Corporate Strategy

Dr.Reddy’s
Laboratories Limited
Presenting by
Pratush Reddy D
Contents…
• Company Overview – Dr.Reddy’s
• More Details – Dr.Reddy’s
• Comprehensive Analysis

– PEST Analysis

– SWOT Analysis
 Company Overview – Dr.Reddy’s
• Year of Establishment :February 1984

– Founder: Dr. AnjiReddy

– CEO : Mr.G.V.Prasad

Growth:
Turned around Indian Bulk Drug industry
Indian Bulk Drug industry
– Mid-80s: Import-dependent
– Mid-90s: Self-reliant
– 2000 onwards: Export-oriented industry

Transformed industry sobriquet from „Imitators‟ to „Innovators‟

• First Indian PharmaCompany to take up Drug Discovery research

 More details
• Revenue : $420 million (Q2 FY11)
• Employees : 13000 +
• Head Quarters : Hyderabad
• Business Types :
» Global Generics
» Pharmaceutical Services & Ingredients
» Proprietary Products
Dr.Reddy’s Presence across the Globe:
POLITICAL
ECONOMICAL
SOCIAL
TECHNOLOGICAL
ANALYSIS
POLITICAL
• Innovator companies are lobbying for making more stringent patent
laws which could make selling of patented products more difficult

• Developed countries are constantly making stringent regulatory systems

(GMP) resulting in increased in manufacturing cost.

• A combination of diverse political thought have got together to cobble

together a rag-tag coalition, that is riddle with ideological
contradictions

• The Minister in charge of the industry has been threatening to impose

even more stringent Price Control on the industry than before. This is
throwing many an investment plan into the doldrums.

(http://www.docstoc.com/docs/13899768/Pest-Analysis-of-pharma-Industry-complete-project)
ECONOMICAL
• It has a competitive and dynamic private sector that
accounts for more than 75% of India's GDP.

• This has shown a marked increase in FDI and FII

inflows (but we are lagging behind if we compare
with China)

• Since 1990, the economy of India has witnessed a

decent growth rate of 6% and has been successful
in overcoming poverty by about 10%.
(http://www.scribd.com/doc/26251406/Fundamental-Analysis-Dr-Reddy-s-Lab)
SOCIAL
 Cost effective generic drugs are needed by developing and under developed
countries for healthcare therefore demand should rise.

 Poor Sanitation and polluted water sources prematurely end the life of about 1
million children under the age of five every year.

 In India people prefer using household treatments handed down for generations
for common ailments.

 Increasing pollution is adding to the healthcare problem.

 Cattle-rearing encourage diseases communicated by animals.

 Early child bearing affects the health standards of women and children.

(http://www.docstoc.com/docs/13899768/Pest-Analysis-of-pharma-Industry)
TECHNOLOGICAL
• Initial investment for Drug discovery is very high and about
15-20 years are required for developing one drug molecule.

• New molecule has to go through clinical trials. If clinical

trials fail whole investment is lost.

• High end technology is required for selecting desired

molecule.

• Thus Dr Reddy’s has to continuously upgrade technology

and synchronize all the areas of drug discovery for
minimizing failure risk.
ANALYSIS
 STRENGTHS:
• Wholly owned subsidiaries in US and Europe
• Joint ventures in China and South Africa
• Markets pharmaceutical products in 115 countries
• Partnerships with global pharmaceutical companies like Novartis, NOVO Nordisk, etc.
• Strong product portfolio
• Manufacture and market over 250 medicines targeting a wide range of therapies
• Wide range of anti-cancer drugs developed
• Over 100 APIs developed
• Six New Chemical Entities(NCE)
• Low cost base
• Contributes to company’s high profit margin of around 34% of sales
• Partnerships with key players in the market keeps its cost base down
• Research Driven & Global Talent
• Expertise in developing innovative product formulations
• 13000 employees worldwide including new drug discovery research scientists.
(http://www.scribd.com/doc/31313536/Implementation-of-7s-Srategy-in-Dr-Reddy-s)
WEAKNESSES:
• India - a rich source of Active Pharmaceutical Ingredients (APIs),
hence major source of revenue is exports of APIs. May loose out to
western world, especially Europe, where currency is much more
stable than the Indian Rupee
• Over-reliance on partnerships
• In order to compete effectively in global markets, strategic
partnerships required to develop products.
• Lack of resources similar to US and Europe based competitors to
develop a drug to marketing stage
• Generic drugs smallest focus
• Smallest portion of revenues from generics at around 20%
• Lack of patent legislation in India harms sales of its products

(http://www.scribd.com/doc/31313536/Implementation-of-7s-Srategy-in-Dr-Reddy-s)
OPPORTUNITIES:
• Take a drug all the way to market
• Take a molecule from its pipeline all the way to
the market place cost-effectively market
• Buy back of the integrated drug development
company from ICICI Ventures and Citigroup
• Domestic Generic drugs market
• In another 4-6 years, many product patents
obtained after the 2004 legislation will go off
providing an opportunity to the company
increase its domestic footprint in Generics
(http://www.scribd.com/doc/31313536/Implementation-of-7s-Srategy-in-Dr-Reddy-s)
THREATS:
• Needs to gain FDA approval for all sources and products
• Products have to pass strict FDA trials before going to market,
which can be costly and time consuming
• This may delay the company entry to particular markets which
affects revenue
• Competition from US and European Companies
• Based in lucrative markets e.g. Novartis, Merck & Co
• Revenues running into billions which dwarfs Reddy’s annual
turnover Litigation charges
• Reddy’s lost the case against Pfizer for the use of generic form of
Norvasc drug. Legal cost $10m and also loss of market opportunity.
• Heightened concerns about profitability of German generics
business of Beta pharm

(http://www.scribd.com/doc/31313536/Implementation-of-7s-Srategy-in-Dr-Reddy-s)
SWOT Evaluation

(http://www.scribd.com/doc/31313536/Implementation-of-7s-Srategy-in-Dr-Reddy-s)
 SO STRATEGIES
• With its low cost base and wide product
portfolio, it can penetrate into the vast
domestic market.
• It can leverage upon its huge research and
development team to discover more drugs.
• It can partner with huge pharma retail outlets
like Hetero and Apollo to promote more of
their products.
 WO STRATEGIES
 By buying out the integrated drug development
company from ICICI ventures and CITI group
the company can actively manufacture its own
drugs using API, with this it can hedge the
threat of losing its market to western players in
the API export market.
• As in next four years, many product patents
obtained after the 2004 legislation will go off
providing an opportunity to the company
increase its domestic footprint in Generics.
 ST STRATEGIES
• By leveraging on the low cost advantage, vast
human resources in the R&D team it can
expand its domestic market thus reducing the
loss risk in case of losing US and European
market.
• Increase the German market position by
introducing new products into the market.
  WT STRATEGIES
• Take a molecule from its pipeline all the way
to the market place cost-effectively market to
reduce the cost of obtaining approval.
• The above strategy also helps to rapidly enter
the markets where approvals take long time.
Thank You..!