2. Introduction
• Indian pharmaceutical industry
• Introduction to DRL (Dr Reddy’s
Laboratories)
• DRL : The rise and fall
• Key business and market sectors of
DRL
• Crisis in DRL: The problems
• What went wrong ?
• Amendments to be made
3. Indian pharmaceutical industry
• 13th in the world in terms of value and 4th in terms of
volume
• A growth rate of 15% for bulk and 20% for formulations
was achieved during the 90s.
• Ranbaxy Laboratories, DRL, Cipla, Sun Pharmaceutical,
Lupin, and GlaxoSmitheKline (GSK) emerged as the
market leaders.
• The growing Indian market attracted foreign investment
• Merck, Pfizer, Daiichi Sankyo entered the Indian
pharmaceutical industry .
• An annual turnover of US$ 21.04 billion was achieved,
domestic contribution – US$ 12.26 billion
4. Contd.
• A growth of US$ 55 billions was expected by
2020.
• A projected growth of US$ 975 billion was
expected by 2013.
5. Introduction to DRL
• Founded in 1984 by Anji Reddy, an entrepreneur and
scientist
• Acquisition of Benzex laboratories in 1988
• Dr Reddy’s research foundation (DRF) was established
in 1993
• Merger with Cheminor Drugs in 2000 was a big leap,
rose as the third largest pharmaceutical company.
• GV Prasad was appointed the executive vice-chairman
and CEO while Satish Reddy became COO.
• Acquisition of Betapharm in 2006 (US$ 570 millions)
6. Cont.
• (2007) Revenues reached US$1.5 billion and recognition
as no 1 pharmaceutical company in India in terms of
turnover, rise to $1.7 billions by 2011
• Joint venture with Fujifilm
• Launch of 135 new generic products, filing of 107 new
product registration, and 56 drug master files
7.
8. DRL: The rise and fall
• Quick rise in the pharmaceutical sector in the late 80s
and early 90s.
• Launch of new products ensured continued growth
• Focus on R&D acted as a booster in growth and
reputation
• Acquisition of domestic and foreign companies were a
major milestone
• Joint ventures , patents and licensing were contributing
factors
9. The Fall
problems
• Acquisition of german generics company Betapharm
Arzneimittel GmbH (Betapharm)
• Patient litigations in the Us market
• Quality problems in Mexico unit
• Falling revenues in key markets
• String of fatal accidents
10. Betapharm Acquisition
• Acquisition of Betapharm was the turning point
• Change in the regulations from the German government
was the cause of downfall
• Rs14.02 billions loss was reported in intangible and
goodwill
• Net loss Rs 5.22 billion primarily due to impairment
charges at Betapharm
• Revenues in the market decreased at a high rate
11. Peoblem in the US market
• Decrease in by more than 50% in the year ended 2009
• Cases in the US relating to pills size issues and patent
infringrment
• Case filed by Pfizer, POZEN and AstraZeneca
• Growing competition in the US market
12. Mexico Fiasco
• Ban on products made at company’s Mexican plant
• Loss of US$ 30 millions over a year
13. Fatal Accidents
• Series of accidents in manufacturing plant in Hyderabad
• With the death of workers stock price decreased by
4.13%
• The next accident in the factory taking lives of two
caused some major issues
• Case was filed by the Directorate of factories , Andhra
Pradesh
14. Losing grounds in domestic market
• A slower rate of growth at just 6%
• Entry of other global drug majors
• Clash of vision in older and younger generations of
Reddy
15. The key issues
• Focus in growth and expansion
• Not utilizing the established companies and the captured
market
• Lack of proper management in the domestic factories
• Unchecked falling standards
• Concerns over patents
16. The road ahead
• Growth in the north American generic business and other
emerging markets will be a boost in performance
• Plans to increase investment and launch new product in
the US marked
• Target to achieve sales of $3 billions.
17. Recomendation
• Betapharm issue needs to be resolved at all cost
• Patent litigation issues need to be resolved
• An agreement with the Us companies needs to
established
• Being sued should not be a problem in future
• Reputation and market loyalty needs to be regained
• An expert supervision in the Mexican facilities may be
the only option
• Quatity issued needs to be resolved
• Appropriate labor needs to be mobilized in the domestic
market
18. • Domestic market needs to be given more priority
• Indian maret is rising as a great market and needs to be
exploited accordingly
• A shared vision needs to be established
• If not possible a change in vision seems mandatory
• Make public all results, including negative or unfavorable
ones, in a timely fashion while avoiding redundancy.
• Educate and train the current employees and provide
complete information.
