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Friday March 09, 2012
Ready for Reddy's
by Yiannis Mostrous, editor Global Investment Strategist Investors should find Indian pharmaceutical companies particularly compelling; they are pillars of growth in the global pharmaceutical industry. Among these, we've long favored Dr. Reddy's Laboratories (RDY). Because of the affordability of their products and technological prowess, Indian pharmaceutical firms should continue to gain market share in developed markets, especially in the US. Furthermore, larger pharma companies could soon initiate a wave of mergers and acquisitions once they start to pursue industry consolidation in earnest. Dr. Reddy's Laboratories is India's second-largest drugmaker. The company boasts a strong research and development unit focused on cancer, diabetes, cardiovascular, inflammation and bacterial infections. At present, Dr. Reddy's has 70 abbreviated new drug applications pending approval from the US FDA. The company has an impressive drug pipeline in the US, and has steadily grown despite the market's occasional indifference. Although the US remains an attractive market for these firms, emerging economies will account for a greater share of future growth. Africa (particularly South Africa) and South America are two of the more promising growth markets, but it will take time for them to achieve sufficient scale and emerge as key revenue drivers. Dr. Reddy's has recently started increasing its presence in India at a rapid pace, and has been investigating the possibility of acquiring some smaller competitors in order to quickly gain market share. Dr. Reddy's is poised for another promising year. Although pharmaceutical firms are notoriously difficult to evaluate, the market has yet to appreciate Dr. Reddy's true potential. There may be periodic pauses in the stock's ascent, but Dr. Reddy's will continue to reward patient investors. Learn more about this financial newsletter at Yiannis Mostrous' Global Investment Strategist. Related articles: 
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