within an agreed credit period and in turn sell these products to retailers. The company’s clearing and forwarding agents are responsible for transporting its products to the wholesalers. The company pays its clearing and forwarding agents on a commission basis. The company has insurance policies that cover its products during shipment and storage at clearing and forwarding locations.

Competition

The company’s competitors in the Indian market include Cipla Limited, GlaxoSmithKline Pharmaceuticals Limited, Zydus Lifesciences Limited, Sun Pharmaceutical Industries Limited, Alkem Limited, Pfizer Limited, Abbott India Limited, Lupin Limited, Aristo Pharma Limited, Intas Pharmaceuticals Limited, Sanofi India Limited, Glenmark Pharmaceuticals Limited, Mankind Pharma Limited, Torrent Pharmaceuticals Limited, and Emcure Pharmaceuticals Limited.

Government Regulations

The company must follow the cGMP regulations at all times during the manufacture of the company’s products. The company continues to spend significant time, money and effort in the areas of production and quality testing to help ensure full compliance with cGMP regulations.

Russia and other Countries of the former Soviet Union and Romania

Russia

The company operates in Russia through its subsidiary, Dr. Reddy’s Laboratories LLC, Russia.

Other Countries of the former Soviet Union and Romania

The company operates in other countries of the former Soviet Union, including Ukraine, Kazakhstan, Belarus, Uzbekistan and Romania. The company’s business in Ukraine has been marginally impacted and the operations are being continued with flexible schedules. All employees have been relocated to safer locations and continue to fulfill their responsibilities in hybrid format depending on local safety consideration. The company continues to ensure availability of the company’s products in these markets.

Sales, Marketing and Distribution Network

The company’s marketing and promotion efforts in the company’s Russia market is driven by a team of 513 medical representatives and 55 managers to detail the company’s products to doctors in 77 cities in Russia. The company’s commercial team consists of 16 key account managers and is focused on establishing a network of relationships with key pharmacy chains. The company’s Russia hospital division has 35 hospital specialists focused on expanding the company’s presence in hospitals.

In Russia, the company generally extends credit only to customers after they have established a satisfactory history of payment with the company. The credit terms offered to these customers are based on turnover, payment record and the number of the customers’ branches or pharmacies, and are reviewed on a periodic basis. The company reviews the credit terms offered to the company’s key customers on a periodic basis and modifies them to take into account the macro-economic scenario in Russia.

Competition

The company’s principal competitors in the Russian market include Berlin-Chemie/Menarini Pharma, GmbH, KRKA Pharma Limited, Teva Pharmaceutical Industries Limited, Lek-Sandoz Pharmaceuticals (an affiliate of Novartis Pharma A.G.), and Zao Ranbaxy (an affiliate of Sun Pharmaceutical Industries Limited).

Government Regulations

North America (the United States and Canada)

In the United States, the company sells generic drugs that are the chemical and therapeutic equivalents of reference branded drugs, typically sold under their generic chemical names at prices below those of their brand drug equivalents.

During the year ended March 31, 2023, the company made 12 new ANDA filings with the U.S. FDA. As of March 31, 2023 the company’s cumulative filings were 320, which included 5 NDA filings under section 505(b)(2) and 315 ANDA filings. As of March 31, 2023, the company had 86 filings pending approval with the U.S. FDA (81 ANDAs and 5 NDAs under the 505(b)(2) route, including 20 tentative approvals). Of the 86 ANDAs, which are pending approval, 45 are Paragraph IV filings, and the company is the first to file with respect to 18 of these filings.

The company has four ongoing Investigational New Drugs (‘IND’) applications for the company’s proposed biosimilars to rituximab, pegylated granulocyte colony stimulating factor (‘PEG-GCSF’), tocilizumab and abatacept. For rituximab, all clinical trials have been successfully completed and the company has filed with the U.S. FDA and European Medicines Agency (‘EMA’) in April 2023. For PEG-GCSF, the company’s partner Fresenius Kabi has successfully completed their clinical trials and has received approval both with the U.S. FDA and the EMA. For tocilizumab and abatacept the company’s clinical studies are ongoing.

As of March 31, 2023, the company had filed a cumulative total of 3 New Drug Submission (‘NDS’), 1 Drug Identification Number (‘DIN-A’) Application and 54 Abbreviated New Drug Submissions (‘ANDS’) in Canada. Out of 54 ANDS 40 were approved, 4 were withdrawn and 10 are pending approval.

Sales, Marketing and Distribution Network

Dr. Reddy’s Laboratories, Inc., the company’s wholly-owned subsidiary headquartered in Princeton, New Jersey, United States, is primarily engaged in the marketing of the company’s generic products in the United States. In early 2003, the company commenced sales of generic products under the company’s own label. The company has its own sales and marketing team to market these generic products. The company’s key account representatives for generic products call on procurement buyers for chain drug stores, drug wholesalers and distributors, mass merchandisers, GPOs for hospitals, specialty distributors and pharmacy buying groups.

The majority of revenue from the company’s North America Generics business is derived from sales of oral solids, as well as sales of various products (both oral solids and OTC products) to retail chains and Wholesalers. This portion of the business represents nearly three quarters of this segment’s gross revenues for this region. The product portfolio includes a wide range of therapeutic areas.

The company’s over-the-counter (‘OTC’) division primarily markets and distributes store brand OTC products, but expanded into the branded OTC segment in May 2016, developing a new channel for the company’s growth. This division has successfully launched over 22 products. OTC products include store brand generic equivalents of products that approved to be sold over-the-counter in the U.S. market. Many of the products may also originally have had prescription drug status and are switched to OTC drug status by the innovator upon U.S. FDA approval (sometimes called ‘Rx-to-OTC switch’ products). The company’s OTC division services a broad range of customers, including drug retailers, mass merchandisers, food chains, drug wholesalers, distributors, GPOs, and more recently, e-commerce or online retailers as well. The company has substantially expanded its portfolio offering. The company launched 3 new products in the market during the year ended March 31, 2023, which included Fexofenadine D24, Nicotine Lozenges original and Guaifenesin ER.

During the year ended March 31, 2023, the company continued to ramp up the company’s presence in the e-commerce channel with the launch of multiple new products on Amazon marketplace. Additionally, the company began to focus on the company’s Horizon 2 growth initiatives. Specifically, in the branded OTC space the company acquired the Premama brand from Luna Pharmaceuticals, Inc. The Premama portfolio, a signature brand of high-quality nutritional supplements designed to support the entire motherhood journey is consisted of seven commercial products.

A portion of the company’s revenues are derived from the sale of injectable products in the therapeutic areas of oncology and critical care. The company has also expanded its presence from drug wholesalers to specialty distributors, integrated distribution networks (‘IDNs’), clinics, and hospitals to market these products. The company also supplies products for private label customers for injectable prescription products.

Competition

The company’s major competitors in the United States include Teva, Viatris Inc., Sandoz (a division of Novartis Pharma A.G.), Endo International plc (including its subsidiaries Endo Pharmaceuticals Inc. and Par Pharmaceutical Inc.), Sun Pharmaceuticals Limited, Lupin Limited, Aurobindo Pharma Limited, Fresenius Kabi, Sagent Pharmaceuticals, Amneal Pharmaceuticals, Inc., Zydus Pharmaceuticals (USA) Inc., and Hikma Pharmaceuticals plc.

In the store brand market, the company competes directly with companies, such as Perrigo, Apotex, Aurobindo, Sun Pharma and Granules that sell store brand OTC products. In the branded market, the company competes directly with companies, such as Bayer and GSK, which sell branded OTC products.

Government Regulations

The U.S. Regulatory Environment

The company’s facilities and products are periodically inspected by the U.S. FDA, which has extensive enforcement powers over the activities of pharmaceutical manufacturers with respect to finished dosage forms and the active pharmaceutical ingredients for such products.

The company is also subject to Section 6002 of the Patient Protection and Affordable Care Act, commonly known as the Physician Payment Sunshine Act, which regulates disclosure of payments to certain healthcare professionals and providers.

Canada Regulatory Environment

In Canada, the company is required to file product dossiers with the Health Canada for permission to market a generic pharmaceutical product. As of March 31, 2023, the company had filed a cumulative total of 4 New Drug Submission (‘NDS’), 1 Drug Identification Number (DIN-A) Application and 54 Abbreviated New Drug Submissions (‘ANDS’) in Canada, out of which, 40 were approved, 4 were withdrawn and 10 are pending approval.

Europe

The company’s principal markets in Europe are Germany, France, Italy, Spain, and the United Kingdom. In addition, through distribution partners the company accesses its portfolio of hospital customers in additional European markets.

The company has also started to launch its products through distributors in markets, such as Austria, the Czech Republic, Ireland, the Netherlands, Portugal, Slovakia and Sweden.

Sales, Marketing and Distribution Network

Germany

In Germany, the company sells a broad range of generic pharmaceutical products under the ‘betapharm’ brand.

Germany – Acquisition of Medical Cannabis Business Nimbus Health

The acquisition of Nimbus Health GmbH in February 2022 marked the company’s entry into the medical cannabis sector.

Founded in 2018, Nimbus Health is one of Germany’s pioneer companies for medical cannabis. The acquisition will allow the company to build on Nimbus Health’s strengths and introduce medical cannabis-based medicines as a promising treatment option for patients. The acquired company will be operating under the brand Nimbus Health and as the company’s wholly-owned subsidiary.

United Kingdom and Other Countries within Europe

The company markets its pharmaceutical products in the United Kingdom through the company’s U.K. subsidiary, Dr. Reddy’s Laboratories (U.K.) Limited. The company sells more than 60 products in the United Kingdom, covering both International Nonproprietary Name (‘INN’) generics, branded generics and over the counter (OTC). The company’s portfolio is sold via wholesale, retail and hospital channels. In the U.K., the company works with the Clinical Commissioning Groups (CCG) (i.e., groups that commission healthcare services for their local communities and include all of the general practitioner groups in their geographical area) to promote the company’s range of branded generics. While the retail business covers a broad range of therapeutic areas, the hospital business focuses on e.g., oncology, anti-invective and HIV and the company’s CCG business focuses on pain and mental health.

Through the company’s subsidiaries in France, Italy and Spain, the company has established itself as a trusted partner for the countries hospitals segment.

The company’s product mix in these markets focuses on a limited number of key therapy areas, such as pulmonary hypertension, oncology, anti-infective and HIV, leveraging the company’s portfolio.

The company works with partners who make the company’s products available in Austria, the Czech Republic, Finland, Ireland, the Netherlands, Portugal, Slovakia and Sweden. This strategy allows the company to scale the company’s operations across Europe.

Competition

The company’s key competitors within the German generics market include Sandoz International GmbH, Teva Pharmaceutical Industries Limited (‘Teva’), Zentiva Pharma GmbH and Stada Arzneimittel AG.

In Italy, Spain and France, the company competes with companies, such as Mylan, Zentiva, Ever Pharma, Medac, Teva and Accord Healthcare Limited (an affiliate of Intas Pharmaceuticals Ltd.), each of which has a well-established presence in the hospital segment of these countries.

Government Regulations

The company’s U.K. facilities are licensed and periodically inspected by the U.K. Medicines and Healthcare Products Regulatory Agencies (‘MHRA’) good manufacturing practice Inspectorate, which has extensive enforcement powers over the activities of pharmaceutical manufacturers.

‘Rest of the World’ markets of the company’s Global Generics segment

The company refers to all markets of the company’s Global Generics segment other than North America, Europe, Russia and other countries of the former Soviet Union and Romania and India as the company’s ‘Rest of the World’ markets. The company’s significant Rest of the World markets include Brazil, South Africa, China, Vietnam, Colombia, Australia and Myanmar.

The company’s joint venture called Kunshan Rotam Reddy Pharmaceuticals Company Limited (‘KRRP’) has commercialized several products. Some of these products are manufactured by KRRP at its manufacturing plant in Kunshan while some others are imported in bulk packs, repackaged and sold in China. In calendar year 2020, KRRP started manufacturing capacity expansion at the Kunshan facility, and plans to start commercial operations in the second half of the calendar year 2023.

The company has also increased its operations with respect to the filing of dossiers and obtaining new product registrations in China. Upon successful registration and approval by the China regulatory authorities, the company intends to launch these products in the coming years.

In December 2021, the company’s product Olanzapine, which the company had commercialized in China through a distribution and supply agreement with a Chinese company, was successfully listed in the 12 province volume based procurement program, which is a tender-style bidding system for centralized procurement of medicines in China.

Global Generics Manufacturing and Raw Materials

The company’s facilities and products are periodically inspected by various regulatory authorities such as the U.S. FDA, the U.K. MHRA, the German BfARM, the South African Medicines Control Council, the Brazilian ANVISA, the Romanian National Medicines Agency, Ukrainian State Pharmacological Center, the local World Health Organization and Drug Control Authority of India, all of which have extensive enforcement powers over the activities of pharmaceutical manufacturers operating within their jurisdiction.

In May 2023, the U.S. FDA completed the Pre-Approval Inspection, a routine GMP inspection and routine cGMP inspection at the company’s formulations manufacturing facility plant 2, Formulations Srikakulam (SEZ), Andhra Pradesh, India. The company has been issued a Form 483 with four observations. The company responded to the observations on June 5, 2023.

Pharmaceutical Services and Active Ingredients (‘PSAI’) segment

The company’s PSAI segment primarily includes its business of manufacturing and marketing active pharmaceutical ingredients (‘APIs’), including intermediates, as well as the company’s pharmaceutical services business.

Active Pharmaceutical Ingredients

The company’s more than 150 different APIs have regulatory approvals filed in numerous markets and enable the company’s generic manufacturing partners to bring formulated products in forms, such as tablets, capsules, or injectable to patients worldwide. Thanks to the company’s backward integration, the company can also provide customers with intermediates, which are the pre-stage of a final API. In addition to the company’s external partners, the company’s API business supplies its own generic business.

During, the year ended March 31, 2023, the company filed 134 Drug Master Files (‘DMFs’) worldwide, of which 12 were filed in the United States, 2 was filed in Canada, 11 were filed in Europe and 109 were filed in other countries. Cumulatively, the company’s total active DMFs filed worldwide as of March 31, 2023 were 1,424, including 243 active DMFs filed in the United States.

The company exports APIs to more than 76 countries, and the company’s main markets include North America (the United States and Canada) and Europe. The research and development group within the company’s API business contributes to the company’s business by creating intellectual properties, principally by developing novel and non-infringing manufacturing processes and polymorphs. Besides the development of new products, the research also focuses on further optimizing the company’s manufacturing processes, which allows the company to produce its APIs at a competitive price.

Pharmaceutical Services Business – Aurigene Pharmaceutical Services Limited

The company’s PSAI segment also includes the company’s pharmaceutical services business, which provide contract discovery (research), development, and manufacturing to global pharmaceutical companies. As a contract development and manufacturing organization (‘CDMO’), the business is operated independently under its own entity Aurigene Pharmaceutical Services Limited and works on new chemical entities (‘NCEs’) and new biological entities (‘NBEs’) for global pharmaceutical companies and biotechnology companies. The pharmaceutical services (contract research, development and manufacturing) arm of the company’s PSAI segment was established in 2001 to leverage the company’s strength in research and development to serve the niche segment of the innovator pharmaceutical and biotechnology companies.

The focus is to leverage the company’s skills in discovery, CDMO (process and analytical development for drug substance and formulation), and large scale commercial manufacturing to serve outsourcing needs of global pharmaceutical and biotechnology companies. The company has positioned the company’s PSAI segment’s Pharmaceutical Services business to be the partner of choice for large, medium and emerging innovator companies across the globe, with service offerings spanning the entire value chain of pharmaceutical services.

Effective June 1, 2020, the company’s Pharmaceutical Services business was integrated with Aurigene Oncology Limited (‘AOL’), which operated the company’s discovery service business, and the integrated business model was commenced under Aurigene Pharmaceutical Services Limited (‘APSL’). APSL is a subsidiary of AOL within the company’s group. APSL was formed to service the needs of innovator customers in the areas of discovery, development and manufacturing services for clinical and commercial needs. The company’s aspiration is to make APSL a global leader in offering end-to-end integrated solutions across discovery, development and manufacturing.

Sales, Marketing and Distribution

The company’s PSAI business has now sales operations in 11 markets, including Brazil, China, Europe, India, Japan, Mexico, the U.S., and Russia with colleagues from regulatory affairs and commercial.

Developed Markets: The company’s PSAI segment’s principal overseas markets are the United States and Europe.

The company markets its products through its subsidiaries in the United States and Europe. These subsidiaries are engaged in all aspects of marketing activity and support the company’s customers’ pursuit of regulatory approval for their products, focusing on building long-term partnerships through customer service excellence.

India: India is an important market for the company’s PSAI segment.

Other Key Markets: The company’s PSAI segment’s sales to all of the other markets (excluding the United States, Europe and India).

The company’s commitment to the Chinese market shows through a strong pipeline of products for the Chinese market and the company’s local presence of business development and regulatory affairs experts. Further key markets include Brazil, Mexico, and Japan. While the company works through the company’s agents in these markets, the company’s local marketing and regulatory affairs associates are an important interface to understand and serve customers in those regions.

For the company’s contract development and manufacturing services line of business, the company has focused business development teams dedicated to the company’s key geographies of North America (the United States and Canada), the European Union and the Asia Pacific. These teams target large, medium and emerging innovator companies to build long-term business relationships focused on catering to their outsourcing needs from discovery to commercialization.

Going forward, the company expects its PSAI segment to show growth on account of the company’s investments in technologies and platforms, such as peptides. The company is also pursuing a partnership model to enable its customers to reach more markets faster and efficiently by leveraging the company’s cost leadership and presence across the globe. The company’s PSAI Segment has been investing in digital solutions to revitalize the company’s engagement and transparency with the company’s customers.

The company is committed to enhancing the accessibility and affordability of medicines for vulnerable populations, promoting greater equity in healthcare. The company has identified crucial areas of focus and continues to establish partnerships with multilateral agencies and pharmaceutical organizations. Together, the company intends to develop an enduring pipeline of ground-breaking medicines that are affordable to people worldwide.

PSAI Manufacturing

The infrastructure for the company’s PSAI segment consists of eight U.S. FDA-inspected plants (six in India, including one in a Special Economic Zone, one in Mexico, and one in Mirfield, the United Kingdom) and two technology development centers (one in Hyderabad, India and one in Cambridge, the United Kingdom).

India: All of the company’s facilities in India are located in the states of Andhra Pradesh and Telangana. The company has the flexibility to produce quantities that range from a few kilograms to several metric tons. The manufacturing process consumes a wide variety of raw materials that the company obtains from various sources that comply with the requirements of regulatory authorities in the markets to which the company supplies its products. The company procures raw materials on the basis of its requirement planning cycles. The company utilizes a broad base of suppliers in order to minimize risk arising from dependence on a single supplier.

In May 2023, the U.S. FDA completed its routine cGMP inspection at the company’s API manufacturing facilities at Plant 1, Bollaram, Hyderabad, Telangana, India. The company was issued a Form 483 with one observation. The company responded to the observation on May 24, 2023.

Mexico: The company’s manufacturing plant in Cuernavaca, Mexico (the ‘Mexico facility’) was acquired from Roche during the year ended March 31, 2006. In addition to active pharmaceutical ingredients, naproxen and naproxen sodium and a range of intermediates, the Mexico facility manufactures steroids as active ingredients for use in human and veterinary pharmaceutical products.

The United Kingdom: The small molecules business continues to supply complex APIs to customers at a range of scales. This business is also able to provide cost effective contract development and manufacturing organization solutions to innovators developing new pharmaceutical products, tapping into the expertise of the company’s parent company as required.

The company has invested in this business to update equipment and implement modern data acquisition systems to meet today’s stringent regulatory requirements.

For the company’s contract development and manufacturing services, the company has well-resourced synthetic organic chemistry laboratories, medicinal chemistry analytical laboratories and kilo laboratories at the company’s research and development centers at Hyderabad and Bengaluru in India. The company’s chemists and process engineers are experts in discovery, development and manufacturing services, from the pre-clinical stage to commercialization. To complete the full value chain in development services, the company also provides formulation development services. The company has facilities for pre-formulation and formulation development, analytical development, clinical trial supplies, pilot scale and product regulatory support. This facility also follows rigorous Safety and Information Security practices and is certified against ISO 27001:2013 standards for information security. Larger quantities of APIs can be manufactured from the company’s API plants in India, the United Kingdom and Mexico. The company also offers end to end project management support for effective deliveries.

The company’s contract development and manufacturing services are uniquely positioned in the market where it utilizes assets (both in terms of physical assets and technical know-how) of a vertically integrated pharmaceutical company and combines this with the service model.

Competition

The company’s main competitors in this segment are Divis Laboratories Limited, Aurobindo Pharma Limited, Cipla Limited, Mylan Laboratories Limited, Sun Pharmaceutical Industries Limited and MSN Laboratories Limited, all based or operating in India. In addition, the company experiences competition from European and Chinese manufacturers, such as Zhejiang Huahai, Tianyu, as well as from Teva Pharmaceuticals Industries Limited, based in Israel.

Others Segment

The company’s Others segment consists of business operations of the company’s wholly-owned subsidiaries, Aurigene Oncology Limited (‘AOL’) (formerly Aurigene Discovery Technologies Limited) and SVAAS Wellness Limited (‘SVAAS’) and the company’s Proprietary Products business.

AOL: AOL is a clinical stage biotech company committed to the discovery and development of novel and effective therapeutics for the treatment of cancer. AOL leverages its expertise in oncology focused novel therapeutics for the benefit of cancer patients everywhere. It is focused on developing innovative therapeutics addressing several hallmarks of cancer, leveraging its deep capabilities in science and building value added collaborations with leading companies globally. AOL works with established pharmaceutical and biotechnology companies through customized models of drug-discovery collaborations. In the last two decades AOL has contributed to delivering 19 small molecule and peptide drug candidates in clinical development. AOL has out-licensed several first-in-class and best-in-class compounds to pharma and biotech companies for global clinical development, while undertaking clinical POC studies for a few programs on its own.

SVAAS: SVAAS is in the business of providing digital healthcare and information technology enabled business support services. SVAAS has been enabling access to healthcare services through its web-based or mobile application platform, and providing integrated healthcare, medical and other related services and technology-driven solutions to promote health and wellness. SVAAS brings together doctors, laboratories and diagnostics, pharmacies and insurance to provide a one-stop cashless and seamless user experience across channels, and addresses genuine patient need through assurance of quality and credibility, ease of use and comprehensive support consequently resulting in better adherence and better health.

Proprietary Products

The company’s Proprietary Products business focuses on the research, development, and commercialization of differentiated formulations by building a pipeline of high value, globally relevant products in therapeutic areas of high unmet need and commercializing these pipeline products through partnerships to maximize value.

The company’s Proprietary Products business focuses on the development of differentiated pharmaceutical products across multiple therapeutic areas, including dermatology, the central nervous system and anti-inflammatories. The commercialization of these products was carried out through launching in the U.S. market and through product divestiture and out-licensing to various partners in the United States and Europe. The products licensed out included not only the approved and marketed products but also the ones in the development stage, such as the ones which completed Phase 2 exploratory clinical studies or proof of concept.

Research and Development Expenses

The company’s research and development expenses were Rs.19,381 million for the year ended March 31, 2023.

History

Dr. Reddy's Laboratories Limited was founded in 1984. The company was incorporated in India under the Companies Act, 1956, by its promoter and the company’s former Chairman, the late Dr. K. Anji Reddy, in 1984.