Davos 2023 | Dr Reddy's will continue to allocate capital for inorganic growth in India

The outlook for the pharmaceutical sector in 2023 appears to be positive, with companies like Dr Reddy's seeing potential for growth in the US market and a favourable environment for investment in India. During the World Economic Forum meeting in Davos, GV Prasad, co-chairman and MD of Dr Reddy's, told CNBC-TV18 that India was a priority for his company and the firm would continue to allocate capital for inorganic growth in the country.

“India is a big priority for Dr Reddy's. If you see the last three, four or five years, that is where we have put on maximum capital in terms of inorganic (investment). Of course, we are open to value add in transactions wherever there will be, but our bias is towards branded markets and in that, India would be foremost,” Prasad said.

Prasad emphasised that the US market was still attractive and would remain an important part of every large generic company in India.

He said, “The US continues to be the largest generic market in the world. It is a market which is quite transparent and easy to get in. Companies have to innovate have to find ways to get growth, market share and all of that. And I think the biggest competition is from our Indian companies.”

Prasad states that many governments worldwide are pushing for the localisation of the pharma value chain, which benefits Indian companies like Dr Reddy's.

He said, “The PLI is certainly encouraging for companies to invest in our active ingredients and go backwards and move the supply chain back to India. We are seeing this kind of trend globally, many governments are encouraging the localisation of the pharmaceutical value chain. So, in a sense, what India has done is good for the industry and the country. How much impact it will have, I think we have to see. It will take a couple of years to gain momentum. But in the long term, it certainly will help.”

Prasad acknowledged that the generic business operates under pricing pressure but said they have bottomed out on the worst in the US market. He added that pricing pressure in the US will always be there.