Business Strategy Assignment Case Study on Dr.

Reddy’s Laboratories
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but it soon started exporting to other less-regulated markets that had the advantage of not having to spend time and money on a manufacturing plant that that would gain approval from a drug licensing body such as the U.Background note Dr. 60 active pharmaceutical ingredients for drug manufacture. marketed by Pfizer as Lipitor. the family-controlled Dr Reddy's denied that it was in talks to sell its generics business in India to US pharmaceutical giant Pfizer.S. . In 2010. has become India's second biggest pharmaceutical company. Reddy's Laboratories Ltd. which had been suing the company for alleged patent infringement after Dr Reddy's announced that it intended to produce a generic version of Atorvastatin. Anji Reddy. Food and Drug Administration (FDA). Anji Reddy had worked in the publicly-owned Indian Drugs and Pharmaceuticals Limited. By the early 1990s. Reddy's manufactures and markets a wide range of pharmaceuticals in India and overseas. Reddy's began as a supplier to Indian drug manufacturers. and biotechnology products. K. The company has over 190 medications. an anti-cholesterol medication. Dr. This allowed their movement into regulated markets such as the US and Europe. Dr. Reddy's was already linked to UK pharmaceuticals multinational Glaxo Smithkline. Dr. diagnostic kits. the expanded scale and profitability from these unregulated markets enabled the company to begin focusing on getting approval from drug regulators for their formulations and bulk drug manufacturing plants in more-developed economies. Founded in 1984 by Dr. Hyderabad. Reddy's had six FDA-plants active pharmaceutical ingredients in India and seven FDAinspected and ISO 9001 (quality) and ISO 14001 (environmental management) certified plants making patient-ready medications – five of them in India and two in the UK. By 2007. critical care.

generics. In markets with guidelines for approval. Purpose Committed to providing Affordable and Innovative medicines for healthier lives.Pharmaceutical Services and Active Ingredients. in collaboration with other companies. (NYSE: RDY) is an integrated global pharmaceutical company. Company supply pharmaceutical ingredients to other generic companies through the API arm of its PSAI business. Reddy’s offers a portfolio of products and services including Active Pharmaceutical Ingredients (APIs).Introduction Established in 1984. and making them available to as many patients as possible. which contributes to its goal of providing affordable medicine. Through its three businesses . Providing Affordable Medicines Dr. The company will continue to promote affordability in significant ways and work to expand its product offering of generics. committed to providing affordable and innovative medicines for healthier lives. Custom Pharmaceutical Services (CPS). Dr. We will continue to look for new opportunities to take generics to more patients. Reddy’s Laboratories global generics business helps reduce drug costs for individuals and governments by bringing generic drugs to market as early as possible. Biologics business offers more affordable and equally effective generic biopharmaceuticals or biosimilars. . focusing on increasing access to products with significant barriers to entry. Global Generics and Proprietary Products – Dr. Company market both generic small-molecule drugs and generic biopharmaceuticals. Reddy's Laboratories Ltd. differentiated formulations and News Chemical Entities (NCEs). biosimilars.

Prasad (Vice. G. 5. Dr. by providing a range of technology platforms and services.Developing Innovative Medicines Despite the great advances of medical science. anti-bacterial and metabolic disorders. Ravi Bhoothalingam. The company’s proprietary products businesses address some of these unmet medical needs. Ashok Ganguly. there are still many unmet medical needs. It focuses on its research on the therapeutic areas of pain. Satish Reddy (Managing director and COO). K. 7. It also develops new chemical entities with improved and well-characterized safety and efficacy profiles. Reddy’s Laboratories. Anupam Puri.Dr. 9.Mr. Sridar Iyengar .Dr.Mr. (Chairman) 2.Mr. by developing and bringing to market new drugs.Chairman and CEO).Ms. Its Custom Pharmaceutical Services arm of Its PSAI business helps innovator companies get their proprietary medicines to patients faster. 6. Bruce Carter. Vision. Omkar Goswami.Dr. combined with a deep understanding of underlying disease pathways. 3.Mr.Dr. 1. 8.Mr. To become a discovery led global pharmaceutical company Board of Directors of Dr. Kalpana Morparia. Anji Reddy. Through innovation in science and technology. Reddy’s Laboratories develop and commercialize new formulations of approved products. 10.V. 4.

So there can’t be concept of direct seeking in the pharma market. 5. Strategies are followed by pharmaceutical companies:      Personal Selling Symposium Sample Gifts Promotional Literature Conferences Direct Mailing Dr. 6.Nomination.Investment committee.e the end users of the products is away from companies. Governance and compensation committee. before it is introduced in the market. 2. Reddy’s follow the all types of methods mentioned above.Risk Management committee.Management committee. The product has to undergo various clinical trails. technology and operations committee. medical test. because of following reasons : The pharmaceutical product does not reach directly as the patients consume only those brands which are being prescribed by the doctor so as we know companies can’t sell directly to patients i. .Shareholders and grievance committee. So it is doctor who is the customer for companies. Industrial goods etc. 4. 3.Science.  Pharma marketing is also different as the product is technical in nature as compared to any consumer product.Audit committee. Marketing in Dr. Reddy’s LaboratoriesMarketing in Pharmaceutical industry is totally different from other industries like FMCG. 7.Board Committees 1.

to be sure. for instance. So far in the current financial year. Smart companies therefore try to sell more in the chronic disorders market.) Drug discovery research (now called proprietary products) has been brought together with research on existing molecules and bio-similar.ten of these have been in-licensed from abroad. Dr Reddy's has launched 65 brands . . Most of company’s products were in special therapies like oncology and dermatology. (This perhaps could be the reason why there have been rumors of GSK buying into Dr Reddy's . so that all eggs are not in one basket. There are over 20. Russia and the United Kingdom For smaller markets.New Marketing initiatives taken to tackle competition Dr Reddy's has decided to focus on five markets: the US. So. As a result. Cipla. 30 per cent is chronic disorders where drugs are prescribed for a longer period.000 registered pharmaceutical companies in the country.4 per cent. That perhaps is the reason why it is India's most valuable pharmaceutical company. Germany. is not easy. sells 70 per cent in that space. Sun Pharma. it was small work to develop a robust pipeline of products for India. India. While market leader Cipla covers 75 per cent of the molecules (drugs and medicine) sold in India and newcomer Mankind Pharma covers 60 per cent.a charge Prasad denies. has a share of just 5. Dr Reddy's is 12th with a 2. it has tied up with GlaxoSmithKline which has a distribution network in place. Company is planning to alter the ratio from 70:30 in favor of acute disorders to 50:50. The market leader. the market is extremely fragmented. Dr Reddy's count is only 40 per cent. The Indian market.2 per cent share of the pie. each molecule has at least 50 brands in the market. while its real strength was in mass market products prescribed by general practitioners and consultant physicians Dr Reddy's supplies active pharmaceutical ingredients across therapies to the world's top companies. While 70 per cent of the market is acute disorders which require shorter medication. and also sells a variety of generics in several markets. It is complex and tough.

Apart from products. Here.000. The model. To address that problem. So. and not more than a fifth of them hold an MBBS degree. . They could be paid for every referral.000 per month is better than the industry average of 300. But Dr Reddy's sees an opportunity here. it has readied an aggressive push into rural markets. The government is spending a lot of money in the National Rural Health Mission.000 doctors in the urban markets. men and women are in touch with about a third of them.that's where all companies have focused so far. the other leg of the pharmaceutical business in India is the access to doctors who write the prescriptions. But. In other words. Dr Reddy's can thus be expected to expand its field force further in the days to come.000). The incomes are going up.000). it is way short of rivals like Mankind Pharma (5. there is still a long way to go. to name a few) based on the insight that rural prescriptions are often different from urban prescriptions. is self-sustaining and scalable. "This market is highly under-penetrated. productivity per medical representative at Rs 400. Dr Reddy's has ramped up its field force to 2. like Hindustan Unilever's Shakti." says a company’s correspondent It has put together a new brand portfolio for such markets (Redikate. About a quarter of annual pharmaceutical sales worth Rs 35. Redihealth and Redihope. though it is larger than Ranbaxy (2.000 rural doctors.000 crore (Rs 350 billion) in the country happens in villages. medical representatives play a crucial role. There are about 6000. There are not more than 200. It has engaged 600 medical representatives from two external agencies (Ma Foi is learnt to be one) especially for the rural markets. Dr Reddy's knows that the urban market is tough to crack . Dr Reddy's is trying three models: The first plan is to use local entrepreneurs who can diagnose ailments like hypertension and refer patients to doctors. But the market is scattered thin. The challenge here is to reach the customers.500.

It will be a homecoming of sorts for the prodigal. every pharmaceutical company. Indian as well as multinational. But the number could rise in the future. The rural market is still small for Dr Reddy's -. Dr Reddy's has held anaemia camps in the last three months for 50. of which 40 per cent were found anaemic. Finance . The third plan is to use the infrastructure of agencies and programmes which are already there in villages.The second plan is to link people through health camps. In fact. is ready to join the rural bandwagon.000 villagers.this year it will contribute around Rs 75 crore (Rs 750 million) to revenue. The models will be rolled out in Andhra Pradesh. Uttar Pradesh and Maharashtra. which together account for around a quarter of the rural market. like the World Health Foundation and ITC's e-choupal. The problem is.

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Comparison with competitors .

Competetion .

1 KILO lab Unique manufacturing capabilities for Steroids and cytotoxics. United Kingdom. HPAI          Developed and commercialized Highly Potent Active Ingredients for Oncology formulation.Operations Capabilities No of capabilities in major chemistries: 24 Reaction volume with concurrent scaling up and piloting: over 2. Environmental compliance Contributing to a sustainable world with zero liquid discharge systems.3 million litres State of the art equipment and instruments Six UFDA approved plants in India. One USFDA inspected plant in Mirfield. . 3 analytical labs. R&D Facilities 3 centers with over 300 chemists and engineers well skilled. Excellent control over supply chain Cost effectiveness and high speed development. One USFDA approved plant in Mexico. separate labs for formulation 21 organic chemistry labs. Fully integrated Operations Supply chain and SAP R/3.

Human Resources             World wide employees: 9500+ Employees India: 7878 Germany: 394 Rest of Europe: 101 North America: 109 Mexico: 322 Rest of the world: 771 Research and scientific staff: 1700+ Marketing and sales force: 4000+ Manufacturing staff : 3000+ Nationalities: 40+ Company lays emphasis on      Attracting. 360 degree feedback survey Alumni Network.) Organizational Climate Survey. Developing young and mature leaders. . Annual celebrations to recognize excellence. Promoting teamwork and collaboration Building a diverse workforce and meritocracy Tools used in HR 1234567Talent management. Learning and development. Perfect (Performance enhancement and coaching tools. developing and retaining multi skilled high performers. Creating a learning organization.

TGA (Australia). ANVISA (Brazil). Approved by USFDA. TPP (Canada) One FDA-Inspected plant in USA Biologics Facility  One in India.Analysis SWOT Analysis Strengths: API Facilities  Capabilities in Major Chemistries-24  Six FDA-Inspected plants in India  One FDA-Inspected plant in Mexico  One FDA-Inspected plant in Mirfield  More than 2. audited by multiple regulatory agencies Research And Development  PSAI 3 Technology development centers (2 in Hyderabad.3 million litres reaction volume Finished Dosage Units  Six in India. With ISO 14001 and ISO 9001 certifications.  NCE Conducts research in the areas of metabolic disorders. MCC (South Africa). Formulations and analytical development skills. INDIA. UK)  Product development  Integrated Product development Capabilities that includes API. Biologics development center . cardiovascular indications and Cancer. 1 in Cambridge. MHRA (UK).

 USA market is getting overcrowded by Indian players. clinical trials.Weakness:  Drug discovery is unpredictable business.  Considerable investments in USA & Europe and neither of these markets has reach significant volumes. which will be less competitive in the market.  Partnerships to accelerate the discovery and development of new therapies focusing on Biosimilar development.  Additionally.  Cost of innovation is very high and for Dr Reddy’s it has to be funded from a Generic business where the margins are low.  Need to build downstream skills for Drug discovery in development. global registration and marketing.  Betapharm (Germany) acquisition will help penetrate other European markets Threats:  Being in Generic business achieving critical mass is challenge. Opportunities:  Niche Therapeutic Area-Global Oncology Strong Biologics & Cytotoxic Manufacturing Infrastructure to address the need of Oncology Market  Need to find products. like niche products or ones that have IP and technology barriers.  Challenge is to find the right collaborator to achieve strategic vision of becoming a discovery led global pharmaceutical company and at the same time building generic business to a critical mass. the price pressure and the presence of international giants like Sandoz and Teva are considerably slowing down the performance of the Indian generic pharmaceutical companies in this market. .

and Europe. UK.  Eg Success of Rivital by Ranbaxy lab.  High end technology is required for selecting desired molecule.  New molecule has to go through clinical trials.  As disposable income of people is rising and are becoming more health conscious. Social:  Cost effective generic drugs are needed by developing and under developed countries for healthcare therefore demand should rise. Dr reddy’s with its brand name can penetrate these markets.g-Seizure of drug consignments in transits belonging to some of reputed Indian manufacturer meant for African countries at Neitherland port by Excise  Developed countries are constantly making stringent regulatory systems (GMP) resulting in increased in manufacturing cost.  Innovator companies are lobbying for making more stringent patent laws which could make selling of patented products more difficult  e. Economical:  As cost of healthcare is shooting up in developed countries there will be want for quality generic drugs in USA. demand for products such as nutraceuticals . .multi vitamins are rising. If clinical trials fail whole investment is lost. products under patent cannot be launched in India. Technological:  Initial investment for Drug discovery is very high and about 15-20 years are required for developing one drug molecule.PEST Analysis Political:  With amendment of patent laws.  Thus Dr Reddy’s has to continuously upgrade technology and synchronize all the areas of drug discovery for minimizing failure risk.

Technological: . and Europe.multi vitamins are rising. Dr reddy’s with its brand name can penetrate these markets.  Innovator companies are lobbying for making more stringent patent laws which could make selling of patented products more difficult  e. Additionally.g-Seizure of drug consignments in transits belonging to some of reputed Indian manufacturer meant for African countries at Neitherland port by Excise  Developed countries are constantly making stringent regulatory systems (GMP) resulting in increased in manufacturing cost. the price pressure and the presence of international giants like Sandoz and Teva are considerably slowing down the performance of the Indian generic pharmaceutical companies in this market. PEST Analysis Political:  With amendment of patent laws. products under patent cannot be launched in India. UK.  As disposable income of people is rising and are becoming more health conscious.  Eg Success of Rivital by Ranbaxy lab. Economical:  As cost of healthcare is shooting up in developed countries there will be want for quality generic drugs in USA. Social:  Cost effective generic drugs are needed by developing and under developed countries for healthcare therefore demand should rise. demand for products such as nutraceuticals .

 High end technology is required for selecting desired molecule. . Initial investment for Drug discovery is very high and about 15-20 years are required for developing one drug molecule. If clinical trials fail whole investment is lost.  Thus Dr Reddy’s has to continuously upgrade technology and synchronize all the areas of drug discovery for minimizing failure risk.  New molecule has to go through clinical trials.

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