Analysis of Pharma Sector in India

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Analysis of Indian Pharmaceutical Industry
Dr. Reddy Laboratories

Table of Contents
Acknowledgement4
1.Industry Analysis5
1.1 Porter’s Five Forces Analysis5
2.DRL’s Present Strategy6
2.1Riding on Generics6
2.2Focusing on depth rather than breadth7
2.3 Leveraging strategic partnerships to reduce risk and investment8
2.4 Para IV filings9
2.5 Focusing on selected therapeutic areas9
3. Key Issues faced by DRL10
3.1 Poor positioning in India10
3.2 Russian Opportunity11
3.3 Failed Betapharm acquisition11
3.4 Reducing margins in EU market12
3.5 Lack in high-end R&D expertise12
3.6.Glaring gaps in drugs portfolio12
3.7Low gross margins and ROE12
4 Key Recommendations13
4.1 Regional Level Strategy13
4.2 R&D Strategy13
4.3 New Businesses Strategy13
4.4 Product Level Strategy13
5. Basis of Recommendations14
5.1 Consolidate in India14
5.2 Expanding presence in Russia15
5.3 Withdraw R&D and Manufacturing from Germany15
5.4 Expand into emerging markets of South Africa, Mexico and Japan15
5.5 Increased focus on Collaborative Research16
5.6 Aggressive focus on CRAMS17
5.7 Invest early into BioSimilars19
5.8 Expand Drug portfolio19
5.9 Expand into patented drugs market20
6. Implementation Schedule and Timeline20
7. Alternatives Considered21
8 Key Business Risks and Contingency Plan22
9. Appendix23
9.1 DRL Business Overview23
9.1.1 Overview23
9.1.2 Business Description23
9.1.3 Key therapeutic areas23
9.1.4 Key Products23
9.2 DRL Business Segment Overview23
9.2.1 Pharmaceutical Services & Active Ingredients (PSAI)23
9.2.2 Global Generics24
9.2.3 Proprietary products24
9.3 DRL Financial Analysis25
9.4 VRIN Analysis for DRL26
9.5 TETRA THREAT FRAMEWORK FOR DRL26
THE THREAT OF IMITATION26
THREAT OF SUBSTITUTION27
THE THREAT OF HOLDUP27
THE THREAT OF SLACK27
9.6 Indian Pharmaceutical Market Overview28
9.7 R&D Value Chain Analysis29
REFERENCES :30

Acknowledgement

We wish to extend our special thanks to Prof. Rejie George for giving us an opportunity to carry out the project work and for being a constant source of inspiration. Our thanks are due to Mr. R Vijaysarathi (Director, Central Quality Assurance, Dr. Reddy’s Laboratories) for giving us his precious time and helping us in completing the project. Their kind cooperation has helped us gain a better understanding of not just the organisation but the pharmaceutical industry as a whole. 1.

Industry Analysis

Industry Definition:

The exact industry for analysis can be defined by assessing two aspects: a. Product: On demand side medicines are usually differentiated and medicines for one particular disease/ailment cannot be substituted by that made for another disease/ailment. The customer has to buy medicines for treatment purposes. It is usually difficult to be substituted by any other commodity. However, the pharmaceutical industry can be divided on the basis of products into two parts- generics and innovators. b. Geographical scope: On demand side most of the demand for medicines manufactured in India is from Indian customers only. However, a significant portion of the manufacture has lately been exported. We shall be defining the industry based on manufacturing location and hence any company which has its manufacturing and/or R&D base in India shall fall within our purview. 1.1 Porter’s Five Forces Analysis

Applying the Porter’s 5 forces analysis (Table 1), it can be said that both industry segments are attractive, though the industry faces lot of churn and uncertain times. Table 1: Porter’s five forces analysis

2. DRL’s Present Strategy

Presently they are focusing on commercialization of new products for which the products are under trials at development stage, several new products have been identified after a thorough study of the market and the...
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