Dr Reddy's Laboratories: Growing Pains

            
 
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Please note:

This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.



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Case Details:

Price:

Case Code : BSTR403 For delivery in electronic format: Rs.500;
For delivery through courier (within India): Rs. 500 + Rs. 25 for Shipping & Handling Charges

Themes

International Management/ Corporate Strategy / Strategy Implementation
Case Length : 16 Pages
Period : 2006-2011
Pub Date : 2012
Teaching Note : Not Available
Organization : Dr. Reddy's Laboratories.
Industry : Pharmaceuticals
Countries : Global; India; US; Europe

Abstract:

This case study is about Dr Reddy's Laboratories Ltd (DRL), a global pharmaceutical company. Established in 1984, DRL was the largest Indian pharmaceutical company with a net worth of Rs.58 billion in 2007. As a fully integrated pharmaceutical company, DRL provided affordable medicines through its three core businesses - Pharmaceutical Services and Active Ingredients, Global Generics, and Proprietary Products. Since 2008, however, the drug maker went through a very difficult phase. The acquisition of German generics company betapharm Arzneimittel GmbH (Betapharm) in 2006 backfired, sinking the company into its worst ever quarterly loss in the fiscal 2008-09. Pending lawsuits for alleged patent infringements prevented DRL from launching generic products in its biggest market, the US.

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Moreover the ban imposed by the US Food and Drug Administration (FDA) on products made at DRL's Mexico unit for violation of manufacturing practices seriously dented the company's image as a quality drug maker. The ban also affected the company's revenues from the US market. A string of accidents which broke out across at DRL's Indian manufacturing facilities brought its safety practices under question. In a bid to crack the generics market in the US, the company lost sight of the domestic market and could not come up with new products in the Indian markets unlike its competitors. As a result, the company lost its coveted position in the domestic market. All these problems led to a decline in the stock price of the company. It was also reported that while founder Anji Reddy wanted to make DRL an innovative research-driven company focused on producing low-cost medicines, the younger generation led by son-in-law GV Prasad (CEO) and son Satish Reddy (COO) sought to make DRL a generics-driven global giant. In light of the problems, the challenge before DRL's management was how to stem the rot and orchestrate a turnaround.

Issues:

Analyze the strategies adopted by DRL to become a global company .
Examine the reasons for the problems faced by DRL.
Understand the issues and challenges faced by an Indian pharmaceutical company in growing its business in the international market.
Explore strategies which would help DRL resolve the key issues and lead to a turnaround.

Contents:

  Page No.
Introduction 1
Industry Overview 1
About DRL 3
Business Segments 4
Key Markets 4
DRL's Problems 5
Betapharm Acquisition 5
Problems in the US Market 6
Mexico FTASCO 7
Fatal Accidents 7
Losing Ground in the Domestic Market 8
The Road Ahead 8
Exhibits 9

Keywords:

Internationalization, Corporate-level and International strategy, Directions for strategy development, Ansoff's matrix, Strategy Implementation, Turnaround strategy, Pharmaceutical, Global pharmaceutical industry, Indian Pharmaceutical industry, Dr Reddy's Laboratories, Globalization, FDA, Patents, Generics, R&D, Betapharm, Anji Reddy

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