Shares of Dr Reddy’s Laboratories climbed on March 17 after the company said it had signed a deal to sell nine of its non-core brands in dermatology to Eris Lifesciences.
Under the deal, Eris Lifesciences will be assigned the trademarks of these brands by Dr Reddy’s for a total consideration of Rs 275 crore.
According to IQVIA MAT data for December 2022, the divested portfolio generated sales of Rs 60 crore in India.
However, brokerage ICIC Direct predicted that the deal would not significantly impact post-divestment earnings, as the portfolio accounted for less than 1% of total sales. The company also believes the deal is valued somewhat based on industry metrics.
Shares of Dr Reddy’s Laboratories were trading 0.83% higher at Rs 4,420.35 on the NSE at 9:58 am.
M.V. Ramana, CEO of Branded Markets (India and Emerging Markets) at Dr Reddy’s, also said in a filing to the exchange that the move aligns with the company’s strategy of organically growing brands, pursuing strategically appropriate acquisitions and divesting non-core brands.
Ramana added: “This deal further strengthens our core business and helps us develop our focus in India.”
The drugmaker acquired Mayne Pharma’s US generic prescription portfolio in late February. Wall Street analysts, however, shrugged off the move.
According to global research and brokerage firm Bernstein, Dr Reddy’s acquisition of Mayne Pharma’s US generic drug portfolio has not positively impacted the company.
Concerns stem from Mayne Pharma’s large US portfolio, which has seen notable price declines.
Another brokerage, Jefferies, also sees the acquired portfolio as generic vanilla, as all products are oral solid doses (OSDs), many of which face stiff competition.