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Saturday, February 17, 2007

The world is Dr Reddy's oyster

Almost everyone has heard of Dr Reddy's Laboratories or DRL. It is India’s second largest pharmaceutical company, which has just come out of a fairly challenging year and their mission now is to convert DRL into India’s first pharma company that makes drug discovery commercially viable. All set to do this are GV Prasad, Executive Vice Chairman & CEO of DRL and Satish Reddy, who is Managing Director & COO of DRL.

Both men are brothers-in-arms and brothers-in-law. GV Prasad is the intense one who "networks professionally" while Satish Reddy is the social butterfly who also loves travelling. Prasad admits to having been biased to his work over his family and he knows they have been understanding about it. But along with being a workaholic, he is also a nature lover and still manages to find the time to promote a bird sanctuary.

Prasad came from a construction business family and had started a bulk drug business in Hyderabad, which was then acquired by Dr Reddy’s. He then moved out of pharmaceuticals for a few years and went back to the family business. Then in 1990, one of the companies that Dr Reddy’s had promoted lost its CEO, who wanted to pursue his aspiration separately and then Dr Reddy’s asked him to come on board.

Prasad told CNBC-TV18, "Creating new businesses has been one of my strengths. It’s just the excitement of creating something, that didn’t exist and see growth, flourish and become self-sustainable and this is really what drives me."

Satish Reddy came into the business in 1993, and there was a bit of a crisis situation at that time. He admits he was not ready for the responsibility and it was more like being thrown in the deep end of a pool and told to learn to swim. He came back from the US with a Masters in medical chemistry and then went to work learning the ropes with Prasad.

Reddy elaborates, "I think the situation itself was such that it did put a lot of pressure on the company. So I did come into a situation which demanded quite a bit. In a sense, a core R&D team which really was the backbone of the pharmaceutical business because we were pretty much a bulk drugs company then, had left and they didn’t leave that much behind, except the old products which were there. So, you know to put the team back together to get new products back online - that was a crisis situation."

He says of Prasad, that he's very intense about things. Prasad says, it is about "passion and involvement, when I get caught up with an issue." Reddy confesses to being more moderate, someone who delegates a lot and is more of a people's person.

He says, "There are situations which require his (Prasad's) kind of personality, which really require someone who is hard driving and who makes sure that things get done and all that. Most of the times, we really complement each other."

But what have they learnt from Dr Reddy, about this business? Prasad says, "The two big lessons I've learnt from him are, one is to look at the forest always and be aware of the larger picture and not worry too much about the details and I think that’s something which has had a big influence on me."

"The other one is, to delegate and empower people. He has delegated to me and Satish. We can make huge mistakes as long as we are doing the right things for the organisation, he gives us so much power. So his faith in people is something which has been a big lesson for me."

Reddy adds, "The other thing is, he is extremely focused. If there is a certain job to be done, he just pursues it so hard, it really drives people crazy until the job is done. At the end of 1993 and early 1994, the company was a bulk drug company, he was very clear that it had to migrate into being a more of a finished drug company. He said we have to be a Rs 200 crore and the number five company in India. It was as simple as that. So that’s exactly what it turned out to be."

DRL did get there but how it got there is as much of a story. Prasad says, "First, I think is the commitment of the senior management. Dr Reddy himself personally drives this whole agenda for research. Second, the amount of resources we commit to this space with very little expectations of success because drug discovery by nature, is a very risky game. And third, the ambience we provide, the intellectual freedom we give to our scientists and the whole work culture that we built around our research organisation."

"Even before we went into the drug discovery, while we were doing bulk drugs, these are still very much research driven. So the organisation is very committed to research and hence creating a place, where scientists really love to be in, has been a fundamental defining point for Dr Reddy’s."

Reddy adds, "We empathize with the chemists much more because we have worked with them more closely, both he and I in different parts of the company. So, I think we tend to empathize with them in terms of what they need."

With the pressure of results and being responsible to shareholders, the management has got to learn to explain about long term goals and short-term projects. The challenge has been to allay fears if litigations arise, or soothe ruffled feathers, if gestation periods for a new drug takes too long. The most disappointing moment is ofcourse, when the clinical trials fail.

But perseverence is the name of the game. Prasad explains, "I think the big thing for me is to establish the company as a global player in the generic space and become meaningful in terms of size in that area. The second thing is, to really commercialize our innovation, to convert drug discovery into a business and third, to really prepare the organisation for the next generation of leaders and the next wave of growth."

Reddy says, "Right now, it’s still a very generics company. All the revenues we derive today are purely from selling generic products. We want to make the transition to an innovation-based company. We still don’t have any sales from innovation. So I think ultimately, a dream would be fulfilled when we actually see our own discovered molecule in the market across the world, that’s what really everybody is waiting for."

Dr Reddy's Labs is looking to grow organically, and is especially looking forward to being a global company in fragmented European markets. It is also open to making appropriate acquisitions, as and when the valuations are just right for their pocketbooks.

Prasad concludes, "As a industry, India has not seen innovation in any major way in any of the industries. I think the pharmaceuticals industry will be the first big industry to discover drugs and put them on global markets."

Written for www.moneycontrol.com

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