DRIVIN G ROWTH - Dr. Reddy's

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management discussion
and analysis
contributed 21 per cent of the total
turnover. The exclusivity period concluded
at the end of January 2002. An exclusivity
period is awarded to a successful patent
challenger at the end of the life of a patent,
during which period the original patent
holder and the challenger have exclusive
marketing rights.
Our success with fluoxetine has had
several positive spin-offs. First, it
demonstrated that an Indian
pharmaceutical company can acquire the
legal and regulatory skills to mount a
successful patent challenge in as exacting an
environment as in the US. This knowledge
base has been very useful. Today, 8 of our
13 ANDAs with the USFDA are patent
challenges. Second, it has led to Dr. Reddy’s
expanding the marketing, sales and
distribution network in the US, which
should facilitate further growth of our
generics in the North American markets.
Third, it proved that Indian knowledgebased
companies could produce
formulations according to international
standards. Fourth, and perhaps most
important from the point of view of Dr.
Reddy’s corporate vision, much of the
additional cash flows arising out of
fluoxetine are going to be invested in
moving up the value chain — in drug
discovery, R&D, innovation, acquisitions
and commercialisation.
Another factor that contributed to the rise
of Dr. Reddy’s international presence was
the 17 per cent growth of APIs revenue
overseas. This growth was led by the US
(21 per cent growth) and Europe (54 per
cent growth). The two major drivers of
international APIs revenue were
ciprofloxacin and nizatidine.
In another overseas market-related
development, in the fourth quarter of
2001-02, Dr. Reddy’s signed an agreement
to acquire the UK-based BMS Laboratories
and its subsidiary, Meridian Healthcare, for
£9.05 million. The combined revenue of
these two companies stood at £7 million
and net profit at £1.2 million for the year
ended February 2002. Meridian Healthcare
is a niche generic player with rights to
market over 100 products, a strong sales
team, innovative raw materials sourcing
and a relatively low cost of production.
Successfully completed on April 11, 2002,
the acquisition will serve as a vehicle for
entering the European markets and, thus,
jumpstart our generics business.
China, where Dr. Reddy’s operates
through its joint venture, Kunshan Rotam
Reddy Pharmaceutical Co. Limited, is a
large but challenging market. By March 31,
DR. REDDY’S LABORATORIES LTD. | MANAGEMENT DISCUSSION AND ANALYSIS | ANNUAL REPORT 2001-2002