Dr. Reddy's Laboratories Limited has entered into a definitive agreement to acquire Roche's API business at the state-of-the-art manufacturing site in Cuernavaca, Mexico including all employees and business supply contracts. The total investment outlay is about USD 59 million including working capital.

This business involves the manufacture and sale of APIs including intermediates to Roche and other innovator companies. The product portfolio currently comprises about 18 products including mature APIs and a range of intermediates and steroids. This acquisition also adds unique steroids manufacturing capabilities to Dr. Reddy's. The Cuernavaca site at Mexico currently employs nearly 340 people and has been inspected by the US FDA and other international regulatory agencies, claims a company release.

Commenting on the acquisition, GV Prasad, CEO, Dr. Reddy's Laboratories said, "With the acquisition of Roche's API business at the Mexico site, Dr. Reddy's will emerge as a leading player in custom pharmaceutical services (CPS) business and position itself as a partner of choice for Innovator Companies across the globe with service offerings spanning the entire value chain of pharmaceutical services. This strategic acquisition provides an opportunity for our CPS business to grow from the current base of USD 10 million to USD 100 million over the next 18 months. The integration of these businesses - people and technology; the expertise of the management team and distinctive manufacturing capability at the Mexico site, with that of Dr. Reddy's strengths in process chemistry and world class research capabilities will provide a strong foundation to drive the next wave of growth in our CPS business."

The acquisition is expected to be completed by end of December 2005. The company expects the acquisition to be EPS accretive to Dr. Reddy's and the full year financial impact of the acquisition will be realized from the year 2006-07 onwards.

Established in 1984, Dr. Reddy's Laboratories is an emerging global pharmaceutical company with proven research capabilities.