GlaxoSmithKline is in talks to buy a 5 percent stake in Indian drug maker Dr Reddy's Laboratories in a deal likely to be valued at $150 million, the Economic Times reported on Friday, citing sources privy to the development.

A transaction could be clinched in two months if talks stay on track, the newspaper said, adding Glaxo could get the first right of refusal if the founders of the Indian firm decide to sell their stake in the future.

A spokesman for Dr Reddy's reached by Reuters said the firm would not comment on market speculation.

Glaxo in June signed an alliance with Dr Reddy's that gave Glaxo access to the Indian firm's portfolio and future pipeline of more than 100 branded pharmaceuticals.

Indian drug industry dominated by home-grown generic firms is drawing overseas firms as they look to sustain growth and quickly build a generic presence.

Last year, Japan's Daiichi Sankyo took over India's Ranbaxy Laboratories for $4.2 billion.

(Reporting by Narayanan Somasundaram; Editing by Ranjit Gangadharan)