Dr. Reddy’s wants to be “innovation-driven” generics company (RDY, INDY)


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The Indian pharmaceutical industry is trying to find its place in a crowded global marketplace, and many companies will have to change strategies just to survive. Motital Oswal analysts recently met with Dr. Reddy's Laboratories ( RDY , quote ) CEO G.V. Prasad to learn his plans for the next ten years.

Prasad was educated in the United States, earning a degree in Chemical Engineering and an MBA in the early 1980s. He has been CEO of Dr. Reddy's since 2001, and is widely credited as the architect of the company's successful generics strategy.

Now Prasad wants to transform Dr. Reddy's from a "pure generics" company to "innovation-driven generics." To do this, the company will scale up its presence in global bio-generics while focusing on complex and difficult-to-manufacture pharmaceuticals. Geographic expansion will take a back seat to investment in innovation, and the company will stay focused on its five key markets of the U.S., India, Russia, Germany, and the United Kingdom.

Motital Oswal analysts are skeptical of the strategy, saying that "this transformation could entail significant investments in the coming years," and expressing concern that the company will not hit its FY13 revenue targets. They reiterated a "Neutral" stance on Dr. Reddy's stock.

Investors looking to gain exposure to Indian pharma should also examine the iShares S&P India Nifty 50 Index Fund ( INDY , quote ). Pharmaceuticals have been a small part of this ETF in the past, but analysts predict their share is likely to grow.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Stocks

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