HYDERABAD, India (Kyodo) Dr. Reddy’s Laboratories Ltd., India’s second-largest pharmaceutical company, is considering setting up an office in Tokyo or Osaka next year in an effort to break into the Japanese generic drug market, CEO G.V. Prasad said in a recent interview.
“Japan remains the focus area for us,” said Prasad, who doubles as the company’s vice chairman, at his office in Hyderabad.
Dr. Reddy’s is an aggressive firm, and in February it chalked up India’s biggest-ever purchase of an overseas firm.
“We put the structure in Europe so that it will build on its own,” Prasad said, referring to the acquisition of Betapharm Group, Germany’s fourth-largest maker of generic drugs, for about $570 million.
“But in Japan we have nothing. It is very important for us to go to Japan and try to do something,” he said.
The 45-year-old CEO said Dr. Reddy’s plan to set up a Japan office will give a push to “very early stage discussions” his company is having with some Japanese pharmaceutical firms.
“We have started talking to a number of Japanese companies” to find an entry partner for the Japanese generic drug market, said Prasad, declining to give specifics.
Japan has an underdeveloped market for generic drugs compared with many industrialized countries, but the government has started promoting such drugs to hold down rising health-care costs.
Generic drugs, which usually come on the market after the patent on a drug expires, contain the same ingredients as their branded counterparts but are less expensive.
They account for only about 17 percent of the Japanese drug market by volume, compared with a roughly 50 percent share in the United States, Britain and Germany, according to the Japanese Generic Pharmaceutical Manufacturers Association.
Given that Japan is rapidly aging, and its drug market is the world’s second-largest after the U.S., Prasad said Japan has the potential to become a huge market.
Dr. Reddy’s, founded in 1984 in Hydrabad by entrepreneur and scientist Anji Reddy, employs about 7,400 people globally and sells its products in more than 100 countries.
It is keen to scout out opportunities in Japan, Prasad said, believing the company can help Japanese drugmakers become more competitive in the global market by helping them create lower cost supply chains.
As with information technology, India has emerged as a global player in the pharmaceutical industry, thanks to an abundance of inexpensive labor and solid scientific and technological skills.
Ranbaxy Laboratories Ltd., India’s biggest drugmaker, last November increased its equity stake in Nihon Pharmaceutical Industry Co., a joint venture between the company and Nippon Chemiphar Co., from 10 percent to 50 percent.
Prasad said he traveled to Japan quite often in the early 1990s in an effort to drum up business.
But, he said, “It was very difficult and . . . not very successful.”
This time he is more confident, saying, “I think there is more acceptability of Indian companies.
“In those days, it was difficult to do business, even in the United States,” he said. “But now Indian companies are very well accepted in the world.”
In 2001, Dr. Reddy’s became the first Asian drugmaker outside Japan to list on the New York Stock Exchange. The company is expected to exceed $1 billion in revenues in the current business year, the CEO said, adding the vast majority of its sales will come from the U.S., Germany, Russia and Britain.
Looking ahead, Prasad said the company wants to become a developer of its own proprietary drugs instead of just selling generics and active pharmaceutical ingredients — the chemicals used in the manufacturing of drugs.