Date: 22nd June, 2022
Dr Reddy’s Laboratories held an analysts’ meeting where the management detailed both it’s medium & long term growth aspirations. Management outlined its growth levers in the medium term (Horizon 1) and strategic investments/areas in which the company intends to pursue growth over the long run (Horizon 2). In the investor meet, Dr Reddy’s indicated a medium term aspiration to achieve double digit sales growth. The company expects to enhance value for all the stakeholders through increasing business prospects in existing segments under ‘Horizon-1’ strategy and adding new business models under ‘Horizon-2’ strategy.
Horizon 1 comprises the existing established businesses: generics, API, branded generics/OTC and biosimilars, while in Horizon 2 the company intends to invest in innovations (specifically in immunooncology through Aurigene), capabilities in biologics and cell gene therapy, contract development and manufacturing services (CDMO), focusing on disease management through products and services (beyond the pill).
Dr Reddy’s is already investing in certain Horizon 2 segments like NCE research, CDMO (small molecules) and is conducting pilots on the primary care and condition management service platform SVAAS.
As per management, North America (35% of FY22 sales) has a pipeline of 175+ products, of which 90 have been filed which includes biosimilars, drug-device combinations, peptides and other complex technology platforms. Talking on the Indian biz of Dr. Reddy’s there been an improvement in its ranking in India to 10th and is now targeting to be among the top 5. In the near term for India it will continue to focus on core therapy areas and evaluate inorganic opportunities to enter fast-growing therapies. In the medium term for India it will broaden its portfolio in Nutraceuticals and OTC.
For North America, it expects sustained growth despite price challenge led by injectables, OTC and direct to patient channels in the near term. Long term growth will be led by Biosimilars, drug device combinations and immune-oncology drug launches under Horizon 2.
In fact, it expects quality growth in the USA led by 175 pipeline drugs (90 of them filed) including 25+ complex products across Drug-device combinations, peptides, long-acting Injectables & RTUs under advanced technologies like – Particulate Systems, Microsphere & Liposomal, Peptides platform, Emulsions and Suspensions. Few targeted products include – Semaglutide, Teriparatide, Octreotide, Liraglutide, Regadenoson, Dasatinib, Pegfilgrastim, Rituximab, Tocilizumab and Abatacept.
For EU (saw 2x growth in last 3 years), Dr. Reddy’s expects to build scale in EU5 (Germany, UK, Spain, France and Italy), selective geographic expansion and first-to-market launches in the near term. Under horizon 2, it targets Biosimilars and branded as well as OTC play for long term growth.
The company highlighted its geographical aspirations as well with clear well defined targets and aspirations being communicated to the analyst community.
In the domestic formulations (2x in last 4 years), DRRD targets to build big brands under focused therapies and improve sales productivity using Digital & Analytics in the near term but focuses on Nutraceuticals, OTC, Biologics and CAR-T, NCE, etc along with digital play for long term growth.
With a strategy to leverage its existing/future portfolio across markets, DRRD expects sustained double-digit growth in Russia, 2-3x growth in China in 5 years through >10 filing annually and 4-5x jump in Brazil in 5 years led by oncology and institutions focus.
The company also highlighted the pipeline of products that it is focusing on –
- Engaged in the discovery of novel therapeutics in the areas of Oncology & Inflammation and has 13 drugs under various stages of discovery & clinical trials
- Drug Discovery & Development collaborations with several pharma and biotech companies in the US and Europe
- Commercial portfolio of 6 products being marketed in India and Emerging markets
- Progressing on Phase-3 trials for Rituximab (for EU & US)
- Potential launch of Pegfilgrastim, filed with our partner
- Multiple other biosimilar assets are under development in various stages
To enhance its focus on ESG, it has set its sustainability goal of – a) 100% renewable power and Carbon neutral in direct operations by 2030, b) 25% new launches to be first to market by 2027 (to make drugs affordable), c) 35% women in senior leadership by 2030, d) 100% living wages for our extended workforce by 2025.
Sources – Newspaper articles, analyst research reports, company presentation