Dr. Reddy’s Labs, an international pharmaceutical player, recently announced a major acquisition in its consumer healthcare segment. The company signed a definitive agreement to acquire Haleon’s global portfolio of consumer healthcare brands in the Nicotine Replacement Therapy category outside the United States.
Nicotinell: Expanding Dr. Reddy’s International Footprint
Notably, the acquisition portfolio includes Nicotinell, a global leader in the NRT category, along with local market-leading brand names such as Nicabate, Thrive, and Habitrol. Nicotinell is a well-established brand, holding the second position globally in the NRT market (excluding the U.S.) and the top position in the lozenge/mini lozenge format. It has a robust presence in over 30 countries, including key markets in Europe, Asia (including Japan), Australia, Canada, and Latin America. In 2023, the portfolio generated approximately GBP 217 million in revenue.
The transaction, valued at GBP 500 million, includes an upfront cash payment of GBP 458 million and performance-based contingent payments of up to GBP 42 million, payable in 2025 and 2026. The acquisition is expected to close in early Q4 of 2024, subject to regulatory approvals and customary closing conditions.
Strategic Fit and Market Expansion
Erez Israeli, Chief Executive Officer of Dr. Reddy’s, commented on the acquisition: “We see the acquisition of this global portfolio of consumer healthcare products led by the global brand Nicotinell as a logical extension of our efforts in consumer healthcare OTC in recent years, and of our purpose of ‘Good Health Can’t Wait’. We have been steadily building our OTC presence in various markets and investing in our capabilities. The business to be acquired from Haleon has maintained steady sales and strong profitability over the years. The portfolio is attractive for its customer loyalty, its global nature, and the access it provides to key customers. We believe we can unlock more value, grow the portfolio further, and increase consumer access around the world to these global brands. Given these advantages, it is the ideal anchor around which to build a larger global OTC platform.”
Commitment to Public Health and Innovation
Dr. Reddy’s continues to strengthen its core business of generics, branded generics, Active Pharmaceutical Ingredients (API), over-the-counter (OTC) products, and biosimilars. Alongside this, the company has been investing in growth drivers of the future in three areas – access to novel molecules (NCEs, NBEs, CAR-T); digital therapeutics (wearables, apps); and consumer healthcare (including nutrition and OTC wellness products). The acquisition of Nicotinell aligns with Dr. Reddy’s strategic focus on consumer healthcare. To bring a range of nutritional health solutions and supplements to the Indian market and expand its presence in the consumer healthcare division, the company recently concluded a joint venture with Nestle India for its nutrition products.
Dr. Reddy’s is actively expanding its presence in the consumer healthcare market globally. In the United States, the company has acquired several well-known OTC brands, including Habitrol® for NRT, Doan’s® for pain relief, and Premama® for women’s health. In India, the company’s OTC portfolio includes products in hydration, cough-cold-allergy, and skin care categories. In Emerging Markets, Dr. Reddy’s has a long-established and sizeable OTC business with market-leading products in the allergy, pain relief, gastro-intestinal, and women’s health categories in Russia & CIS, South Africa, Asia, Latin America & the Caribbean. Earlier this year, Dr. Reddy’s entered the UK consumer health market with the launch of the allergy medication Histallay. The recent acquisition of Nicotinell could significantly enhance Dr. Reddy’s footprint in Europe and other global markets, complementing its existing capabilities.
Dr. Reddy’s delivered an impressive financial performance in FY24, where the company reported record revenues of $3.3 billion and a 24% increase in profit after tax. The strategic investments in research and development, totaling ₹22,873 million ($274 million), and increased spending in sales, general, and administrative expenses were in line with strategy, and underscore the company’s commitment to growth levers such as biosimilars, CAR-T, OTC, digital therapeutics, etc. for growth and innovation.
The company’s strategic partnerships, such as those with Sanofi for vaccine distribution in India and Bayer for marketing the heart failure drug Vericiguat, have bolstered its market position and expanded access to essential medicines. The partnership with Pharmazz Inc. to commercialize the resuscitative agent Centhaquine and the venture into digital therapeutics with the launch of Nerivio® for migraine treatment in Europe highlight Dr. Reddy’s commitment to addressing unmet medical needs through innovative solutions. Additionally, the recent joint venture with Nestlé India aims to bring a comprehensive range of nutritional health solutions to the Indian market. This partnership combines Nestlé’s global expertise in nutritional products with Dr. Reddy’s extensive distribution network, significantly enhancing Dr. Reddy’s consumer healthcare portfolio and strengthening its market presence in India.
A Vision for Global Health
As Dr. Reddy’s celebrates its 40th anniversary, this acquisition marks a significant milestone in its journey towards serving over 1.5 billion patients by 2030. The company’s focus on diversifying growth lever, investing in innovation, strategic partnerships, and commitment to improving healthcare outcomes positions it well to navigate the dynamic pharmaceutical landscape and seize emerging opportunities.
Dr. Reddy’s Laboratories Ltd. continues to prioritize access to affordable and innovative medicines, driven by its purpose of ‘Good Health Can’t Wait’. This acquisition not only strengthens its market position but also enhances its ability to provide effective healthcare solutions to millions of patients worldwide.
This article is for informational purposes only and is not intended to serve as medical, financial or any form of professional advice. Readers are advised to do their own research and consult with licensed professionals in their respective fields.