Far East pharma deal

Dr. Reddy’s acquires JB Chemicals & Pharmaceuticals prescription business in Russia, other CIS markets

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HYDERABAD, India—Seeking to enhance and expand itsprescription, hospital and over-the-counter portfolio, Indian generic drugmakerDr. Reddy's Laboratories has entered into an agreement with Mumbai-based JBChemicals & Pharmaceuticals to acquire its pharmaceutical prescriptionportfolio in Russia and other regions in the Commonwealth of Independent States(CIS), a regional organization whose participating countries are former SovietRepublics formed during the breakup of the Soviet Union.
 
 
 
The agreement, announced July 22, involves the acquisitionof 20 brands, including Metrogyl and Jocet, for an estimated $34.85 million.Dr. Reddy's has also entered into a supply agreement with JB Chemicals for thecontinued manufacturing and supply of these brand-name products that reachacross key therapeutic areas.
 
 
Jocet, an important brand in JB Chemicals' portfolio, givesDr. Reddy's a much-awaited entry into the $256 million cold-and-cough market,according to the company. Two other brands—Unispaz and Metrogyl gel andMetrogyl vaginal gel—further strengthen Dr. Reddy's portfolio.
 
 
 
Dr. Reddy's is not only the largest Indian pharmaceuticalcompany in Russia, but it is the fastest-growing international branded genericcompany by volume. The pharma entered the Russia market in 1992 andconsolidated its position during the turbulent currency crisis of the late1990s.
 
 
 
Omez, Nise, Ketorol and Ciprolet are Dr. Reddy's top fourbrands in the Russian market and are ranked number one in their respectivemolecular segments, says the company. Fiscal-year 2011 revenues from Russia andother CIS markets were $244 million, representing a growth of 19 percent from theprevious year.
 
"Russia is one of our leading markets where we enjoy astrong equity with stakeholders," said Satish Reddy, chief operating officerand managing director of Dr. Reddy's, in a news release. "This acquisition willhelp expand our prescription, hospital and OTC portfolio, complement ourexisting strong basket of products and add to our growth aspirations in theRussia and other CIS region."
 
 
Company spokesman Milan Kalawadia tells ddn, "This is one of many transactions which Dr. Reddy'shas conducted over the years within our current markets. Through thisagreement, Dr. Reddy's has gained access to a number of products that haveexisting sales. The deal complements our existing strong portfolio ofproducts."
 
Commenting on the transaction, J.B. Mody, chairman of JBChemicals, says the decision to sell the remaining Russia-CIS business "hasbeen taken in the overall interest of the company, and the sale proceeds willhelp the company pursue growth opportunities in domestic formulations,rest-of-the-world exports and contract manufacturing business."
 
 
"This supply agreement is a testimony to the quality andcompetitiveness of  [JB Chemicals']branded product portfolio and its world-class manufacturing capabilities," Modyadds.
 

 
Dr. Reddy's and Fujifilm in Japanese generic joint venture
 
TOKYO—In late July, Dr. Reddy's Laboratories Ltd. alsosigned a memorandum of understanding with Fujifilm Corp. to enter into anexclusive partnership in the generic drugs business for the Japanese market andto establish a joint venture in Japan.
 
 
According to the companies, they will sign a definitiveagreement before the end of the year. The new joint venture will have a 51 percentstake owned by Fujifilm and 49 percent stake owned by Dr. Reddy's.
 
The new company will develop, manufacture and promotecompetitive and high-quality generic drugs using the advanced quality controltechnologies in Fujifilm's photo film business and Dr. Reddy's expertise incost-competitive production technologies for active pharmaceutical ingredientsand formulations. The joint venture intends to launch its first products inJapan in the next three to four years and plans to design products that fit thespecific requirements of the Japanese market.
 
The companies said in a press release announcing the jointventure that Japan is the world's second largest pharmaceutical market,estimated to be $97 billion, per an IMS Health estimate.
 
 
The market is characterized by low penetration (about 23percent of Japanese prescription drug sales by volume contributed by generics,compared to 70 percent by volume in the United States); wide-ranging governmentinitiatives to reduce healthcare spending; a rapidly aging demographic profile;and comparatively high reimbursement prices.


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