Dr. Reddy's Laboratories is an Indian multinational pharmaceutical company. Case study presented me and my colleagues.

1. The Making of an
Indian Multinational
Atul Prajapati(19)
Lekha Shinde (25)
Jigar Patel(17)
Milan Dajjuka (35)
Yashmita Shetty()
Haridas Yadav
Rahul Yadav (30)
Chhayangi Revadekar (21)

2. Foundation of DRL
• Founded by Anji Reddy in 1984 after struggling for a
decade in difficult partnerships
• Initially took advantage of the process patent regime.
• Started by manufacturing APIs and later started
formulating its own branded generics.
• Also founded Cheminor in 1984
• DRL and Cheminor togeather generated $12.5 million
in sales by 1990
• Both companies merged in the year 2000

3. Current Identity of DRL
• Leading generic drug company.
• Ranked 16th in the IPM
• Aims at becoming 1 of the top 25 discovery-led
pharma companies in the world.
• Challenge is to maintain current profitability and
growth while undergoing the above transformation.

4. The Evolution of DRL
Four parallel evolutions in group strategy:-
 Product diversification
 International expansion with branded formulations
 Growth in the generics business
 Building of capabilities for discovering new drug
molecules
By 2000 industry leader within India in three
therapeutic segment:- Pain management,
gastroenterology, cardiovascular

5. • By 2000 company has:-
 1500 sales persons for international dealing network
 6 factories for manufacturing
 3 additional formulation plants
 Reachable to 2000 stockists and 100,000 retailer in india
 Export in 50 countries, eastern Europe, south east Asia,
Latin America were first target.
Dr Reddy’s Research Foundation was started in 1993 to
focus on drug discovery.

6. The DRF
• Fast, Flexible with around 200 employee
• Started hiring fresh PhD’s
• Provide “spirit of excellence” scholarship in selected Indian
universities.
• Money was raised in foreign capital to fund the company’s
diversification and new discovery.
• Through GDR Company issue $48 million in 1994 and
through ADR $115.5 million in 2001.
First non Japanese Asian pharma company listed in New York
Stock Exchange.

7. The post 2000 Era
• Founder brought DRL, DRF and Chemin or together
and introduce new corporate entity, Dr. Reddy’s
Laboratories.
• Two major segments:- Bulk actives and Branded
formulations
• Ranbaxy and Cipla were competitors in Bulk actives.
• Israeli Teva and Swiss Novartis Generics were
competitors in Generics

8. DRL-A Leading Generic Drug Company
DRLs strength is its manufacturing process and has
earned reputation as leading drug company.
THE GENERIC OPPORTUNITITY:-
• Reduced health care cost
• WAXMAN-HATCH Act of 1984
• By 2001 generics drugs represented growth of 10-
12% each year

9. Waxman-Hatch act of 1984
Drug Price Competition And Patent Registration
Act:-
The act allows patent holder/manufacturer-
• To file ANDAs
• To sue the applicant within 45 days of such filing

10. Waxman-Hatch act of 1984
Drug Price Competition And Patent Registration Act:-
The act allows Patent holder/manufacturer-
• To file registration applications before patent on
originator product expired
• Patents of $30 billion worth of drugs were due to
expire by 2005

11. ANDA Filing by DRL
• The first ANDA filing was in 1997 for Ranitidine
75mg tablet in US market.
• DRL spent several million dollars in 2001 fighting Eli-
Lilly Patent
• 11 ANDAs by DRL had been approved in 2013
• DRL was awaiting for 23 additional applications

12. DRL In Specialty Drugs
• In December 2002 DRL won court battle to launch a
specialty drug in US market
• DRL generated $50 million in free cash flow each
year
• In March 2004 DRL lost its filing
• Merck authorized DRL to sell generic copies of
PROSCAR

13. Drug Prices of Generics
• In exclusivity period prices were 60-70% of original
patent drug
• After exclusivity period prices dropped to 15-20%
• 57% cost advantage over patent holder for generic
manufacturer
• 76% Estimated cost advantage for Indian generic
manufacturer

14. New Drug Discovery
 Initial focus on therapeutic areas with less competition (eg: Diabetes care)
 Drug discovery process is expensive ; Dr. Reddy’s focuses on pre-clinical
research phase (less capital incentive & low risk) i.e $10 million budget it
could develop 10-14 new drug candidates
 DRL out-licensed 2 anti-diabetic molecules & developed a robust pipeline of
NCE’s for 4 therapeutic areas
 Perlecan Pharma ( ICICI+ Citigroup+ DRL venture formed Drug development
company)
 Risk of 4 NCE’s spread across 3 partners. To de-risk drug discovery further DRL
got into collaborative research (Argenta Discovery –COPD)
 Another Eg: Balaglitazone, with Denmark based Rheoscience

15. Managing a Global Company
• By 2002 offices present in 60 countries
• Subsidiary companies in US, Brazil, UK, France, Holland &
Singapore
• International revenues dominated domestic revenues by 2:1
factor in 2002
• US continued to be the biggest pharma market accounting
$245 B of $500 B global market
• India provided an advantage for manufacturing cost over US
(1/5th of US cost)
• The break up of revenue of DRL by business & by geography
for the year ending 2004-05 is given:

17. Expanding Global Business
Company
Acquired
in
Cost
($ Million)
What RD. Reddy's Got
Trigenesis (US) May-05 11 Dermatology
Roche (Maxico) Dec-05 59
Custom pharmaceutical
Services
Betapharm
(Germany)
Mar-06 570
Market and regulatory
access

18. European Market
• By 2011, €11.8 Billion worth patent expirations would
happen in the four key generic markets of Europe (UK,
France, Italy & Germany)
• Market ($14.2 Billion), generics are growing faster
than brands and growth rate is almost equal to that of
the US.
• There is no provision for marketing exclusivity, hence
generics opportunity is far more predictable.
• Acquiring a local European company made better
sense than starting from the base

19. Russian Market
• Russia accounted for 9% of DRL’s global revenues
(expected 15-18% over the next 5 years)
• Antibiotic Ciprolet and Omez were leaders with combined
sales of $17 million
• Enam was the 4th largest with sales of $7 million
• TB, Heart Diseases and Diabetes were growing market
• Low population but high expenditure on health, making
country’s pharma industry grow as fast as India
• Imported 70% pharma requirements
• Out of 15000 drugs available in the market, prices of only
236 were controlled

20. Germany Market
• €4.8 billion market, it was growing at 13%
• Bought Betapharm, 4th largest company in Germany,
for 2500 Crore in February, 2006
• Betapharm had 3.5% market share
• Betapharm’s mfg would shift to India since DRL’s
facilities were already European regulation compliant
• It had a rich pipeline of 146 registered products with
60 more coming up in next 5 years
• At 25% growth, Betapharm had been fastest growing
generic company in Germany for the last 5 years

21. Autonomy and Sharing
• DR .Reddy’s structured itself around seven strategic
business units (SBU)
• Bulk actives
• DR . Reddy’s Research Foundation (DRF)
• Seventh SBU Biotechnology
Critical Care
• SBU set of shared corporate service
• DRL had a create additional value

22. People Issues
• Build on 3 pillar
• Innovation, Entrepreneurship, globalization
• Relationship with research Institute & university
• Talent management become priority
• Changing business model caused problem.
• DRL use to chemical company than drug formulation , than
the generic player
• Move towards the discovery so show change in portfolio

23. • This lead to emotional issue with people.
• experienced and skilled people brought.
• Worldwide Nearly 10% of DRL employee are non
Indian. china >Russia> America
• Managing global workforce is was not easy.
• Example Indian move to US could make more there
than local hire

24. • HR policy focus on learning and development talent,
management and development a performance orientation
culture.
• Introduce individual key focus area KRA`S , regular revise
and feedback annual superior and self appraisal,
performance linked to compensation ,bonus
• Competency base development program to all level with
course of communication analytic and negotiation skills
• Employee with high potential were sponsored for degree
at reputed business school

25. Everything under one roof
Find a right balance
Alliances and acquisition
Mitigate the risks
Expansion
New base
Interconnected Strategies + Organizational Dilemmas
+ People Dilemmas