Dr Reddy's Laboratories (DRL), which would be completing 10 eventful years in drug discovery, would be spending 10 per cent of the total revenues in drug discovery and R&D initiatives in the current year. The company spent Rs 137.5 crore, which was almost 8 per cent of the revenue, in 2002-03 for R&D, which itself was an increase of 85 per cent over the amount invested for research in the corresponding previous year at 4.5 per cent of the total revenue.

Addressing the shareholders at the 19th Annual General Meeting, Dr Anji Reddy, Chairman, said, "during this decade-long journey we have tasted many successes, encountered many failures as well. Most importantly, in this journey, we have learnt valuable lessons that would immensely help us in progressing towards our dream of bringing our own molecules to the market."

"For a company that is just 10 years into its drug discovery efforts, today we have an exciting and enviable NCE (new chemical entities) pipeline. We have three molecules in clinical development and five molecules in pre-clinical development in the areas of metabolic disorders, cardiovascular, cancer, inflammation and infection. We have many more molecules in these areas in exploratory and discovery stage and we would move some of them into pre-clinical development in the current year," Dr Reddy told the shareholders.

He said the company's efforts in PPAR research continued to give exciting molecules. "We have three molecules - a dual activator and two predominantly PPAR alpha agonists in pre-clinical stage and another dual activator in discovery stage. One of the two predominantly PPAR alpha agonists, DRF 10945, is undergoing regulatory toxicology studies in France," he said.

The target-based discovery and validation programme at Atlanta, USA, was progressing well and had two molecules in pre-clinical development and one in discovery stage. One of the pre-clinical candidates, RUS-3108, was a new approach to treat Atheroscelorosis. As far as the cancer programme was concerned, the phase II trials for DRF 1042 had already commenced in India and the company was currently working on starting clinical development in North America. Efforts were also on to initiate phase I clinical development for another cancer molecule, DRF 1644, in India soon.

However, the bigger challenge was to make a molecule from the company's pipeline all the way to the market place cost-effectively and also make it available at affordable price to the people. " I have great confidence in our army of chemists and biologists, and am confident that we will bring our own molecule in this decade," Dr Reddy said amidst applause from the shareholders.

A favourable lower court judgement in the Amlodipine Maleate case, record revenues from API global business, filing 14 ANDAs and 14 DMFs (Drug Master Files) were some of the other achievements of the company during 2002-03. A disappointing lower court decision on Omeprazole, the Novo Nordisk decision not to go ahead with phase III trials of Ragaglitaxar, Novartis opting for a follow-up compound in place of DRF 4258 were some of the setbacks in the year.

In its commitment to spreading health and happiness, Dr Reddy's Foundation for Human and Social Developments had undertaken tremendous activities. Through the CAP (child and police) and LABS (Livelihood Advancement Business School) the Foundation was able to do a lot of meaningful and quality work, Dr Reddy said.

The AGM was a formality as the company had already announced the annual results and the dividend payable to the shareholders. The company had recorded a total turnover of Rs 1807 crore and a profit after tax to the tune of Rs 392 crore in 2002-03 as against a profit of Rs 459.7 crore in the previous year. Even though the turnover was higher by over Rs 500 crore, the decline in profit was primarily due to a shortfall in profits generated from the sale of Flouxetine 40mg during the year in the US market where the product enjoyed a 180-day exclusivity in sales. The company had declared a dividend of 100 % for the year, ie, Rs 5 for each equity share of Rs 5.

Addressing the shareholders, G V Prasad, Chief Executive officer, said last year the company filed 14 Drug Master Files, the maximum filed by any company in the world. The company received several honours in recognition of its outstanding efforts, the key amongst them being featuring in Forbes top 200 ' Best Under a Billion' companies, 7th position in India's 'Most Respected Companies' by Business World and ICSI National Award for Excellence in Corporate Governance by the Institute of Company Secretaries of India.

He said the company had made significant progress in aggressively pushing the core businesses, creating a sales and marketing infrastructure in the US and certain key focus markets and expanding the internal discovery pipeline by building a distinctive global research organisation.

In the current year the focus area for bulk business, after the US, would be Europe as it had the highest potential for growth and to address this opportunity the company was making plans to expand into the European continent for finished dosages.

Dwelling on the strategy for the future, Prasad said while bulk, branded formulations and generics were yielding revenues today, the company would move up the value chain and speciality and discovery would be the future growth drivers. The company would kickstart the speciality strategy with the launch of Amlodipine Maleate subject to approval by the US Federal Court. Beyond this, the company was also in the process of building a truly differentiated speciality pipeline that would telescope it into realising its vision of becoming a 'discovery-led global company, Prasad said.