ICICI Venture, Citi to buy into new DRL firm

Dr Reddy's Laboratories on wednesday announced setting up of a drug development company, Perlecan Pharma, with private equity participation from ICICI Venture Capital and Citigroup Venture Capital International Mauritius.

DRL will have a 17 per cent equity holding, while the two venture capital companies will hold 42.5 per cent each in Perlecan Pharma.

However, DRL will eventually hold 70-80 per cent in Perlecan Pharma through bonds to be issued by the new firm. The company will be managed by an independent board.

This is the first instance of venture capital outfits participating in the equity of a drug development company.

Earlier, ICICI Venture had funded DRL's ANDA (abbreviated new drug applications) project for the US market. ICICI Venture has also recently bought out the non-core business -- diagnostics, veterinary and fine chemicals -- of Ranbaxy Laboratories.