Indian Pharmaceutical major Dr. Reddy’s Labs has entered into an agreement with British Company SkyePharma Plc. to undertake a feasibility study of a product, which will use the drug delivery systems of the UK firm.

Skype Pharma will receive a small upfront payment, while the cost for the study will be paid by Dr Reddy's. If the study is successful, full development activities will begin later this year, an official release said.

"We are very pleased to enter into this collaboration with Dr Reddy's on a new product development opportunity and hope to extend the collaboration to other products," said Mr. Frank Condella, CEO, SkyePharma.

Dr. Reddy’s has posted standalone net profit of Rs 42.3 crore for the quarter ended December 2007 versus Rs 503 crore in same period of last year. Standalone net sales stood at Rs 764 crore versus Rs 1153 crore. The company couldn’t perform well in the last quarter. The stock recently touched a 52-week low. Indian stock markets crashed in January as global stock markets were weak. The fear of a possible US recession has caused erosion of investor money in last three weeks.