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Post 2018, Dr Reddy's could get to see fruits of TEVA portfolio in the US

The deal, which cost Dr. Reddy's $350 million, translates into around $45 million paid for each product.

twitter-logoE Kumar Sharma | June 14, 2016 | Updated 12:58 IST

E Kumar Sharma, Associate Editor, Business Today
Dr. Reddy's acquisition of the portfolio of eight products from Teva, the world's largest maker of generic drugs, is not for immediate launch in the US, but is expected to enter the market from 2018 till 2024, with bulk of them by 2022.

The deal, which cost Dr. Reddy's $350 million, translates into around $45 million paid for each product. It makes sense for Dr. Reddy's, say analysts, as these are differentiated, complex, non-injectable generic products with combined sales, in terms of the innovator branded versions of these products, at $3.5 billion.

However, neither the analysts are able to predict, nor is the company willing to share what sales these generic products are likely to generate once they begin getting launched.

Also, while the company does not share the exact details of the products, these are across diverse categories such as softgels, respiratory, vaginal creams and others, with some of them made by Teva and others by third parties currently.

Out of these, seven products are pending approval from USFDA (US Food and Drug Administration) and one already has received an approval. Acquiring these would mean Dr. Reddy's gets a ready portfolio of filed ANDAs (Abbreviated New Drug Applications), which in simple lingo are applications before the USFDA for US generic drug approval. This is a simpler solution than having to develop these ANDAs and conduct the various bio-studies, which could all take five to 10 years.

Analysts feel though the launches are not immediate, these could help Dr. Reddy's strengthen its base of differentiated products for the US market. And, going forward, it could further include other products in these categories. It makes sense for Teva since these are being "divested by Teva as a precondition to its closing of the acquisition of Allergan's generics business". The press release issued by Dr Reddy's on this deal quotes G.V. Prasad, Co-Chairman and CEO of the company, as saying, "This transaction will add strength to our product portfolio, help us be more relevant in our US market and also create new opportunities for growth."

It also quotes Alok Sonig, Executive Vice President and Head of North America: "Dr. Reddy's Laboratories has a strong track record in the US market with over 79 filed ANDAs pending approval, of which we believe 18 have first-to-file status. The acquisition of these attractive ANDAs from Teva will enhance our short-to-mid-term aspirations, and is consistent with our growth initiatives to identify inorganic opportunities to expand our base business."

Dr. Reddy's Laboratories is acquiring the portfolio on a cash-free, debt-free basis, and expects to finance the transaction using a combination of cash on hand and available borrowings under existing credit facilities.

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