Mumbai: Drug maker Dr Reddy’s Laboratories Ltd on Wednesday said that it has agreed to acquire a select portfolio of the established products business of Belgium-based biopharmaceutical company UCB SA in India, Nepal, Sri Lanka and Maldives for 800 crore.

The combined revenue of the acquired business was around 150 crore for 2014, Dr Reddy’s said, adding that the transaction includes absorbing approximately 350 employees engaged in the operations of UCB in the India business.

The acquisition of UCB’s existing brands in the areas of dermatology, respiratory and paediatric diseases will help Dr Reddy’s to expand its therapy footprint into these fast-growing areas, the company said.

India contributed about 1,571.3 crore or 15% of Dr Reddy’s generic sales in the year ended 31 March 2014, growing at 8% making it the third biggest market after the US and the combined Russia and Commonwealth of Independent States (CIS).

With the Russia business under pressure because of a plunge in the value of the rouble and an economic recession, Dr Reddy’s is trying to increase its India sales. Russia and CIS contribute about 17%, or 1982.9 crore.

For the full year ended 31 March 2014, Dr Reddy’s had total sales of 13,217 crore.

“The acquired UCB portfolio shall accelerate Dr Reddy’s presence in the high growth areas of dermatology, respiratory and paediatrics with market leading brands like Atarax, Nootropil, Zyrtec, Xyzal, Xyzal M, etc.," said Alok Sonig, senior vice-president and India business head at Dr Reddy’s.

Atrarax, Zyrtec and Xyzal are anti-allergy drugs, and Nootropil is used in the treatment of myoclonus, a central nervous system disorder.

These brands of UCB delivered 22% growth in 2014, Dr Reddy’s said in an email, citing IMS data.

“We see no reason why this trend should not continue," the company said.

Analysts said Dr Reddy’s latest acquisition is expected to help the company expand sales and gain market share in the highly competitive Indian branded generics space.

The Indian pharmaceutical market is worth 85,000 crore, growing at around 12%. Dr Reddy’s has a market share of 2.1%.

“The products acquired by Dr Reddy’s are high margin and fast growing," said Hitesh Mahida, an analyst at Mumbai-based Antique Stock Broking Ltd.

In December, Dr Reddy’s bought the over-the-counter Habitrol brand, a nicotine replacement therapy, from Novartis Consumer Health Inc., for an undisclosed amount.

Habitrol has sales of $58 million in 2013.

UCB said the company will be focusing on its key neurology portfolio in India after the sales of its portfolio products to Dr Reddy’s.

The transaction is expected to be closed in the first quarter of the financial year 2015-16.

As on 31 December, Dr Reddy’s has cash and cash equivalent of 2873.6 crore on its books.

Shares of Dr Reddy’s gained 1.12% to close at 3,526.60 on BSE on Wednesday, the benchmark Sensex rose 1.08% to end at 28,260.14 points.

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