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Case Study

Dr. Reddy’s Laboratories: Realizing an ambitious vision

By Balaji S. Chakravarthy and Sophie Linguri Coughlan

20 pages

July 2009

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Reference: IMD-3-2117

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 analyze 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.

Learning Objective

The case is a good vehicle to discuss the changing landscape of the global pharmaceuticals industry. It is also useful for discussing the strategies of emerging global contenders from BRIC countries. Third, the case presents a rich backdrop for discussing how companies should manage the risks involved in corporate renewal. Should Dr. Reddy’s focus on what it is good at, i.e. generics and related products and services; or should it venture into the higher-margin but higher-risk discovery-led business? How can it do both?

Keywords

Pharmaceutical Business Model, Patent Challenges, Polypill, Biologics, Corporate Renewal, Global Organization, Talent Management, General Management, Strategy

Settings

India
2003 - 2009

Type

Field Research

Available Languages

English

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