Monday, September 29, 2008

SWOT – Dr. Reddy’s

Dr. Reddy’s Laboratories Ltd. formed by Dr. K. Anji Reddy in 1984, is now a global pharmaceutical company with presence in over 115 countries worldwide. It was the first Asia-Pacific (outside-Japan) country to be listed in NYSE in year 2001. For the fiscal year ended March 2008, consolidated revenues reached $1.25 billion, a 23% decrease on the previous year.

SWOT Analysis


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
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, 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
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
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 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 Betapharm

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