Dr. Reddy's Signs Definitive Agreement to Acquire Roche's API Business at Its Mexico Facility

This business involves the manufacture and sale of APIs includingintermediates to Roche and other Innovator Companies. The productportfolio currently comprises about 18 products including mature APIsand a range of intermediates and steroids. This acquisition also addsunique steroids manufacturing capabilities to Dr. Reddy's. TheCuernavaca site at Mexico currently employs nearly 340 people and hasbeen inspected by the U.S.FDA and other international regulatoryagencies.

Commenting on the acquisition, GV Prasad, CEO, Dr. Reddy'sLaboratories, said, "With the acquisition of Roche's API business atthe Mexico site, Dr. Reddy's will emerge as a leading player in CustomPharmaceutical Services (CPS) business and position itself as apartner of choice for Innovator Companies across the globe withservice offerings spanning the entire value chain of pharmaceuticalservices. This strategic acquisition provides an opportunity for ourCPS business to grow from the current base of USD10 million to USD100million over the next 18 months. The integration of these businesses-- people and technology; the expertise of the management team anddistinctive manufacturing capability at the Mexico site, with that ofDr. Reddy's strengths in process chemistry and world class researchcapabilities will provide a strong foundation to drive the next waveof growth in our CPS business."

The acquisition is expected to be completed by end of December2005. The Company expects the acquisition to be EPS accretive to Dr.Reddy's and the full year financial impact of the acquisition will berealized from the year 2006-07 onwards.

About Dr. Reddy's

Established in 1984, Dr. Reddy's Laboratories (NYSE:RDY) is anemerging global pharmaceutical company with proven researchcapabilities. The Company is vertically integrated with a presenceacross the pharmaceutical value chain. It produces finished dosageforms, active pharmaceutical ingredients and biotechnology productsand markets them globally, with focus on India, US, Europe and Russia.The Company conducts research in the areas of diabetes,cardiovascular, anti-infectives, inflammation and cancer.

About Roche

Headquartered in Basel, Switzerland, Roche is one of the world'sleading research-focused healthcare groups in the fields ofpharmaceuticals and diagnostics. As a supplier of innovative productsand services for the early detection, prevention, diagnosis andtreatment of disease, the Group contributes on a broad range of frontsto improving people's health and quality of life. Roche is a worldleader in diagnostics, the leading supplier of medicines for cancerand transplantation and a market leader in virology. In 2004 sales bythe Pharmaceuticals Division totaled 21.7 billion Swiss francs, whilethe Diagnostics Division posted sales of 7.8 billion Swiss francs.Roche employs roughly 65,000 people in 150 countries and has R&Dagreements and strategic alliances with numerous partners, includingmajority ownership interests in Genentech and Chugai. Additionalinformation about the Roche Group is available on the Internet(www.roche.com).

Disclaimer

This press release includes forward-looking statements, as definedin the U.S. Private Securities Litigation Reform Act of 1995. We havebased these forward-looking statements on our current expectations andprojections about future events. Such statements involve known andunknown risks, uncertainties and other factors that may cause actualresults to differ materially. Such factors include, but are notlimited to, changes in local and global economic conditions, ourability to successfully implement our strategy, the market acceptanceof and demand for our products, our growth and expansion,technological change and our exposure to market risks. By theirnature, these expectations and projections are only estimates andcould be materially different from actual results in the future.