Dr Reddy plans Spanish foray, tapping capital market

Hyderabad, May 31 (UNI) Close on the deals in Germany and Mexico, Dr Reddy's Laboratories will foray into Spain with an acquisition 'over the next few weeks,' upgrade facilities and locate new product develoment centre with 100 million USD capital expenditure, possibly by tapping the market in 2007.

Over the next 12-15 months, the company plans huge capital investment to build an additional product development centre and shore up its facilities focussing on Active Pharmaceutical Ingredients (API) and generics, Dr Reddy's Managing Director and Chief Operating Officer Satish Reddy told the media after its board meeting here.

The Capex will be funded from internal accruals but Mr Reddy said the company could explore tapping the market with a public issue.

Dr Reddy had come out with an IPO in 1986 followed by GDR issue for 48 million USD in 1994.

While the company crossed the 500 million USD milestone in its revenue for 2005-2006, it had, during the year, acquired Betapharm, the fourth largest generic company in Germany for 576 million USD in cash.

The company during the year also acquired Roche's API Business at the state-of-the-art manufacturing site in Mexico including all employees and business supply contracts for 61.5 million USD.

Dr Reddy's, over the next few weeks, will acquire a ''small company'' in Spain ''which markets products and has marketing rights.'' It also plans acquisitions in Italy and France, he said.

Even though company CEO and Vice-Chairman G V Prasad did not specify on acquisition plans in Italy and France, he said the company hoped to leverage Betapharma acquisition to garner 200 million USD sales in 2007.

In its 28th day of acquisition, Betapharma had contributed 16 million USD to Dr Reddy's 2006 business.

Planning to release six to eight drugs in the US market depending on clearances from the regulatory agencies, Dr Reddy is likely to utilise during the year 33 million USD from ICICI Venture with whom it has partnership for commercialisation of ANDAs.

With the formation of Perlecan Pharma, an integrated drug development company, it plans to commercialise at least seven New Chemical Entity (NCE) under development.

Looking at 100 million USD business from 'custom built products,' Mr Prasad indicated company would undertake more clinical trials during the year ''with external funding.'' UNI DB JJ GM 2108