Dr Reddy's Eyeing for Generics Arm of Merck

by VR Sreeraman on  February 25, 2007 at 2:48 PM Corporate News   - G J E 4
Dr Reddy's Eyeing for Generics Arm of Merck
Dr Reddy's Laboratories, one of India's largest manufacturers of generic medicines, is the latest Indian company working on putting in a bid for a major European company - the generics arm of German pharmaceuticals giant Merck.

"We will take a look at it and then decide," G.V. Prasad, Dr Reddy's vice-chairman and chief executive officer, told The Times here. He added that any bid from Dr Reddy's would be as part of a consortium, most likely backed by private equity.

"We don't have the size to do it on our own," Prasad, who was on a visit to London, told the newspaper.

Merck is reported to have said in January that it was considering a sale of its generic drugs business to help pay for its Euro 10.5 billion (7 billion pounds) acquisition in September of Serono, the Swiss biotechnology group.

A sale of the Merck Generics unit, which is believed to be worth between Euro 3 billion and Euro 4 billion, would allow Merck to concentrate on its core prescription pharmaceuticals business.

The Times said that Merck Generics had sales in over 90 countries and was the third-largest generics business in the world. In 2005 it reported sales of Euro 1.8 billion and operating profits of Euro 238 million. It employed approximately 5,000 people.

Hyderabad-based Dr Reddy's already owns a small European generics business. "We see the potential to grow that quite significantly," Prasad told the newspaper.

He added that Dr Reddy's was aiming to achieve revenue growth of 20-25 percent in Europe from 2008 onwards.

Globally, the company had sales of $546 million (278 million pounds) in 2006 and is India's second-largest pharmaceutical company after Delhi-based Ranbaxy Laboratories.

Ranbaxy and Actavis of Iceland are also reported to be interested in buying Merck's generics business. Another Indian drugs firm, Cipla, had earlier expressed interest but recently said the price was too high.

Prasad said that Indian generics businesses were likely to "play a very important role" in the development of the global generic medicines industry.

"India offers a vibrant chemical industry and the costs of manufacturing and infrastructure are still much lower," he told the paper.

Source: IANS

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