3i sells betapharm to India based Dr. Reddy's Labs

16 Feb 2006

3i, Europe's leading private equity and venture capital company has sold German generic pharmaceutical company betapharm Arzneimittel GmbH to Indian Dr. Reddy's Laboratories Ltd. The transaction volume is €480m. The sale also includes the not for profit beta institute.

Founded in 1993, betapharm is the fourth-largest generics company in Germany with a market share of about 3.5%. betapharm markets high-quality generic drugs focussing on long-term therapy products with high prescription rates. betapharm is the fastest growing generics company over the past five years in the top 10 inGermany(1) with a track record of successful product launches. betapharm's current portfolio comprises circa 145 active ingredients in the market. Located in Augsburg, Germany, betapharm currently employs circa 370 people including a sales force of about 250.

3i invested in betapharm in March 2004. Since then 3i has been active in helping the company develop its business activities, particularly in product sourcing. 3i also introduced Thomas Nedtwig as a Chief Financial Officer and managed the succession of Dr. Wolfgang Niedermaier as CEO when Peter Walter retired.

Bernie Schuler, a partner in 3i's European buyouts business based inFrankfurt, has led this transaction and has been on the board managing the investment, from completion to exit. Commenting on today's sale, he said: "3i has worked closely with management in the past two years to position the business for international growth and expansion. Today's sale to Dr. Reddy's is an exciting logical step for betapharm's next phase of development. Dr. Reddy's broader product range and high quality production base at competitive cost levels will enable the business to grow exponentially."

The buyer, Dr. Reddy's Laboratories Limited, established in 1984, is an emerging global pharmaceutical company with proven research capabilities. The company is vertically integrated with a presence across the pharmaceutical value chain. It produces generic finished dosage forms, active pharmaceutical ingredients and biotechnology products and markets them globally, with a focus on India, U.S.A, Europe and Russia. Dr. Reddy's employs over 6,500 people globally with headquarters in Hyderabad, India.

Dr. Wolfgang Niedermaier, CEO of betapharm comments: "Dr. Reddy`s impressive pipeline of generic and innovative products and its high quality standards combined with competitive manufacturing costs will help further develop our position in the German market and offer an entry platform for the European market. Its extensive and well recognised corporate social responsibility activities perfectly fit with our successful corporate philosophy and business model. We see Dr. Reddy`s as our partner of choice to build a successful joint future and continue betapharm`s growth and success story."

Commenting on the strategic acquisition, G V Prasad, Vice-Chairman and CEO, Dr. Reddy's Laboratories, said: "We are very excited with our strategic investment in betapharm. betapharm with its differentiated business model has all the key elements for achieving success in a fast growing generics market in Germany. We strongly believe that this strategic investment will generate substantial opportunities for long-term value creation for both companies."

Bear, Stearns International Limited, New York, and Sal.Oppenheim, Frankfurt, acted as financial advisors to 3i on this transaction and Clifford Chance, Frankfurt, acted as external legal counsel for 3i. Rothschild, London, acted as financial advisors and Freshfields Bruckhaus Deringer, Munich, acted as external legal counsel to Dr. Reddy's in this transaction.

(1)     INSIGHT Health - NPI-Gx

Notes to editors

About 3i

3i is a world leader in private equity and venture capital. We focus on Buyouts, Growth Capital and Venture Capital and invest across Europe, in the United States and in Asia Pacific. Our competitive advantage comes from our international network and the strength and breadth of our relationships in business. These underpin the value that we deliver to our portfolio and to our shareholders. www.3i.com

About betapharm

betapharm Arzneimittel GmbH and the non-profit beta Institut für angewandtes Gesundheitsmanagement are parts of the beta healthcare group being located in Augsburg / Germany. Founded in 1993 betapharm provides generic drugs (non-patented). betapharm covers all important medical indications ranging from a common cold to severe cardiovascular diseases offering an assortment of 145 active ingredients in 871 different commercial sizes and packings The non-profit beta Institut was founded in 1999 and focuses on applied health management. Its core services are focussed on social-medical research, advanced training, consulting, project development as well as information services. The institute's major strength is its ability to independently develop and prove innovative concepts in practice while scientifically evaluating them in conjunction with universities. The result of this research are innovative solutions for today's healthcare system.

About Dr. Reddy's Laboratories Ltd.

Established in 1984, Dr. Reddy's Laboratories (NYSE: RDY) is an emerging global pharmaceutical company with proven research capabilities. The Company is vertically integrated with a presence across the pharmaceutical value chain. It produces finished dosage forms, active pharmaceutical ingredients and biotechnology products and markets them globally, with focus on India, US, Europe andRussia. The Company conducts research in the areas of diabetes, cardiovascular, anti-infectives, inflammation and cancer.