Dr Reddy's to focus on global market, inorganic growth

Chairman GV Prasad says the company has reached a critical mass where the growth will be smoother

Dr Reddy’s Laboratories Limited chairman G V Prasad said the management was well on course to building the company as a dominant global pharmaceutical player with the inorganic growth and globalisation being the driving theme.

He also said the company was able to achieve a much greater predictability in its business and had reached a critical mass where the growth will be smoother in contrast to the low and high performance cycles it had previously gone through.

“We believe that we are building a dominant global pharmaceutical company. We are still under-leveraging our capabilities but at the same time we are very focused on building a very strong organisation in terms of competitiveness,” Prasad told the audience at an endowment lecture event here  Tuesday evening.

After successfully passing through the initial phases of building a company with international scale operational and product capabilities Dr Reddy's focused on a large number of acquisitions, though of small size except in the case of betapharm, Germany, in the last decade. It had also entered into business development alliances with global companies and partners for access to markets, products, technologies and talent across the world. This, according to him, is a right strategy to continue in future.

From a small chemical ingredients company in the 80s it became India's second largest  pharmaceutical generics player with over Rs 13,000-crore revenues by spreading its footprint across all important product development areas, including the drug discovery and the niche biologics. For this to happen Prasad said thinking long-term was the underlining mantra.

“All the decisions are taken on a long-term basis. We don't mind paying a short-term price in that process. Many times we suffered by taking a long-term view. We had some variability in our performance but overall, it helped us build a much more sustainable organisation,” he said.  For some years, the company went through cycles of low and high performances. It had now crossed that stage, he added.

The company has introduced the concept of business units empowering its heads with end to end profit and loss responsibility, transparency in decision making, high degree of tolerance to errors, process orientation in place of individual supervision among other things.

However, Prasad admitted the excessive process orientation had led to some level of bureaucracy and complexity in the company's operations creating barriers to simple actions and agility.

While terming betapharm acquisition as one of the strategic mistakes, Prasad said the company had enough appetite for risk taking. “I am very comfortable about risks we are taking because we have restricted ourselves to pursue the pharmaceutical business. Within the industry we did take high risks and Dr Reddy (founder chairman Dr K Anji Reddy) himself was a great risk-taker, which worked very well sometimes but sometimes it could have its impact on the business,” he said.