Analysis Of Pharmaceutical
Industry Based On Porter’s
FiveForcesModel

Dr. Reddy's Laboratories Limited is a pharmaceutical company founded by
K. Anji Reddy in 1984 and is engaged in providing medicines. It is India’s
Second biggest pharmaceutical company and is headquartered in
Hyderabad. The Company operates in three segments: Global Generics,
Pharmaceutical Services and Active Ingredients (PSAI), and Proprietary
Products.
• The Global Generics segment includes manufacturing and marketing
prescription and over-the-counter finished pharmaceutical products
ready for consumption by the patient, marketed under a brand name
(branded formulations) or as generic finished dosages with therapeutic
equivalence to branded formulations (generics).
• PSAI segment includes the Company's business of manufacturing and
marketing active pharmaceutical ingredients and intermediates (API) or
bulk drugs.
• Proprietary Products segment focuses on the research, development and
manufacture of differentiated formulations and new chemical entities.
These products fall within the dermatology and neurology therapeutic
areas, and are marketed and sold through its subsidiary, Promius
Pharma, LLC.
Company Profile

PRODUCTS

To be first Indian
Pharmaceutical
company that
successfully takes
its products from
discovery to
commercial launch
globally
To become a
discovery ruled
global
pharmaceutical
company with a
core purpose of
helping people
lead healthier lives

Quality
Harmony and Social Responsibility
Respect for the individual
Collaboration and Teamwork
Innovation & Continuous Learning

Threat of
new
entrants(lo
w)
Government regulations in
terms of quality and price
leads to hindrance in
establishing new
manufacturing operations.
Impeding new patent
regime will raise the
barriers to entry.
High entry barriers due to
costs associated with
research & development of
new drugs (i.e. years of
investment in R&D for a
drug that may/may not
work)

Industry
competition(hig
h)
Most competitive industry
with hundreds of
competitors. Major
competitors for Dr.Reddy
are Sun pharma, Novartis,
bayers, Pfizer,
GlaxoSmithKline, novo
nordisk.
High growth prospects.
Working capital requirement
is high

Bargaining
power of
buyers(lo
w and
medium)
End user of the product is
different from the
influencer(doctor)
Consumer has no choice
but to buy what doctor
says
Hospitals & other health
care organizations buy in
bulk quantities and exert
pressure on
pharmaceutical
companies to keep prices
in check
Regular patients have lost
bargaining power due to
price increases in generic
drugs

Bargaining
powers of
suppliers(low)
Pharma industry
depends upon several
organic chemicals
Very competitive and
fragmented industry
Chemicals are largely
a commodity
Pharma industries
can switch from their
suppliers without
incurring a very high
cost

Threat of
substitutes(lo
w)
Naturopathy
Ayurvedic
Homeopathy

• Leverage existing infrastructure to deal with
the need of Oncology Market.
• New partnerships to discover and develop
new therapies focusing on Biosimilar
development.
• Find products which will be less competitive
in the market – Niche Products, products
with IP and technology barrier.
• Increase domestic footprint in generic
market.
• Demand of cost effective generic drugs in
developed and under developed countries.
• Disposable income of people is rising and
they are becoming health conscious –
demand for products like multi vitamins are
increasing ex. success of Rivital by Ranbaxy.
Opportunities

• Increasingly stringent
regulations for new drug
development.
• Intense competition in the
generics segment.
• Price pressure and presence of
international giants like Sandoz
and teva are considerably
slowing down performance of
Indian Pharmaceutical
companies.
• US market is getting
with Indian
overcrowded
players.
Threats