Dr Reddy's outsources manufacture to Chinese cos

Hyderabad: Betting big on the Chinese market, Dr Reddy's Laboratories which has plans to launch over 70 products in the East Asian country has started outsourcing manufacture of some of the drugs to local partners.

The company which won the tender to market Olanzapine drug in China, is expected to launch it beginning next year, the official said.

"As mentioned earlier, we are working towards filing and an eventual launch of over 70 products, across the chosen therapy areas, over the next few years. We have 8-10 products currently available in the market.

All our products are marketed either through our Joint Venture, Kushnan Rotam Reddy Pharmaceuticals (KRRP) or through our partners in China," Dr Reddy's spokesperson said.

The products are manufactured either in the plant owned by KRRP in China, or partners in China, or in India by Dr Reddy's, the official further said.

Erez Israeli, CEO of Dr Reddy's earlier in the recently held earnings call said they are in the process of moving the manufacturing of some of the drugs to a local partner as the company entitled for certain exemptions in terms of tests and studies.

"On top of it, we are moving few products to a contractor to make in China. There are certain advantages for example, exemptions from certain tests when you do a bio study and make products in China, and we will explore that.

And some products we will sell out of our Indian facilities," Israeli said. Dr Reddy's successfully emerged as one of the winners for the supply of olanzapine in the centralised drug procurement programme, becoming the first Indian generic company to have prevailed in the new tendering process in China.

"The Olanzapine supplies through the tender will start from the beginning of CY 2020, and the initial tender period is for 2 years," the spokesperson further said.

Olanzapine is used to treat the symptoms of psychotic conditions such as schizophrenia and bipolar disorder.

Dr Reddy's generated $130 million revenues through product sales including the company's JV in China during the last fiscal.

DRL has a subsidiary Dr Reddy's (WUXI) Pharmaceutical Co. Limited and joint venture Kunshan Rotam Reddy Pharmaceuticals Company Limited is engaged in manufacturing and marketing of formulations in China.

Early this week, GV Prasad, co-Chairman of Dr Reddy's Laboratories, referring to how the trade war could have a positive aspect on the country's pharma sector, said, "several markets are not procuring from China and China has also decided to be stepped up its game by addressing new segments within the pharma sector.

And a number of Indian pharma companies are dependent on supplies from China."

"So now we have an opportunity to expand and initiate work on backward integration projects apart from setting up new facilities. This will enable us to add scale."