Executive Insight: Building and growing pharma success

Dr Reddy’s is one such success: India’s third largest pharmaceutical company, named fourth in “The Best Companies to work for in India, and the first and only Indian pharma company to be listed on NYSE. How did it happen and what happens next? Marcel Velterop explains.

Dr Reddy’s has many firsts to its credit in the Indian pharma industry. Apart from being the first and only pharma company to be listed on NYSE, it was the first to out-license an original molecule, the first Indian company to be an authorised generic partner with an innovator, the first to issue a sustainability report, and so on. In addition, Dr Reddy’s initiated its drug discovery program in 1993, the earliest by any private company.

Today, at the company’s Discovery Research Centre in Hyderabad, many laboratories are devoted to developing novel drugs. Dr Reddy’s is also working on treatments for oncology, metabolic disorders, cancer, cardiovascular illness and obesity. We spend 12 to 14 percent of annual revenue on research and development because we are a global generics player on the way to innovation. The company is transforming itself into a discovery-led pharmaceutical company.

We see human resources as an investment and not a cost. The people who are joining us today come with a high pedigree and we are able to attract very good talent from various institutions across the world. The quality of people coupled with our well-established HR practices and strong company values make Dr. Reddy’s one of the best companies to work for in India.

Stick to your vision

We got onto the discovery research platform way back in 1993 because if we just rely on our capability to produce cheaper products, we will always remain a minor player. If you take a look at the statistics, the 25th research based pharmaceutical company is still bigger than the number one generics firm. We believe India has some outstanding innovative skills and each scientist working at Dr. Reddy’s Laboratories is extremely passionate about his or her job.

In addition Dr Reddy’s set up a separate NCE development company called Perlecan who will take discovery assets further into the later phase before partnering or out-licensing the asset.

Finally, our Custom Pharmaceutical Services business provides the integrated pharmaceutical skills of the company to both large and emerging innovators globally. The partnerships that are in development here will increase our innovation related business significantly.

Build and conquer

Building a sustainable generic business and increasing geographical expansion are key priorities for Dr. Reddy’s. We were not represented in Germany, the largest pharmaceutical market in Europe and the third largest in the world, hence it was important for us to have presence there. Building it organically would have been very difficult and inorganic growth was the right option. betapharm was a perfect fit for Dr Reddy’s in may respects [Dr Reddy’s bought German-based rival betapharm in 2006].

In the future, betapharm, could help us introduce a variety of generic products and build a presence in the European markets where we are not yet present. We could also introduce other products we are developing into Europe with betapharm’s presence.

Elsewhere, we are obviously pleased with the final approval of our generic version of Zofran with 180-days of marketing exclusivity. With six product introductions to date in the current year, we are making good progress in building a sustainable base generics business with potential upsides in the US in the medium term. It furthermore proves that Dr Reddy’s can work in partnership also with the large innovator pharma companies in addressing the dynamics of our industry.

Always meet demand

The polypill places us closer to the patients and we consider it an incremental innovation. It is a market-focused improvement in the sense that the polypill will respond to the needs of the vast majority of cardiovascular patients in the specific marketplace of the developing world.

The developing world cannot afford expensive medication and multiple pill regimes. There is a real need for this product, and we will be able to provide it. A company like Dr Reddy’s with deep skills in API, in formulation and in marketing is combining its expertise in this area to solve a significant problem in the developing world. It is not only a business opportunity; it is a breakthrough to make an impact on society. We are very excited about this project.

The first launch will be in India (end of 2007) and then we will expand to other developing countries.

Plan ahead

Only by setting aspirational objectives will a required set of actions follow to try and achieve them. This is what has happened to date. For 2007 and beyond, we have a portfolio of innovative products and we will continuously build further partnerships with both the large and emerging innovators. It is not something that we are just thinking or planning about, we are actually taking action and executing.

We believe we have the right set of characterisitics and resolve and are very confident that we will succeed.

Marcel Velterop holds a master’s degree in chemical engineering and for the past 15 years has held several posts in global marketing and sales as well as strategy development. During the past 8 years he has been active in the global pharmaceutical industry with extensive experience in working with both India and China as well as NCE chemical development outsourcing projects in Europe. He joined Dr Reddy’s CPS in January 2004 as Director Sales & Marketing and recently took up the role of Vice-President Sales & Business Development Europe for CPS. He has been actively working with innovators both large and small within Europe providing solutions to a range of tailor made requirements.

Marcel Velterop: “Each scientist working at Dr. Reddy’s Laboratories is extremely passionate about his or her job”

Corporate responsibility

Q. Dr Reddy’s has a Foundation for Human & Social Development, which is a social responsibility program working with responsible citizens and Police, helping children attend school and adults find work. How important do you think this is for society and how do you expect this project to grow in the future?

A. Our corporate citizenship instinct is shaped by Dr. Reddy’s Foundation (DRF), a non-profit organisation setup by Dr. Reddy’s in 1996 that allows us to participate in society beyond business operations. The Foundation is pioneering innovative solutions for education excellence and sustainable livelihoods. Our multidimensional approach to CSR also includes employee giving and employee volunteering.

DRF is a social change catalyst that fosters, develops and promotes initiatives at individual/group/organisation levels to promote sustainable social development. To date over 60,000 underprivileged people have been trained by the Dr Reddy’s Foundation and have found employment. We hope to create one million livelihoods.

Aside from the passion within Dr Reddy’s that started this social initiative, society benefits greatly. It is hoped that many other companies will follow this example to maximise the positive impact such initiatives have in our society.