Neopharma snatches Dr. Reddy's API plant as it continues global expansion

Therapiva, a joint venture of Abu Dhabi-based Neopharma and India’s Laxai Life Sciences, says it has a GMP manufacturing plant in India. It will now add Dr. Reddy's entire API manufacturing business. (Therapiva)

Just weeks after announcing a deal to sell its antibiotics manufacturing in the U.S. to Neopharma, India’s Dr. Reddy’s Laboratories says it will now unload its API manufacturing business in Jeedimetla, Hyderabad to the Middle East-based Neopharma. The move comes as the Indian drugmaker continues to cut costs and Neopharma makes moves to become a player in Western drugmaking.

Dr. Reddy’s said today that it has sold its API manufacturing plant in Hyderabad to Therapiva, a joint venture of Abu Dhabi-based Neopharma and India’s Laxai Life Sciences, an emerging generics company. Terms and specifics of the sale were not disclosed but Dr. Reddy’s says it includes manufacturing plants, current assets and liabilities and its employees.

A spokesperson said in an email that the two Dr. Reddy's API plants included in an FDA warning letter for manufacturing failures were not part of the sale.

“The divestiture of our API manufacturing business unit is a step towards streamlining our manufacturing operations and optimizing our cost structures,” Sanjay Sharma, executive VP of Dr. Reddy’s global manufacturing operations said in a statement.

BR Shetty, chairman of Neopharma, said the acquisition would give the company a high-quality manufacturing base in India.

“This is a key milestone in our acquisition strategy over the next few years to increase Neopharma’s presence in the global generics space,” Shetty said in the announcement.  

RELATED: Dr. Reddy's unloads antibiotics plant to Abu Dhabi-based Neopharma

Late last month, Dr. Reddy’s said it had concluded the sale of its 390,000-square-foot antibiotic manufacturing plant in Bristol, Tennessee to Neopharma for an undisclosed sum. It is Neopharma’s first manufacturing plant in the U.S.

A representative for Neopharma, which has been expanding recently, said the company intends to increase the number of employees to about 50 from the current 40 by the end of next year. It has a plan to expand the plant and potentially have 100 workers there.

RELATED: Dr. Reddy's blasted in warning letter for hiding existence of testing lab from FDA

Dr. Reddy’s, which had annual revenues of about $2.1 billion in its 2017-2018 fiscal year, has seen its finances falter for several years as it has dealt with regulatory issues tied to its manufacturing.

The FDA issued a scathing warning letter in late 2015 that covered three facilities, including two API operations and a formulation facility where the company makes oncology drugs. Particularly annoying to the FDA was the discovery of a secret testing lab that one plant used for years to test batches, which allowed the company to hide failed test results.