London: Western drug makers are stepping up the hunt for emerging market “tigers” in India. UK-based GlaxoSmithKline Plc has emerged as frontrunner for a phased buy-in of Dr Reddy’s Laboratories Ltd, people familiar with the matter said.

A deal could spark a fresh wave of foreign deals in India’s drugs sector after the troubled purchase of Ranbaxy Laboratories Ltd by Daiichi Sankyo Co. Ltd last year. While nothing is finalized, one possibility is that Glaxo will take a 20% stake in Dr Reddy’s Holdings, a family vehicle that in turn owns 23.2% of the drug maker.

This would give Glaxo a stake of just under 5%, worth around $165 million (around Rs764 crore). But the British firm could also get right of first refusal on the family’s remaining holding, the sources said. Officials at both firms declined to comment.

Industry analysts said such a deal would fit well with Glaxo’s strategy of building up its presence in key emerging markets.

It would mirror the 16% stake bought in Africa’s biggest generic drug maker, Aspen Pharmacare, in a deal worth some $470 million.

While not alone in stalking Dr Reddy’s, Glaxo is thought to have the edge, helped by an existing alliance that gives it access to many of Dr Reddy’s products.

Sumeet Chatterjee in Bangalore contributed to this story.