Hyderabad: Some seven months after admitting to the failure of Perlecan Pharma Pvt. Ltd as a separate entity, Dr Reddy’s Laboratories Ltd (DRL) is reviving its drug-discovery efforts by moving the operations to Aurigene Discovery Technologies Ltd, its independent subsidiary in Bangalore.
DRL’s drug discovery operations will be absorbed into Aurigene from July. The Hyderabad drug company also said Rajinder Kumar, its president of research and development (R&D) and commercialization, will step down after the transition, and that it will close its Atlanta, US-based research facility.
“The company may be hoping to find a strategic partner in the future to share the risks and research funding,” said Chirag Dagli, an analyst with Mumbai-based equities research firm Pinc Research.
Dagli added that this time around, DRL is unlikely to tap private equity or venture capitalists as the previous experience was a failure. “It has to be a strategic partner who understands the nature of drug development, the risk involved and is still willing to commit for the long term.”
DRL had in September 2005 spun off its drug-discovery efforts into a special purpose vehicle, Perlecan Pharma, which was thought to shield the parent company from the high risks and expenses associated with discovering new drugs.
Venture capital firms ICICI Venture and Citi Venture Capital International supported DRL’s efforts by committing $52.5 million (Rs250 crore today) in funding and investing $26 million of it as first phase investment for an 86% stake.
However, both ICICI and Citi exited the venture in June, after which DRL wound up Perlecan and merged it with its in-house R&D arm in October.
DRL’s discovery research resources, including employees, facility and infrastructure, will now come under Aurigene, which will operate out of Bangalore and Hyderabad. However, all the intellectual property will remain with DRL, a company spokesperson clarified.
DRL has started human trials of three drug candidates that target conditions such as dyslipidemia, a disruption in the amount of lipids in the blood, and cardio pulmonary obstructive diseases. These will now be carried out by Aurigene.
DRL also announced that it has set up an in-house group called proprietary products, which will be responsible for building the firm’s proprietary, branded research portfolio in collaboration with partners and service providers.