Hyderabad-based Dr Reddy’s Laboratories (DRL) is gearing up for two major launches next month – injectable drug remdesivir for hospitalised Covid-19 patients, and oral drug favipiravir that is given to mild to moderate patients.
While the company admitted that its India revenues were hit due to lower prescription generation and a sluggish growth in the acquired Wockhardt portfolio, it is bullish on its Covid-19 portfolio nonetheless.
Apart from favipiravir and remdesivir, its key Covid-19 products, DRL has already launched nutraceutical products and hand sanitisers during the pandemic. Products like azithromycin (common antibiotic used in Covid) have also seen traction, DRL said.
Erez Israeli, Chief Executive Officer of DRL felt that these products are launched with a longer horizon in mind, not just targeted for the pandemic. Israeli, however, also felt that the Covid-19 health crisis was here to stay for at least another year or so which meant the Covid targeted products would continue to do well. “Unless a vaccine surprises us, the pandemic is here to stay at least for a year or so. Our data on favipiravir is showing it is a good product,” Israeli said.
DRL is going to launch the innovator brand Avigan of favipiravir as part of a tie up it has with Japan’s Fujifilm Toyama Chemical Co and Global Response Aid (GRA). Under the tripartite agreement signed on June 30, Fujifilm grants DRL the exclusive rights of manufacturing and also grants both DRL and GRA the rights to develop, sell and distribute Avigan in all countries other than Japan, China and Russia. In India DRL will have exclusive rights over Avigan, the innovator brand.
While Israeli did not wish to comment on the pricing of Avigan in India, he said that since they would have access to the clinical data from the innovator, they have the opportunity to market it to other countries. DRL has the rights to sell the drug overseas other than Japan, China and Russia.
As for remdesivir, the company is yet to get approval from the country’s drug regulator. It, however, is preparing so that it can launch soon after it gets the nod.
Trying to boost acquired Wockhardt biz:
After DRL and Wockhardt agreed to a deal in February for 62 brands along with related sales and marketing teams and one manufacturing plant at Baddi, the pandemic forced the companies to renegotiate the deal. In the first quarter of FY21, DRL’s India business fell 10 per cent on a YoY basis and by 8 per cent on a sequential basis.
Saumen Chakraborty, president and CFO of DRL admitted that the along with the Wockhardt portfolio, the decline is higher. He added that on a moving annual turnover basis, DRL would have done better than the industry but for the Wockhardt portfolio.
Chakraborty said that the sales of Wockhardt brands were considerably down in April. “For last financial year, the sales of these brands were Rs 480 crore. Since April sales was below even Rs 20 crore, we felt that it would not be prudent for us to go ahead with the acquisition at the earlier negotiated price of Rs 1850 crore,” he said. The companies spoke mutually and came to consensus.
DRL agreed to pay Rs 1,483 crore on the closing date under the business transfer agreement. And DRL will hold Rs 300 crore on the closing date and will release it if revenue from the sales of these products during the 12month period (post closing) exceeds Rs 480 crore. DRL will have to pay twice the amount by which the revenue will exceed, Chakraborty said.
“The integration has been very fast and smooth despite the Covid situation. We feel these brands are ones we can revive and grow,” he added. DRL is trying to grow the business fast and has no specific plans of rationalising the team that came from Wockhardt as of now.
“The primary goal is to sell more. We have better ability to invest in those brands. The team that came from Wockhardt is very good. We are always doing efficiency and productvity activities, but not specific to any group,” Israeli said.
July 30, 2020