in China

Mumbai: Following its foray into the US market, pharma conglomerate Dr Reddy’s Laboratories (DRL) is planning to expand its existing presence in China through an inorganic route.

The company has recently mooted a proposal with the Export Import Bank of India seeking financial support for its acquisition programme in China. The proposal is currently under the consideration of the Exim Bank board and a final decision in this regard will be taken soon.

DRL has already established its presence in China by floating a company, Kunshan Rotam Reddy Pharmaceutical Company, in a joint venture (JV) with Kunshan Double-Crane Pharmaceutical Company (KDPC) of Jiangsu province, China, and Canada Rotam Enterprises Company (CREC), for production and marketing of Dr Reddy’s products in China.

Sources familiar with this development say DRL has mooted a proposal with the Exim Bank seeking its expertise in the pharma export market in China and possible JV acquisitions in that country. The company has also sought the financial support of the bank for its acquisition programme in China. However, when contacted, Exim Bank officials declined to make any comments in this regard.

The sources further say DRL has already initiated talks with some Chinese companies for picking up equity stake, but nothing has materialised so far. During last year many Indian pharma companies like Ranbaxy, Aurbindo Pharma and Ajantha Pharmaceuticals had identified China as a potential market for growth.

DRL’s JV in China would produce and repackage bulk formulations, tablets, capsules, ointments and gels. The venture will be set up with a total investment of $15,780,000. The registered capital of the new company will be $11,000,000, of which Dr Reddy’s will hold a majority stake of 51 per cent, amounting to $5,610,000 over three years. KDPC and CREC will have 47.41 per cent and 1.59 per cent share respectively  in the JV.

The JV has a formulations facility with a built-up area of 8,000 sq m. The scale of production will be 180 million tablets, 120 million capsules and 3.6 million tubes of ointment on an annual basis. Last year DRL had entered into an exclusive co-marketing and development agreement with Par Pharmaceuticals, US, to market 14 generic pharmaceutical products of DRL.