Dr. Reddy's expanding capacity at three plants

Indian generics maker Dr. Reddy's Laboratories, which has been upgrading its manufacturing network, is planning to spend more than $13 million to more than triple capacity at three plants in India. The plans come even as the drugmaker has reportedly been planning to move some production from a plant in Srikakulam that the FDA cited in a Form 483 last year, in hopes of saving its chances of launching some lucrative drugs that would be made at the troubled facility.

Citing government documents, the Economic Times reports that Dr. Reddy's intends to expand capacity at the facilities to about 142 metric tons from about 41 metric tons currently. A spokesman for the company told the newspaper that it expects to spend about 1,000 crore ($162 million) on capital expenditures during the fiscal year that will end March 31 and that it already has laid out 675 crore on plant projects during the first three quarters.

Dr. Reddy's acknowledged late last year that the FDA had tagged its plant in Srikakulam with a Form 483 following an inspection there. One of the key APIs manufactured at the plant is for the generic of AstraZeneca's ($AZN) blockbuster heartburn med Nexium. The FDA recently granted Teva Pharmaceutical Industries ($TEVA) permission to make a copy of Nexium, which went off patent in May, but other drugmakers are also expected to seek approvals to get in on that lucrative business. Indian analysts told DNA last week that Dr. Reddy's was looking to move production of the Nexium API to another of its facilities in the event that the FDA issues a warning letter for the Srikakulam plant, impeding its chances of getting a copy approved.

One of Dr. Reddy's Indian competitors, Ranbaxy Laboratories, has already seen its opportunity slip away. It was approved for the 180-day exclusive of the drug, but the FDA trashed that approval since the plant where Ranbaxy was going to make the drug is among four of its facilities banned by the agency from shipping to the U.S. because of drug testing and manufacturing problems.

Dr. Reddy's itself has benefited from Ranbaxy's problems, getting approval from the FDA, along with Endo Health Solutions ($ENDP), to make a generic of Roche's ($RHHBY) antiviral Valcyte. Ranbaxy had a 180-day exclusive for that drug as well but lost it at the same time that the FDA canceled its approval for the Nexium generic.

- read the Economic Times story