The revenue inflow forms part of an arrangement between Dr Reddy's Research Foundation (DRF) and Novo Nordisk, wherein the domestic firm has licensed discoveries in certain areas to the multinational in return for upfront and milestone payments and royalties.

DRL managing director K Satish Reddy told The Financial Express that payment had been received through one of the company's wholly-owned subsidiaries and would be reflected in the balance sheet for the year ended March 31, 1998.

The DRF-Novo Nordisk research arrangement covers compounds that have potential for treatment of diabetes, obesity, dyslipdemia and complications associated with these diseases. As per the arrangement,Novo Nordisk obtains an exclusive worldwide license to develop and market pharma products discovered and patented by DRF.

The deal envisages the Danish giant taking DRF's new drugs for pre-clinical development and subsequent trials, besides retaining global marketing rights except in India. In India, these drugs will be marketed along with DRL.

Reddy also said the company was looking at brand acquisitions in core therapeutic areas like anti-infectives, pain-management and cardiovasculars, though no specific sum had been earmarked towards this end.

Asked about the possible merger of DRL with group company Cheminor Drugs, Reddy said that though this was an option, it was not expected for the next two years.

On the opportunities presented by US-based Schein Pharmaceuticals' acquisition of a 18.04 equity stake in Cheminor Drugs, Reddy said the American company would also source a range of bulk drugs from DRL.

While the possible revenue inflows from such sales could not be ascertained, he said thatSchien's equity participation would be restricted to Cheminor.

Cheminor Drugs has received shareholder approval to make a preferential allotment of three million equity shares of Rs 10 each at $5 per share, translating into a premium of Rs 170 per share, to Schein Pharma. Schein, in which the Bayer group holds a minority interest, will hold an 18.04 equity stake in Cheminor Drugs. The alliance has primarily been forged for development and supply of certain finished dosage forms mainly for the US market.

Cheminor will issue two million equity shares in December 1997 and the balance one million in June 1998. The post-issue promoters holding would stand at 53.71 per cent.

Reddy also attributed the robust financial performance of DRL to the thrust in finished dosage forms and was confident of maintaining a 30 per cent growth in turnover over the next few years.

DRL reported a 45 per cent jump in net profits at Rs 48.80 crore and a 32.69 per cent increase in turnover at Rs 331.60 crore for the year endedMarch 31, 1998.