Hyderabad: India’s No.2 drug maker Dr.Reddy’s Laboratories Ltd has acquired six over-the-counter (OTC) labels from US-based Ducere Pharma for an undisclosed sum. The deal, which was announced on Wednesday, marks the Indian drug maker’s entry into the highly lucrative branded US consumer health goods market.

Over-the-counter drugs are medicines that can be bought directly by patients without a prescription. In 2015, Americans spent about $44 billion on OTC drugs, according to a November report in the New York Times.

The six brands, sold in over 20,000 US stores including those of No.1 retailer Wal-Mart, had total sales of $8 million in 2015 in that market. They will boost Dr. Reddy’s OTC segment, which had US sales of $200 million.

“Dr.Reddy’s is trying to building its OTC or branded segment, where there is less competition (and) better margins,"said Sarabjit Kour Nangra, vice president of pharma research at Mumbai-based brokerage house Angel Broking Ltd.

The OTC labels coming to Dr.Reddy’s stable include pain relievers such as Doan’s caplets, Bufferin tablets, Nupercainal ointment and Myoflex cream. The other brands that it bought are Cruex, which is used to treat toenail fungus, and Comtrex, which is used to cure common cold and cough.

Dr Reddy’s did not disclose the other terms of the deal citing “contractual obligations" with Ducere, which is controlled by private equity firm Casla Capital Management. Ducere acquired the six brands from Novartis in May 2013 when the Swiss pharma giant restructured its US business following regulatory issues at a plant there.

“These legacy products enjoy strong brand equity built over several decades," said Alok Sonig, executive vice president and head of Dr.Reddy’s in the US. Some analysts such as Nangra, however, believe the Indian drug maker needs to invest more on brand building.

The consumer health care segment, which includes everything from health drinks to pain relievers, is heavily dependent on mass advertising and retail distribution.

While initial investments may be large, once the brand is built, there will be no recurring expenses such as spending on medical representatives and other promotions. The company will also have a better ability to control prices.

According to the US Food and Drug Administration, there are more than 300,000 over-the-counter drug products in that market, a number that continues to grow as an increasing number of medications move from prescription to OTC status.

Dr.Reddy’s said it plans to invest in marketing the new brands it acquired, boosting their presence in existing channels and taking them to newer ones.

Shares of Dr.Reddy’s gained 0.92% to close at 3052.95 on BSE, while the benchmark Sensex rose 2.28% to end 25,881.17 points.

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