Dr Reddy''s to acquire Roche business in Mexico

Mumbai: Dr Reddy's Laboratories Ltd announced today that it has signed a definitive agreement to acquire Roche's API (active pharmaceutical ingredient) plant in Cuernavaca, Mexico, including all employees and business supply contracts. The Indian drug maker is shelling out about $59 million, including working capital, towards this acquisition, in an all-cash deal.

The Mexican plant produces APIs, or bulk drugs and intermediates, and sells them to Roche and other companies. According to a Dr Reddy's spokesperson, the product portfolio of the plant "currently comprises 18 products including mature APIs and a range of intermediates and steroids".

With this acquisition, Dr Reddy's has gained "unique steroids manufacturing capabilities". The Mexican facility employs about 340 people and "has been inspected by the US FDA and other international regulatory agencies.

Says GV Prasad, CEO, Dr Reddy's Laboratories, "With the acquisition of Roche's API business at the Mexico site, Dr Reddy's will emerge as a leading player in custom pharmaceutical services business and position itself as a partner of choice for innovator companies across the globe with service offerings spanning the entire value chain of pharmaceutical services. This strategic acquisition provides an opportunity for our CPS business to grow from the current base of $10 million to $100 million over the next 18 months."

Prasad expects the acquisition to be completed by the end of December 2005. The full impact of the addition to earnings will be seen in the next financial year. Dr Reddy's earnings per share have been on the decline in the recent past, and this acquisition is being seen as a means to improve the EPS.

Dr Reddy's is a global pharmaceutical company operating in over 100 countriess worldwide. The company's operations span across the entire pharmaceutical value chain - from API to formulations to discovery research as well as service areas such as custom pharmaceutical services (CPS).

Dr Reddy's Business-Geography Matrix

Business Geography	API	Branded Formulations/ Oncology/ Biologics	Generics	Specialty Pharmaceuticals	CPS
North America
European Union
Rest of the World