Dr Reddy’s will also close down research facility in Atlanta.
Indian generic maker Dr Reddy’s Laboratories will wind up its proprietary products development to Aurigene -a wholly-owned arm, as part of a major restructuring operation to offset the fourth quarter losses incurred following the write-down of $290 million against the German unit Betapharm.
Dr Reddy’s will also close down research facility in Atlanta in the United States.
Dr Reddy’s would move its discovery research operations to Aurigene unit from July 1, new unit would be set up to work on developing proprietary products and research activities in collaboration with others, the company said in a statement.
Aurigene is a partnership based drug discovery biotech headquartered in Bangalore. Aurigene is engaged in small molecule and peptide drug discovery partnership in early stage discovery collaboration from Target to IND. Aurigene has 15 discovery programmes with 9 collaborators world wide. Aurigene also provides specialized services in crystallography, peptides and small molecules including scale-up and ADME assays.Dr Reddy’s will transfer all the discovery research resources including employees, facility and infrastructure to Aurigene. The new R&D activities will now operate out of two sites – Bangalore and Hyderabad.
In addition, Dr. Reddy’s will be creating a new group to focus on proprietary products development, which will be responsible for building the proprietary, branded R&D portfolio in collaboration with various partners and service providers.
The new organization will work with Aurigene and other discovery biotechs to ensure effective management of the ongoing and future drug discovery programmes. All the existing intellectual property will be owned and managed by this new unit. This group will also have responsibility for the development portfolio and the company’s differentiated formulations efforts.
“We have been working at delivering sustained growth with profitability to significantly improve shareholder returns. As we prioritize our company-wide research and development spending, we will now be placing greatest emphasis on R&D activities that can have a significant impact on near-term earnings, while not losing focus on long-term interests of the company,” said G V Prasad, vice chairman & CEO said.
The new drug discovery will be known as Aurigene – Hyderabad, and will report into CSN Murthy, CEO – Aurigene. The current head Dr Rajinder Kumar, President – R&D and Commercialization will step down, but will continue to advise the proprietary products group on various matters beyond July 1, 2009.
Dr Raghav Chari, senior vice President will head the Proprietary Products Group.
Dr Reddy’s also announced that the company received approval for three investigational new drugs (INDs) from its discovery pipeline.
The first human subjects were successfully dosed in a phase I study with DRL 17822, a selective inhibitor of CETP, for the treatment of dyslipidemia, atherosclerosis and associated cardiovascular diseases. The compound shows potent elevation in HDL-C and reduction of atherosclerotic plaques in animals, and has a clean safety profile in preclinical studies. The two other IND’s are for the treatment of COPD and dyslipidemia.
Dr Reddy’s has written down $290 million against its German unit Betapharm resulting in a March quarter loss.
Dr Reddy’s Laboratories posted a 3.76 per cent drop in net profit at Rs 156.1 crore for the fourth quarter ended March 31, 2009, as compared to Rs 162.2 crore in the corresponding period a year ago.Dr Reddy’s gross earnings rose by 12.36 per cent to Rs 1,166.5 crore for the quarter under review as against Rs 1,038.1 crore.
As per the audited consolidated results, the group has posted a net loss attributable to the shareholders of the parent of Rs 917.2 crore for the year ended March 31, 2009 as compared to a net profit of Rs 438.1 crore for the previous corresponding year.
Dr Reddy’s recorded an impairment loss with respect to intangible assets related to its acquired German subsidiary Betapharm, amounting to Rs 316.7 crore (euro 47 million), before tax and with respect to goodwill of Rs 1,085.6 crore (euro 162 million). This is a one-time non-cash charge in the income statement and incorporates the provisions of applicable accounting standards.