Dr. Reddy’s laboratories rank among the top five national pharmaceutical players


Based in Hyderabad, Dr Reddy’s Laboratories (DRL) aims to be among the top five pharmaceutical players in the domestic market by focusing on the chronic therapy segment. The United States would remain an important geographic area, but the company says it hopes to double its revenue from China and increase its revenue in Brazil fivefold over the next five years.

The company has set an ambitious strategy for its next stage of growth where it says by 2027; at least 25% of its products will be “first-to-market” generics, meaning they will be affordable versions of innovative products. (see box) It also aims to launch three innovative products that improve treatment standards every year.

GV Prasad, co-chairman and managing director of Dr Reddy Laboratories (DRL), told Business Standard: “In India, we want to increase our share of the chronic market where we are underrepresented, and we can invest there for a inorganic expansion if we find the right fit in terms of size and price etc. We’ve done it before, like Novartis’ cardiovascular product.

Prasad added, “We want to grow in India in the spaces that are relevant to us, and want to do that organically and inorganically.”

He said they have diversified their efforts from the United States to other markets and shifted their capital allocation to markets like India. “In India, we have made brand acquisitions over the past few years. We continue to work in the United States, but we have allocated more capital to India,” Prasad said.

The United States has been a priority market for DRL for years and still contributes around 35% of its consolidated revenue. But other markets are catching up fast – India and emerging markets together have $1 billion in revenue, roughly the same size as US revenue.

The US company recorded a CAGR of 5% between FY19 and FY22, and DRL has a portfolio of 335 products, with more than 160 in the market, and the rest in various stages of development.

However, the generic market in the United States has faced competition and price erosion with the entry of new players. The Indian market, on the other hand, is a market for branded generics. Although it takes time to build a brand, once one has a strong brand, the returns are quite steady.

“In India, the price remains stable and the brand continues to grow. Even in mature brands, there is growth. In the United States, you don’t have pricing power. When you have a brand, you have pricing power. But in generics (like in the US), when a new player comes in, you can quickly lose market share.

He added that you can also gain market share very quickly in the generic market. “Nobody can leave the US market because it’s one of the biggest markets in the world, and the growth is also good,” he said.

DRL plans to move up the value chain in the United States – out of the 175 product pipeline, about 40% are injectables or sterile products and about 25 are complex products.

That aside, China is another key market where DRL aims to do well now with a faster regulatory approval process.

“Chinese regulations now allow that if a product is approved in the United States, then on that basis the product can also be approved in China. The process takes about two to three years,” says Prasad, adding that it is mainly the US pipeline that they take to China. Russia, which is largely an over-the-counter (OTC) market, is also growing rapidly, says Prasad. “About 35 to 40% of this market is OTC and so if you have a force on the ground, it is possible to gain market share in Russia. We will continue to launch products there,” he adds.

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