Form 6-K - Dr. Reddy's

21. Contingencies (continued)
DR. REDDY’S LABORATORIES LIMITED AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(in thousands, except share and per share data)
FTC sought information to supplement the voluntary production the Company had completed on February 1, 2008. The Company completed
its response to the CID on June 23, 2008. Since the production of this information, the FTC has not requested any further information from the
Company nor expressed concerns regarding the Company’s agreement with UCB. The FTC did later request additional information from other
parties involved in this investigation. The Company understands that those productions have been completed and that the FTC has indicated
that it has no further information requests. The FTC has indicated, however, that it is not formally closing its investigation at this time. While
the Company does not expect further requests for information or other action by the FTC with regard to the Company’s agreement with UCB,
since the investigation remains open, the FTC maintains the ability to renew its requests at a later date.
22. Subsequent events
In July 2008, the Company purchased the entire equity holdings of Citigroup Venture Capital International Mauritius Limited and ICICI
Venture Funds Management Company Limited in Perlecan Pharma Private Limited for an aggregate consideration of Rs.757,802. As a result
of this purchase, Perlecan Pharma Private Limited has became a consolidated subsidiary of the Company.
In November 2008, the Company’s German subsidiary betapharm participated in a competitive bidding (or “tender”) process for 64
pharmaceutical products announced by Allgemeinen Ortskrankenkassen (“AOK”), a large public health insurance company in Germany. In this
tender, betapharm has been offered 8 products translating to 33 contracts. The results of this tender, which were announced in December 2008,
have been put on hold, as these are being litigated by the drug manufacturers and are subject to process reviews. There exists significant
uncertainity regarding the ultimate outcome of this matter which is not under the direct control of the Company and, therefore, consequent
impairment and adjustments, if any, that may be necessary to be made to the carrying value of the Company’s intangible assets and goodwill
pertaining to the Group’s German operations cannot be reasonably determined at present.
In December 2008, the Federal Court of Justice in Germany overruled a German Patent Court decision and upheld the validity of Eli Lilly’s
patent covering olanzapine. Betapharm, the Company’s German subsidiary, and certain other competitors had earlier launched olanzapine
products in Germany pending the outcome of such appellate court decision. The Company has subsequently stopped marketing this product in
the German market. Eli Lilly, as part of the litigation, is expected to claim damages. Pending finalization of the discussions between the
Company and Eli Lilly, the Company in accordance with IAS 10, is expected to claim. “Events After the Reporting Date”, has recorded an
amount of Rs.514.9 million, Rs.229.6 million and Rs.224.4 million for the three month periods ended June 30, 2008, September 30, 2008 and
December 31, 2008, respectively, representing its estimate of the probable loss arising from the innovator’s expected damage claims.
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