Name Chaithanya Reddy Sadu

IUD 08PMP03528

Enrollment No. 08BS0002864

SUBJECT: Business Strategy

FACULTY NAME: Prof. A. Lakshmi Narasimha

TOPIC: Implementation of 7’S strategy at Dr.Reddy’s Laboratories

Student signature: Faculty signature:

Introduction to the company

It has significant presence in the regulated markets of USA, Germany and UK where it offers high quality medicines at affordable prices.Strengths• World-class distribution capabilities• Strong product portfolio and an attractive pipeline• Proven ability to garner market share• Credible track record of successful “Day 1” launches• Strong relationships with key distributors, pharmacy chains and insurance funds.Partnering Opportunities• In-licensing, co-development and product opportunities in difficult-to-make generics• Product portfolio expansion• Partners with unique platform technologies for product developmentOur Branded and Unbranded generic products offer affordable alternatives to innovator brands, both directly and through key partnerships.Unbranded GenericsManufacturing Bandwidth• 7 Formulation plants [6 in India (1 USFDA approved), 1 in US]Product Portfolio• Integrated product development center• 50+ products marketed in the US• 130+ ANDAs filed till date. 69 ANDAs pending approval at the USFDA, of which 32 are Para IV and 19 are FTFs.• 160+ products marketed in the EU• 200+ branded formulations marketed in India, Russia and other emerging markets• Among the top 10 generic companies in the US; ranks 5 in Germany; the 7 largest Generic Pharma company in Russia and among the largest pharma companies in India.Branded GenericsOur Branded Generics portfolio offers over 200 products in the major therapeutic areas of gastro-intestinal, cardiovascular, pain management, oncology, anti-invectives, pediatrics and dermatology. Its top brands enjoy leadership positions in our key markets of India, Russia & the CIS, Romania and Venezuela.India• Among the largest pharmaceutical companies• Product portfolio of over 200 brands across 13 therapeutic areas• Market leader in gastro-intestinal, cardiovascular, pain management and oncology• 2000+ sales and marketing team• 300,000+ doctors and 1900+ stockists • Near 100% coverage of KOLs and key institutes• Stamlo, Omez, Reditux, Nise, Ketorol are market leaders in their respective categoryRussia • Among the top 15 pharma companies. 14 in retail segment• Fastest growing international branded generic company by volumes • Top 5 brands occupy the 1 spot in their respective molecule space• 4 brands [Omez, Ketorol, Nise and Ciprolet] among Top 100• Strong presence in gastro-intestinal, cardiovascular, anti-Infective, oncology, pain and dermatology• Building capabilities in wellness and nutraceuticals• 300 + sales and marketing teamGlobal oncology

Strengths• One stop portfolio solution with a broad product basket for launches across the globe• Established capabilities in chemistry and biology enabling strong IP positions• Low cost development and manufacturing operations• Strong commercial infrastructure in focus geographiesPartnering opportunities• Partners for commercialization of our portfolio• In-licensing opportunities in:- Differentiated Products and NCEs (phase III, registered, marketed)- Complimentary basket of oncology products• Co-development and joint commercialization of molecules

Takeovers

Promius Pharma is a branded Specialty company with a portfolio of in-licensed dermatology products and

an internal pipeline in different stages of development. Promius Pharma's current portfolio contains innovative products for the treatment of psoriasis, atopic dermatitis and seborrhea dermatitis.

Strengths• 2 products in the market: EpiCeram Skin Barrier Emulsion and Scytera Foam, 7 products in pipeline• Track record of successful partnerships with Ceragenix, Foamix, Sinclair and Antares• Strong portfolio of in-licensed and co-developed dermatological products and an internal pipeline under development• Strong and committed sales force• State-of-the-art integrated product development center in Hyderabad, IndiaPartnering opportunities• In-licensing and product opportunities in branded dermatology space• Interested in late stage (phase II, Phase III, ready-to-market, or in-market) opportunities for development and commercialization• Out-licensing, co-development and commercialization partners for internal programs for market outside of the US

We view generic biopharmaceuticals as an integral part of our mid to long term growth strategy and believe that building depth in development and manufacturing capabilities will be critical in accessin this opportunity. We have made significant efforts in this direction and have over the years succeeded in creating world class infrastructure and a highly capable team.

Strengths• Proven generic biopharmaceutical development capabilities with two marketed products - Grafeel (filgrastim) and Reditux (rituximab), in emerging markets• Developed and launched Reditux (rituximab) - the world's first generic monoclonal antibody• Pipeline of eight generic biopharmaceuticals in various stages of development with two in clinical development• The product portfolio spans multiple therapeutic areas - oncology, auto-immune diseases and CNS• GMP facilities to manufacture Biologics, in adherence with global regulatory requirements at a significant cost advantage

Partnering opportunities• Partners with intent and capabilities to commercialize generic biopharmaceuticals in specific geographies

SWOT ANALYSISSTRENTHS

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 6120 employees worldwide including

951 scientists in which 323 are dedicated towards new drug discovery research

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

WEAK NESS High amount of revenues from overseas 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,

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

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.

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

TOWS ANALYSIS

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

OT STRATEGIES Take a molecule from its pipeline all

the way to the market place cost-

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.

effectively market to reduce the cost of obtaining approval.

The above strategy also helps to rapidly enter the markets where approvals take long time.

Implementation of &7s strategy Organizational Structure at Dr. Reddy’s LaboratoriesOrganizational charts:

1. Formal reporting relationships - High 2. Levels in hierarchy - High3. Span of control - High 4. Departmentalization- High

Functional Structure: Functional structure with horizontal linkage Systems to facilitate:

a. Coordinationb. Communicationc. Integration

Ladder of mechanism for Horizontal linkage and Coordination

H

L

Cost of Coordination in time and human resources

1-Information systems2-Direct contact3-Task forces

4-Full time integrators5-Teams

SYSTEMSFormal and informal procedures that support the strategy and structure (Systems are more powerful than they are given credit).Various elements of system are:

Communications practice and system Management reporting system Approval process Planning/budgeting system Rewards system including appraisal “Rules”

STRUCTUREFor proper utilization of the Structure the following steps can be followed:

Tasks define jobs Jobs define skills required Skills (and other considerations) define staff

o Over time skills change as staff gains knowledge and experience, and as technology and corporate infrastructure mature

Collection of jobs basis for structure SKILLS

Distinctive competencies – what the company does best, ways of developing or shifting competencies

In case of this company while Job Design it is to be considered whether the existing employees have the necessary skills and knowledge to fulfill proposed / expanded job requirements?

STAFF Human Resource Development at HPL has been an integral part of the Company since its

inception. It has had a significant strategic role in the Company's growth process and continues to do so. It is a function that has contributed to the bottom line of the Company and has built the HPL family. HPL today boasts of a strong online competency profiling system for its employees.

It is to be kept in mind that the people of HPL are ways of shaping their basic management values

Proper HR management processes should be used to develop new managers who can lead the organization.Importance should be given to the ways of introducing new employees and managing careers, socialization processes.

STYLE/CULTUREThe culture of the organization, consisting of

– Organizational culture: the dominant values, beliefs and norms which develop over time and become relatively enduring features of organization life

– Management style: The precise way in which the control system influences the behavior depends on the style of functioning of the manager (i.e where they spend their time and attention, what they allow, what they reward, etc)

Dr. Reddy’s basically follows an External Control System where decision making authority rests with the top management – Centralized in practical operations Regarding organization culture, HPL follows 3 following rules those are reflected from their Vision statement.

1. Respect for Individual2. Customer Satisfaction3. Dedication to Excellence

The company can follow the following aspects for improving its culture: Customer Delight: A commitment to surpassing the customer expectations. (and not

only fulfilling) Leadership by Example: A commitment to set standards in the business and

transactions and be an exemplar for the industry and their own teams. Integrity and Transparency: A commitment to be ethical, sincere and open in their

dealings. Fairness: A commitment to be objective and transaction-oriented, thereby earning trust

and respect. Pursuit of Excellence: A commitment to strive relentlessly, to constantly improve

themselves, their teams, their services and products so as to become the best. STRATEGY – MAXIMISING THE VALUE

8 USFDA approved facilities (6 in India, 1 in Mexico and 1 in UK)- 3 Technology Development Centers (2 in India and 1 in UK)• Among the top three API players glob

increased revenues

satisfied customer

internal business processes - Quality

learning and growth- skilled employees