CHAPTER – 1

Dr. Reddy’s Laboratories

About the company

Dr. Reddy's Laboratories is an Indian multinational pharmaceutical company based in Hyderabad. The

company was founded by Kallam Anji Reddy, who previously worked in the mentor institute Indian Drugs

and Pharmaceuticals Limited. Dr. Reddy manufactures and markets a wide range of pharmaceuticals in India

and overseas. The company produces over 190 medications, 60 active pharmaceutical ingredients (APIs) for

drug manufacture, diagnostic kits, critical care, and biotechnology. Dr. Reddy's began as a supplier to Indian

drug manufacturers, 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 would gain approval from a drug

licensing body such as the U.S. Food and Drug Administration (FDA). By the early 1990s, 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. This allowed their movement into regulated markets such as the US and Europe. By

2007, Dr. Reddy's had seven FDA plants producing active pharmaceutical ingredients in India and

seven FDA-inspected 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. API include Ciprofloxacin,

Omeprazole and Sumatriptan Succinate of Canadian DMFs, Ibuprofen, Ranitidine HCl form 1 and Cipro

HCl of CEP and Omeprazole, S+Ibuprofen and Valsartan, Ramipril, Risedronate Sodium and Nizatidin of

US DMFs. Its CPS is, the largest CPS player from India and a partner-of-choice to innovators, offering top-

end technical expertise, tailor-made pharma solutions and a track record of bringing innovations to the

market quickly, efficiently and economically. Generic business of company is always a challenge for other

pharma companies. It includes branded generics and unbranded generics. In the branded generics include

Omez, Ciprolet, Nise, Enam, Ketorol, Exifine and Cetrine enjoy leadership positions in several key markets,

including India, Romania, Venezuela, Russia & the CIS countries. Dr. Reddy’s brands are available in

nearly 100 countries and generate revenue is more than Rs.69.4 billion. Some of DRL's brand names are
old as its age, but the corporation is relatively young. DRL was founded in 1984 by a simple man Dr. Anji

Reddy. Betapharm (Germany) was acquired in 2006 (which is the fourth largest generic producer in

Germany), with the help of this company.DRL is able to covered a large market share in the generic section

in the global market.

DRL offers product choices to meet a broad variety of needs and preference - from fun-for-you items to

product choices that contribute to healthier lifestyles.

DRL’s aim is “To provide affordable and innovative medicines for healthier lives. We serve society’s

important needs for affordable medicines through the API component of PSAI and the Global Generics

business, and for innovative products that solve unmet medical needs through the CPS component of PSAI

and the Proprietary Products Businesses.”

History of Dr. Reddy

Kallam Anji Reddy of Tadepalli village, Andhra Pradesh is a pharmacist. He completed

his study in science stream in India. He started his career working for the state owned Indian Drugs and
Pharmaceuticals Limited. He was the founder managing director of Uniloids Ltd and worked there from
1976 to 1980 and Standard Organics Limited where he worked from 1980 to 1984.

In the year 1984, Dr. Reddy laid the foundation of Dr. Reddy Laboratories Limited in Hyderabad.

The company established new standards in the Indian Pharmaceutical Industry and transformed the Indian
bulk drug dependency of the mid-80s into a self-sufficient industry in the mid-90s. Finally the Indian
Pharmaceutical industry developed into an export-oriented industry and ever since continues to remain the
same. In the year 1993, Dr. Reddy's Laboratories emerged as India's first drug discovering company and on
April 2001 it was the first non-Japanese, Asian pharmaceutical company which was listed on New York
Stock Exchange. During 90s, the company introduced branded finished formulations in the less regulated
markets in CIS, Middle East, South East Asia and Africa. From late 90s, the company has started exploiting
US patent and regulatory system to introduce generic products in time, to gain market exclusivity and
establish brand image. It is the first Indian based company to receive 180 days exclusivity for a generic drug
in USA. Its latest product Amlodipine Maleate has made a sale of US$ 2.0 billion during 2002. The company
has global operations with a strong focus on US, Europe, Russia, China and India. Its portfolio of products
consists of 70 Active Pharmaceutical Ingredients (API), 100+ Branded Formulations, 11 Generic
Pharmaceuticals, 1 Specialty pharmaceutical, 7 new chemical entities in clinical trials. It has world class
manufacturing facilities consisting of 6 US FDA approved API plants, 7 formulation plants out of which one
is dedicated for US and European market. Its sales turnover for2002-03 was US$ 380 m. This comprised of
35% API, 38% Branded Formulations, 24% Generics and others 3%. Its revenue came from US (32%),
India (36%), Russia (9%), Europe (8%) and others (15%).

About Dr Reddy’s laboratories pharmaceutical industry

As of my last knowledge update in January 2022, Dr. Reddy's Laboratories is primarily involved in the

pharmaceutical industry. Dr. Reddy's Laboratories is known for:

1. Generic pharmaceuticals: Dr. Reddy's Laboratories is a major player in the production of generic

pharmaceuticals, providing affordable alternatives to brand-name medications.

2. Active pharmaceutical ingredients (API): The company is involved in the manufacturing of active

pharmaceutical ingredients, which are the primary components in pharmaceutical formulations.

3. Branded pharmaceuticals: Dr. Reddy's also develops and markets branded pharmaceutical

products, which are sold under the company's own brand names

4. Biotechnology: Dr. Reddy's Laboratories has ventured into biotechnology, including the

development of biosimilars (biological products that are highly similar to already approved

biological products)

5. Custom pharmaceuticals: The company may offer custom pharmaceutical services, including

contract manufacturing for other pharmaceutical companies

6. Research and Development: Dr. Reddy's invests in research and development activities to discover

and develop new pharmaceutical products.

Vison of Dr. Reddy’s laboratories

have to leverage this and ensure that we succeed in delivering these products, molecule by molecule, to the

US on the due dates. As we wrote last year, "We have to do this without fail, and with best-in class cost. That

is the way out." Given the challenges in the US market, we will continue our eff orts to diversify our market

presence. We will leverage our global portfolio of products in markets outside the US to drive growth. We

will also refocus some of our R&D resources to service the high potential branded generics markets such as

China, Russia and other Emerging Markets. This is We believe that pricing pressures will continue to affect
all players in generics in the US. Overcoming this necessitates a robust pipeline of complex formulations

with limited competition — a pipeline that allows your company to introduce several value-added products

each year, and thus make up for price erosions on the earlier launched products. As touched upon earlier in

this letter, we have such a pipeline — of 110 generic fi lings awaiting approval from the USFDA. We an

important element of our geographical diversify and new market entry strategy — to lead with high value

products

India will continue to be important. We have seen a 12% growth in revenues in FY2019 and improved our

market ranking by three places. We shall propel further growth in our PSAI business. These moves should

reduce our dependence on the US and also help us generate sustained growth and profitability to counter-

balance volatility of the unbranded generics markets. We remain focused on improving quality across all

aspects of our operations, with initiatives for continuous improvement, reducing manual interventions

through digitization and shop floor training programs to constantly upgrade the culture of quality. We intend

to continue this journey and meet the highest regulatory standards across markets. Given your company’s

significantly improved performance in FY2019, the success in improving operational effi ciencies and our

determination to drive growth, we are reasonably optimistic of the prospects for FY2020. Our thanks to the

management team, all employees and partners for coming together to deliver better results. And our thanks

to you for your support.

This case describes the challenges that Dr. Reddy’s Laboratories, the second largest pharmaceutical company

in India in 2009, faced in making its vision (of becoming the first discovery-led global pharmaceutical

company from India – “the Merck or Pfizer of India”) a reality. The company had grown from its very

humble beginnings to become a $1.4 billion multinational in the space of 25 short years. Dr. Reddy’s early

success was based on unbranded and branded generics. The company had a global presence and India

revenues represented only 16% of the total. Dr. Reddy’s had built a world class manufacturing organization

and was also expert at mounting patent challenges. Through a series of acquisitions, the company had

assembled a high-quality global supply chain. As the generics opportunity began to plateau, Dr. Reddy’s has

recently sought to develop its skills in new drug discovery and marketing. The company has launched four

new growth businesses:

(1) the polypill project that seeks to combine proven generics in a single pill to provide more effective and

low-cost treatments for chronic diseases like cardiovascular disease (CVD), depression and osteoarthritis;

(2) a specialty dermatology business in the US;

(3) high-margin (and high-risk) drug discovery, with five New Chemical Entities in the pipeline as of 2009;

and

(4) biologics, an exciting and fast-growing segment of the pharmaceuticals industry. The challenge for

the student is to analyse how these dots are connected and whether these initiatives are sufficient for the

company to realize its ambitious vision.

The case also discusses how the company’s CEO, GV Prasad, has restructured the organization to help

realize its vision and has sought to attract and retain the new kind of talent that would be needed in this

effort.

Dr. Reddy’s Laboratories want to achieve

1. Global expansion: Many pharmaceutical companies aim to expand their presence in various

international markets. Dr. Reddy's may seek to strengthen its global footprint, entering new markets

and increasing its market share in existing ones.

2. Innovation and research: Companies in the pharmaceutical industry often emphasize research

and development to create new and innovative products. Dr. Reddy's may aim to continue investing

in R&D to bring novel pharmaceuticals, biosimilars, and other healthcare solutions to the market

3. Market leadership: Dr. Reddy's may aspire to become a leader in specific therapeutic areas or

segments within the pharmaceutical industry.

4. Quality and compliance: Ensuring high-quality products and adhering to regulatory standards

is crucial for pharmaceutical companies. Dr. Reddy's Laboratories may have goals related to

maintaining and enhancing the quality of its products while complying with industry regulations

5. Patient access and affordability: Many pharmaceutical companies aim to improve patient

access to healthcare by providing affordable medications. Dr. Reddy's may have goals related to

ensuring the availability of cost-effective pharmaceuticals for a broader population.

Dr. Reddy’s laboratories mission

“To accelerate access to affordable and innovative medicines because good health can't wait”

To achieve this mission Dr. Reddy’s laboratories took several measures which are:

1. Research and development: Invest in research and development to discover and develop

innovative pharmaceutical products. This includes both new chemical entities and biosimilars.

2. Affordability initiatives: Implement pricing strategies and initiatives to make medications more

affordable for a broader population. This may involve the production of generic drugs, which are

typically more cost-effective than brand-name equivalents.

3. Global expansion: Extend market reach by entering new geographical markets, thereby increasing

access to medicines in different regions

4. Partnership and collaboration: Collaborate with other pharmaceutical companies, research

institutions, and organizations to leverage combined expertise and resources for the development and

distribution of healthcare solutions

5. Quality assurance: Maintain high-quality standards in the production of pharmaceuticals,

ensuring that products meet regulatory requirements and are safe and effective.

6. Patient assistance program: Implement patient assistance programs to support those who may

face financial challenges in accessing necessary medications.

7. Investment in technology: Utilize technological advancements to enhance manufacturing

processes, improve efficiency, and reduce costs, contributing to the affordability of medicines.

8. Regulatory compliance: Ensure compliance with local and international regulatory standards to

meet the required quality and safety benchmarks for pharmaceutical products.

9. Disease awareness and education: Engage in initiatives to raise awareness about diseases,

promote preventive healthcare, and educate healthcare professionals and the public about treatment

options.
10. Supply chain optimization: Optimize the supply chain to enhance the availability and timely

distribution of pharmaceuticals, especially in regions with high demand.

Major milestone of Dr. Reddy’s laboratories

1. Founding and early years: Dr. Reddy's Laboratories was founded in 1984 by Dr. Anji Reddy in

Hyderabad, India. The company started as a manufacturer of active pharmaceutical ingredients (APIs)

and has since evolved into a global pharmaceutical player.

2. First generic approval in united states: Dr. Reddy's gained recognition by being one of the

first Indian pharmaceutical companies to receive approval from the United States Food and Drug

Administration (FDA) for its generic drug products, allowing the company to enter the lucrative U.S.

pharmaceutical market.

3. Global expansion: The company expanded its global footprint by establishing a presence in

various international markets, including Europe, Russia, and other emerging markets, contributing to

its status as a global pharmaceutical player.

4. Biosimilar development: Dr. Reddy's Laboratories has been actively involved in the

development of biosimilar products, including biosimilar versions of biologic drugs. Biosimilars are

complex biological products that are highly similar to existing biologics.

5. Strategic acquisitions: Dr. Reddy's has engaged in strategic acquisitions to strengthen its product

portfolio and market presence. For example, the acquisition of Betapharm in Germany in 2006 and the

acquisition of certain business divisions from Dow Pharma and BASF in 2008

6. Research and development advances: The company has made strides in research and

development, investing in the discovery and development of new pharmaceutical products, including

novel formulations and drug delivery technologies.

7. Partnerships and collaboration: Dr. Reddy's has formed strategic partnerships and

collaborations with various pharmaceutical companies and research institutions to enhance its

capabilities in drug development and expand its reach.

All the major milestone in the chorological order

1. 2004: We began voluntary disclosures on social and environmental aspects.

2. 2007: Covering product responsibility, transparency, operational excellence, human dignity, equal

opportunity, and community development

3. 2010: Environmental commitment statement (ECS) with six Environment, Social Impact and

Governance (ESG) goals for 2020

4. 2013: We introduced the approach to integrate sustainability into our operations encompassing

people, safety, quality, availability, environment, engineering excellence, productivity, continuous

improvement, and community

5. 2016: Committed to delivering good health consistently and going beyond compliance for a

sustainable future

6. 2020: We achieved three goals completely and three goals partially. Conducted materiality

assessment and integrated ESG goals with purpose and business strategy'

7. 2022: Made sustainability core to our purpose and strategy, strengthened our sustainability

commitment for the next decade

Organisational structure of Dr. Reddy’s laboratories

1. Board of directors: The highest level of governance in the company, responsible for major

decisions and oversight.

2. Executive leadership team: Comprising top executives like the Chief Executive Officer

(CEO), Chief Financial Officer (CFO), Chief Operating Officer (COO), Chief Medical Officer

(CMO), and others who lead different functional areas.

3. Functional divisions:

1. Research and development: Responsible for drug discovery, development, and innovation.

2. Manufacturing and operations: Overseeing the production of pharmaceuticals and

managing supply chain logistics

3. Sales and marketing: Handling the promotion and distribution of pharmaceutical products.
 4. Quality assurance and regulatory affairs: Ensuring compliance with regulatory standards

and maintaining product quality.

5. Finance and administration: Managing financial matters, including budgeting and

administrative functions.

6. Human resource: Responsible for recruitment, employee relations, and organizational

development.

4. Business units or divisions: In large organizations, there may be separate business units or

divisions based on product lines, therapeutic areas, or geographical regions.

5. Research and development centres: If applicable, these centres focus on specific research

areas and contribute to the development of new drugs and technologies.

6. Regional officers: Dr. Reddy's may have regional offices or subsidiaries in different countries or

regions to manage operations at the local level.

Organization chart of Dr. Reddy’s laboratories

Whole-Time Directors-

Dr. Anji Reddy G V Prasad Satish Reddy

Chairman Executive Vice Chairman and Managing Director & Chief

Chief Executive Officer Operating Officer

Management Team-
Abhijit Mukherjee Amit Patel Dr. Cartikeya Reddy

President,Pharma Services Senior Vice President & Senior Vice President &

& Active Ingredients (PSAI) Head - North America Head- Biologics

Jeffrey Wasserstein KB Sankara Rao Prabir Jha

Executive Vice-President, Executive Vice President, Senior Vice President,&

NA Specialty Integrated Product Development Global Chief- HR

Advisor, Dr. Rajinder Kumar Saumen Chakraborty

Legal & Strategy President, President- Corporate &

R&D, Commercialization Global Generics

Umang Vohra VS Vasudevan Vilas Dholye

Senior Vice President President & Head of Executive Vice President &

& Chief Financial Officer Europe Operations Head – Formulations

Manufacturing

Name of the heads of the organization

1. G.V. Prasad: Mr. G. V. Prasad was the Co-Chairman and Managing Director of Dr. Reddy's

Laboratories. He played a significant role in the company's leadership.

2. Erez Israeli: Mr. Erez Israeli served as the Chief Executive Officer (CEO) of Dr. Reddy's

Laboratories. He was responsible for the overall management and strategic direction of the company.

Product and services of Dr. Reddy’s laboratories

1. Generic pharmaceuticals: Dr. Reddy's is known for its portfolio of generic pharmaceuticals.

These are affordable alternatives to brand-name medications and cover a wide range of therapeutic

categories.

2. Active pharmaceuticals ingredients (API): The company manufactures and supplies a

variety of active pharmaceutical ingredients, which are the essential components in pharmaceutical

formulations.

3. Branded pharmaceuticals: In addition to generic drugs, Dr. Reddy's develops and markets

branded pharmaceutical products. These may include proprietary formulations and innovative

medications.
 4. Biosimilars: Dr. Reddy's is involved in the development and production of biosimilars.

Biosimilars are biological products that are highly similar to existing biologics and offer more cost-

effective alternatives.

5. Custom pharmaceutical services: Dr. Reddy's provides custom pharmaceutical services,

including contract manufacturing and research collaborations with other pharmaceutical companies

6. Global presence: Dr. Reddy's operates internationally, with a presence in various markets across

the Americas, Europe, Asia, and other regions, expanding its reach and offering products globally

shareholders

DRL (symbol: RDY) shares are traded principally on the New York Stock Exchange in the United States.

The company is also listed on the NSE (symbol: DRREDDY) and BSE stock exchanges. DRL has

consistently paid cash dividends since the corporation was founded. Following table show the complete

history of dividend:

DIVIDEND HISTORY

Year ended Interim % Final % Total %

2000 - 01 - 40 40

2001 - 02 100 50 150

2002 - 03 - 100 100

2003 - 04 - 100 100

2004 - 05 - 100 100

2005 - 06 - 100 100

2006 - 07 - 75 75

2007 - 08 - 75 75

Corporate citizenship

DRL, as a corporate citizen, have a responsibility to contribute to the quality of life in the communities.
This philosophy is expressed in the sustainability vision which states: “DRL’s responsibility is to

continually improve all aspects of the world in which we operate – environment, social, economic --

creating a better tomorrow than today.”

The vision is put into action through programs and a focus on environmental stewardship, activities to

benefit society, and a commitment to build shareholder value by making DRL a truly sustainable

company

DRL’s strategic move is geared towards exploiting an emerging opportunity in the global pharma
industry. “Multinationals are now increasingly looking at outsourcing business functions such as
process synthesis, analytical development, and manufacturing, to focus on drug discovery and brand
management in an attempt to develop cost effective business models,” according to a report by
consulting firm KPMG and the Confederation of Indian Industry, a lobby group
For DRL, building a sustainable organization is not a trend it blindly follows; it is intrinsic to how it

has operated for decades. To it, a commitment to sustainability means a commitment to fulfilling its

obligations to all of its stakeholders -- its customers & partners, employees, shareholders and society.

Thus, while optimizing profitability may be one measurement of its performance, it also judges its

success by its performance with regard to the communities in which it lives and work, the environment

and its employees. DRL understand that it is only by increasing value to all of its stakeholders that it

can build an ever flourishing and lasting organization.

.
 CHAPTER – 2

Business environment analysis of Dr. Reddy’s laboratories

SWOT analysis

S-strength

W- weakness

O-opportunities

T- threats

Strength

1. Global presence: Dr. Reddy's has a significant international presence, operating in multiple

markets worldwide, which provides a diversified revenue stream.

2. Diverse product portfolio:0020 The company offers a broad range of generic pharmaceuticals,

biosimilars, and active pharmaceutical ingredients (APIs), contributing to a comprehensive product

portfolio.

3. Research and development: Dr. Reddy's invests in research and development, allowing for the
creation of new products and the development of biosimilars, enhancing its competitive

position.

4. Regulatory approvals: The company has a track record of obtaining regulatory approvals for its

products, especially in key markets like the United States and Europe.

5. Cost effective pharmaceuticals: Dr. Reddy's is known for its focus on providing cost-

effective alternatives through its generic pharmaceuticals, making healthcare more accessible.
Weakness

1. Dependency on generics: The heavy reliance on generic pharmaceuticals may expose Dr.

Reddy's to the challenges of intense competition and pricing pressures in the generic drug market

2. Pipeline risks: The success of pharmaceutical companies often depends on the success of their

drug pipelines. If the development of new drugs or biosimilars faces setbacks, it could impact future

revenue.

Opportunities

1. Expansion into emerging markets: There is an opportunity for Dr. Reddy's to further expand

its presence in emerging markets where there is potential for increased demand for pharmaceuticals.

2. Biotechnology and biosimilar: The growing market for biotechnology and biosimilars

presents opportunities for Dr. Reddy's to continue its focus on these areas

3. Strategic partnerships: Collaborations and partnerships with other pharmaceutical companies

or research institutions can provide opportunities for shared resources, expertise, and market access.

Threats

1. Generic competition: The generic pharmaceutical market is highly competitive, and the entry of

new generic competitors or increased competition can impact pricing and market share.

2. Regulatory challenges: Stringent regulatory requirements, especially in key markets like the

United States and Europe, pose challenges and delays in getting new products to market.

3. Intellectual property challenges: The risk of legal challenges related to intellectual property

rights, patents, and generic competition can affect the company's revenue and market position.

4. Markest access issues: Political, economic, or regulatory challenges in certain markets may

impact the company's ability to operate or sell its products effectively.

Internal environment analysis

Strength

1. Research and development capabilities: Dr. Reddy's has a strong emphasis on R&D,

allowing for the development of new drugs, formulations, and biosimilars.

2. Diversified product portfolio: The company offers a diverse range of products, including

generic pharmaceuticals, biosimilars, and active pharmaceutical ingredients (APIs), contributing to a

broad product portfolio

3. Global presence: Dr. Reddy's has established a significant international presence, operating in

multiple countries and regions, which provides revenue diversification and access to various markets.

4. Manufacturing capabilities: The company has strong manufacturing capabilities, ensuring the

production of high-quality pharmaceutical products.

5. Regulatory compliance: The company has strong manufacturing capabilities, ensuring the

production of high-quality pharmaceutical products.

6. Cost effective manufacturing: The company's focus on cost-effective manufacturing allows it

to provide affordable alternatives in the generic pharmaceutical market

Weakness

1. Dependency on generic pharmaceuticals: Heavy reliance on generic pharmaceuticals

exposes Dr. Reddy's to market competition and pricing pressures

2. Market concentration: The concentration of revenue in specific geographic regions or markets

may expose the company to economic or regulatory risks in those areas.

Capabilities and resources

1. Skilled workforce: Dr. Reddy's benefits from a skilled and knowledgeable workforce in various

areas such as research, development, manufacturing, and marketing.

2. Intellectual property: the company may possess valuable patents, trademarks, and intellectual

property, providing a competitive advantage.

Operational efficiency

1. Supply chain management: Efficient supply chain management is crucial in the

pharmaceutical industry. Dr. Reddy's operational efficiency is tied to its ability to manage the supply

chain effectively.

2. Quality control: Stringent quality control measures are essential in the pharmaceutical sector to

ensure the safety and efficacy of products.

Cultural factors

1. Innovation culture: The company's commitment to fostering an innovation culture is essential

for staying competitive and developing new products.

2. Cooperate social responsibility: Dr. Reddy's commitment to CSR initiatives can enhance its

reputation and stakeholder relationships.

Market share
 In crore

Open 6,140.00

Previous Close 6,160.05

Volume 247,794

Value (Lacs) 15,253.83

i VWAP 6,152.67

Beta 0.55

Mkt Cap (Rs. Cr.) 102,685

High 6,205.20

Low 6,104.20

UC Limit 6,776.05

LC Limit 5,544.05

52 Week High 6,219.95

52 Week Low 4,297.00

Face Value 5

All Time High 6,219.95

All Time Low 216.80

20D Avg Volume 463,682

20D Avg Delivery(%) --

Book Value Per Share 1,154.31

Dividend Yield 0.65