Reddy Becomes Billionaire as India’s Aurobindo Shares Triple

May 28, 2014 7:05 am ET

(Updates with closing prices in fifth paragraph.)

May 28 (Bloomberg) -- P.V. Ramaprasad Reddy, the co-founder of Indian drugmaker Aurobindo Pharma Ltd., is a billionaire as the stock more than tripled in the past year to a record.

Reddy and his wife, Suneela Rani, control about 38 percent of Aurobindo Pharma, according to a May 26 filing to the Bombay Stock Exchange. Excluding shares pledged as collateral, their interest in the drugmaker is valued at more than $1 billion, according to the Bloomberg Billionaires Index.

Investors are betting on increased sales after the U.S. health regulator approved its generic version of Cymbalta antidepressant in December. Its acquisition of Dublin-based Actavis Plc’s commercial operations in seven European countries this year also gives it scale and access to other markets, said Ranjit Kapadia, an analyst at Centrum Broking Pvt.

“There is a rerating that has happened,” said Mumbai- based Kapadia, who has a buy recommendation on the stock. “There is an expectation of good results.”

The Hyderabad-based drugmaker’s share price more than tripled in the last 12 months. The stock, which closed at a record 642.45 rupees yesterday, fell 0.5 percent to 639.25 at the close in Mumbai.

Aurobindo Pharma plans to announce its earnings for the year ended March 31 at the end of the week, it said in a statement to the stock exchange.

Stock Rally

Tathagato Roychoudhury, who oversees Aurobindo Pharma’s investor relations in the southern Indian city, said Reddy is a billionaire based on the value of his shares and those held by his wife. He said he’s unable to provide details of Reddy’s personal assets as he could only comment on the company.

The shares also climbed as the benchmark stock index rose to a record earlier this week amid growing investor confidence that new Prime Minister Narendra Modi will take steps to boost economic growth. The S&P BSE Sensex’s 16 percent gain this year made India the best performer among the world’s 10 largest equity markets.

Reddy owns 6.7 percent of Aurobindo Pharma and his wife has 31.2 percent stake, according to the May 26 filing. He gave 60 million of his shares -- representing a 20.6 percent stake -- to his wife in 2012, according to an exchange filing then.

The 55-year-old held management positions in various pharmaceutical companies before setting up Aurobindo Pharma in 1986 with K. Nityananda Reddy and a group, according to the drugmaker’s website. It started operations about two years later with one facility manufacturing semi-synthetic penicillin.

Overseas Expansion

Aurobindo Pharma went public in India in 1995. It broadened its suite of drugs, including cardiovascular, anti-retroviral, gastroenterological and anti-diabetic treatments. It also branched out into higher-margin, specialty drugs.

More than 70 percent of the drugmaker’s revenue comes from its overseas operations as it exports to more than 125 countries, according to its website. The manufacturing cost of Indian drugmakers is as much as 65 percent lower than that of U.S. firms and almost half of those in Europe, the company said in its latest annual report.

“Technologically they are highly competent so they can make all the complex molecules,” said Centrum Broking’s Kapadia. “They are also efficient in marketing their drugs in the U.S. and European countries.”