Home / Companies / News /  Dr. Reddy’s Laboratories, GSK end tie-up in emerging markets

Hyderabad: Dr. Reddy’s Laboratories Ltd, India’s second largest drug maker, said it had terminated a strategic alliance with British drug maker GlaxoSmithKline Plc. (GSK) for emerging markets outside India and plans to pursue these markets on its own.

“As part of our company strategy and in light of our strong portfolio of products, we have decided to expand into select new markets," Dr. Reddy’s said in its annual report filed on Friday with US capital market regulator Securities and Exchange Commission (SEC).

“To supplement our own entry and growth in these markets, we have reached an agreement with GSK to take back the marketing rights for key products in these markets. To enable this, both the parties have agreed to terminate the old agreement," Dr. Reddy’s said.

Dr. Reddy’s entered into a strategic partnership with GSK in 2009 to develop and market select generic products in markets such as Latin America, Africa, the Middle East and Asia-Pacific (excluding India) from fast-growing therapeutic segments such as cardiovascular, diabetes, oncology, gastroenterology and pain management.

The deal also involved revenue sharing, wherein revenues were to be reported by GSK and shared with Dr. Reddy’s. In certain markets, both the companies agreed to co-market the products.

The company didn’t specify any revenue loss due to the termination.

An email sent to Dr. Reddy’s seeking clarification on the financial implication of the termination remained unanswered at press time.

Analysts said they were not surprised to see the alliance fall apart.

“The deal was defunct for some time," said Siddhant Khandekar, associate vice-president, research, ICICI Securities Ltd.

“Priorities of multinational drug makers keep changing with market conditions. GSK might have felt the deal with Dr. Reddy’s wasn’t important to build its emerging market business," Khandekar said.

Emerging markets contributed about 18% of Dr. Reddy’s global generic sales of 12,806 crore in the year ended March.

On Friday, shares of Dr. Reddy’s dropped 0.64% to close at 3,150.30 on BSE, on a day the benchmark Sensex declined 2.24% to end at 26,397.71 points.

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