TABLE OF CONTENT

Executive Summary Introduction

S.No .
1 2 3 4

Contents

Page No.
5 7 11 12

Objective About Dr. Reddys Lab. Ltd. a) History of company b) Board & Management

5 6 7

c) Infrastructure Pharmaceutical Industry Heriarchy of marketing department Molecule Introduction a) Gemifloxacin b) Deflazacort

17 26 27

8 9 10 11 12 13 14 15 16 17 18

c) Doxophylline Managing sales force Product positioning Competitor analysis SWOT analysis Field work Market surfing Research & methodology Data analysis Finding Recommendation Conclusion
1

30 31 32 35 37 39 43 45 55 56 58

19 20

Bibliography Questionnaire

59 60

EXECUTIVE SUMMARY The objective of the project was to evaluate the present market share of DRL, deal with retailers to lure more customers and to ultimately increase its market share. To complete this project, a survey was conducted on retailers with the help of questionnaire in the SITAPUR. The sample size was decided by Mr. Nandan Singh, which were 42 retailers. All the retailers selected in the sample had all three products of DRL (Doxobid, Gem One, and Asteroid). After the survey, it was observed that sale of all three drugs is good and the same would directly have an impact on the market share of the company. In SMS Hospital region, a lot of marketing strategies had been already applied by the company. Among these

strategies, strategy for Asteroid was an absolutely new concept and it had an innovative way to attract more & more retailers. The basic purpose of these strategies is to enhance the demand of products by temporarily increasing their value to the purchaser. A major area of improvement that the company should look at is retailer awareness about retailer centric schemes. The same came to light during the survey, wherein it was observed that most of the retailers do not have proper information even about retailer centric schemes being offered by the company. The MR of the company is doing his job with good result; they are well equipped with product scientific knowledge. They should be properly equipped by complete knowledge of the products so that they can give proper knowledge to the retailers. The company should be more liberal in giving the little bit knowledge to retailer about the products so that they can sale companys products.

Board & Management Team Whole-Time Directors-

Dr. Anji Reddy Chairman

G V Prasad Executive Vice Chairman and Chief Executive Officer

Satish Reddy Managing Director & Chief Operating Officer

Management Team-

Abhijit Mukherjee President,Pharma Services & Active Ingredients (PSAI)

Amit Patel Senior Vice President & Head - North America

Dr. Cartikeya Reddy Senior Vice President & Head- Biologics

Jeffrey Wasserstein Executive Vice-President, NA Specialty

KB Sankara Rao Executive Vice President, Integrated Product Development

Prabir Jha Senior Vice President,& Global Chief- HR

Advisor, Legal & Strategy

Dr. Rajinder Kumar President, R&D, Commercialization

Saumen Chakraborty President- Corporate & Global Generics

Umang Vohra Senior Vice President & Chief Financial Officer

VS Vasudevan President & Head of Europe Operations

Vilas Dholye Executive Vice President & Head Formulations Manufacturing

INTRODUCTION
Indias second largest pharmaceutical company by revenue, Dr Reddys Laboratories Ltd (DRL) .The Company consists of Active Pharmaceutical Ingredient Business (API), Custom Pharma Services (CPS), Generics, Generics Biopharmaceuticals, Differentiated Formulation, New Chemical Entities (NCEs).

API CPS

Dr. Reddys Business Generics Generics BioPharmaceutica ls Differentiated Formulation NCEs

API include Ciprofloxacin, Omeprazole and Sumatriptan Succinate of Canadian DMFs, Ibuprofen, Ranitidine HCl form 1 and Cipro HCl of CEP and Omeprazole,S+Ibuprofen and Valsartan, Ramipril, Risedronate Sodium and Nizatidin of US DMFs. Its CPS is, the largest CPS player from India and a partner-of-choice to innovators, offering top-end technical expertise, tailor-made pharma solutions and a track record of bringing innovations to the market quickly, efficiently and economically. Generic business of company is always a challenge for other pharma companies. It includes branded 8

generics and unbranded generics. In the branded generics include Omez, Ciprolet, Nise, Enam, Ketorol, Exifine and Cetrine enjoy leadership positions in several key markets, including India, Romania, Venezuela, Russia & the CIS countries. Dr. Reddys brands are available in nearly 100 countries and generate revenue is more than Rs.69.4 billion. Some of DRL's brand names are old as its age, but the corporation is relatively young. DRL was founded in 1984 by a simple man Dr. Anji Reddy. Betapharm (Germany) was acquired in 2006 (which is the fourth largest generic producer in Germany), with the help of this company.DRL is able to covered a large market share in the generic section in the global market. DRL offers product choices to meet a broad variety of needs and preference - from funfor-you items to product choices that contribute to healthier lifestyles. DRLs aim is To provide affordable and innovative medicines for healthier lives. We serve societys important needs for affordable medicines through the API component of PSAI and the Global Generics business, and for innovative products that solve unmet medical needs through the CPS component of PSAI and the Proprietary Products Businesses.

Shareholders DRL (symbol: RDY) shares are traded principally on the New York Stock Exchange in the United States. The company is also listed on the NSE (symbol: DRREDDY) and BSE stock exchanges. DRL has consistently paid cash dividends since the corporation was founded. Following table show the complete history of dividend:

DIVIDEND HISTORY
Year ended Interim % Final % Total %

2000 01 2001 02 2002 03 2003 04 2004 05 2005 06 2006 07 2007 08

100 -

40 50 100 100 100 100 75 75

40 150 100 100 100 100 75 75

Corporate Citizenship DRL, as a corporate citizen, have a responsibility to contribute to the quality of life in the communities. This philosophy is expressed in the sustainability vision which states: DRLs responsibility is to continually improve all aspects of the world in which we operate environment, social, economic -- creating a better tomorrow than today. The vision is put into action through programs and a focus on environmental stewardship, activities to benefit society, and a commitment to build shareholder value by making DRL a truly sustainable company.

DRL Headquarters DRL World Headquarters is located in Hyderabad (Andhra Pradesh). The headquarter is beautifully designed according to environment of Hyderabad. The manufacturing units consist all the essential facilities which is necessary for an organization. 10

The collection of works is focused on major twentieth century art, and features works by masters. The gardens originally were designed by the world famous garden planner, Russell Page, and have been extended by Franois Goffinet. The grounds are open to the public, and a visitor's booth is in operation during the spring and summer.

OBJECTIVE OF THE STUDY

Analysis of the Doxophylline, Gemifloxacine and Deflazacort in SITAPUR; Impact of schemes on sales; To give recommendations for enhance market share; To analyze the proper functioning of drugs; To check out the availability of drugs;

11

 To study the factors which are important to attract the customers; Kind of distribution channel adopted by company; To know about salesmans effectiveness & attitude.

HISTORY OF DR. REDDY

Kallam Anji Reddy of Tadepalli village , Andhra Pradesh is a pharmacist. He completed his study in science stream in India . He started his career working for the state owned Indian Drugs and Pharmaceuticals Limited. He was the founder managing director of Uniloids Ltd and worked there from 1976 to 1980 and Standard Organics Limited where he worked from 1980 to 1984.

In the year 1984, Dr. Reddy laid the foundation of Dr. Reddy Laboratories Limited in Hyderabad.

The company established

new standards in the Indian Pharmaceutical Industry and

transformed the Indian bulk drug dependency of the mid-80s into a self-sufficient industry in the mid-90s. Finally the Indian Pharmaceutical industry developed into an export-oriented industry and ever since continues to remain the same. In the year 1993, Dr. Reddy's Laboratories emerged as India's first drug discovering company and on 12

April 2001 it was the first non-Japanese, Asian pharmaceutical company which was listed on New York Stock Exchange. During 90s, the company introduced branded finished formulations in the less regulated markets in CIS, Middle East, South East Asia and 8Africa. From late 90s, the company has started exploiting US patent and regulatory system to introduce generic products in time, to gain market exclusivity and establish brand image. It is the first Indian based company to receive 180 days exclusivity for a generic drug in USA. Its latest product Amlodipine Maleate has made a sale of US$ 2.0 billion during 2002. The company has global operations with a strong focus on US, Europe, Russia, China and India. Its portfolio of products consists of 70 Active Pharmaceutical Ingredients (API), 100+ Branded Formulations, 11 Generic

Pharmaceuticals, 1 Specialty pharmaceutical, 7 new chemical entities in clinical trials. It has world class manufacturing facilities consisting of 6 US FDA approved API plants, 7 formulation plants out of which one is dedicated for US and European market. Its sales turnover for2002-03 was US$ 380 m. This comprised of 35% API, 38% Branded Formulations, 24% Generics and others 3%. Its revenue came from US (32%), India

(36%), Russia (9%), Europe (8%) and others (15%).

DRL says it is keen to generate new streams of revenue in order to continue growing and beat the competition in manufacturing where barriers to entry are comparatively less. DRLs strategic move is geared towards exploiting an emerging opportunity in the global pharma industry. Multinationals are now increasingly looking at outsourcing business functions such as process synthesis, analytical development, and 13

manufacturing, to focus on drug discovery and brand management in an attempt to develop cost effective business models, according to a report by consulting firm KPMG and the Confederation of Indian Industry, a lobby group. DRL is positioning itself as a service provider that will enable companies to take their innovations to the market in the most cost-efficient and least time consuming fashion. For DRL, building a sustainable organization is not a trend it blindly follows; it is intrinsic to how it has operated for decades. To it, a commitment to sustainability means a commitment to fulfilling its obligations to all of its stakeholders -- its customers & partners, employees, shareholders and society. Thus, while optimizing profitability may be one measurement of its performance, it also judges its success by its performance with regard to the communities in which it lives and work, the environment and its employees. DRL understand that it is only by increasing value to all of its stakeholders that it can build an ever flourishing and lasting organization. The capabilities of DRL are:

Deep Manufacturing Expertise

Globally Synchronize Supply Chain

Regulatory Performance

Quality & Product Responsibility

14

DRL GROUPS INFRASTRUCTURE Manufacturing Bandwidth & R&D Capabilities:

1. Pharma Services & Active Ingredients 6 FDA-inspected plants in INDIA 1 Cytotoxic facility 1 FDA-inspected plant in Mexico 1 FDA-inspected plant in Mirfield, UK (2 in Hyderabad, INDIA; 1 in Cambridge, UK)

2. Product Development Integrated product development capabilities, that include API development, formulation development and analytical development skills One Integrated product development facility in Hyderabad, India

3. Global Generics-

6 Formulation plants in India ( 1 USFDA inspected) 1 USFDA inspected plant in USA

4. New Chemical Entities-

15

Conduct research in areas of metabolic disorders, cardiovascular indication and cancer

5. Biologics-

Biologic development centre GMP production E coli and mammalian cell platform

INDIAN PHARMACEUTICAL INDUSTRY 6. Introduction:

Globalization is widely seen as a dominating phenomenon of 21st century encompassing world wide integration of financial systems, trade liberalization, deregulation and market opening resulting in a global market and patterns of industrial development. In last few decades it is evident that firms and institutions from peripheral countries or developing world are making sustained and deliberate effort to take advantage of the new opportunities. The rise of East Asia followed by growth in China and India has led to emergence of new breed of Multinational Enterprises (MNEs) from these countries. By the end of 2004 China emerged as fifth largest outward direct foreign investor with a total US $ 37 billion and was the third largest exporter after Germany and the US (Child and Rodrigues, 2005). Similarly albeit on a smaller scale in 16

the last decade Indian economy saw a dramatic growth in overseas investment by the Indian industry. The firms from latecomer countries are making inroads in sectors such as manufacturing (steel and pharmaceuticals) and services (IT) and trading as well as high technology sectors like semi-conductors. Some of the firms such as Infosys, Lenovo, Ranbaxy and Espat are now competing at a global level. Multinational enterprises from developing countries are a clear representation of a sustained increase in outward Foreign direct investment (FDI) from developing countries which has risen from $60 billion in 1980 to $ 869 billion in 2000 and to a total in excess of $1trillion for the first time in 2004 (UNCTAD, 2004). Outward FDI from developing countries accounts for more than 10 percent of the worlds outward FDI. The rise of outward FDI and new MNEs that embody it, from economies such as India, China, Korea, Singapore, Malaysia and Taiwan is a key phenomenon for the world economy in last decade. It shows that firms from developing countries are rising to compete at the frontiers of the world market and this research also focusing on the strategies they have adopted to achieve that.

The first wave MNEs from the developing world documented by authors such as Kumar and mcleod (1981) and Lall (1983) succeeded as international players despite many difficulties. Their success was due as much to the difficulties encountered at home as to the incentives driving internationalization. One of the most salient features of first wave MNE activity is the direction and motivation of FDI compared to western MNEs. Much empirical work on first MNEs indicated strong and marked trend investments in neighboring and other countries which were at a similar or earlier stage of their development. Prominent first wave countries such as India, Philippines, Argentina and 17

Columbia did not show any significant increase in either the level of the total outward FDI, nor a significant shift towards developed country hosts. But the arrival of the second wave MNEs from developing countries represents quite a different phenomenon. First wave countries experienced very low or negative economic growth rate whereas second wave countries grew rapidly over the intervening decade and half. This has been further enhanced by fundamental changes in the world economy which were a direct result of globalization. Globalization has created a more broad and competitive market across countries due to convergence of production and industrial patterns. As a result firms need to have 4 competitive advantages that are globally viable rather than domestically. Most of these developing countries also went through a fundamental shift in the policy orientation from an import substituting role to an export oriented outward economy. Firms in these countries now faced competition in domestic market with global firms and needed upgrade their capabilities to survive. These changes had a profound impact in creating a second wave of MNEs from developing countries. Therefore Mathews (2006) argues that analysis of second wave requires different perspectives that differ from those created to account for outward FDI from developed countries, and the first wave of MNEs from developing countries. Initial analysis of second wave of MNEs reveals that overseas move of firms in the second wave is a result of the pull factors that are drawing firms into global connections unlike push factors that drove firms as stand alone players in the first wave (Mathews, 2006). Dunning et al. (1997) suggest that in the case of second wave of MNEs from East-Asian countries such as Taiwan and Korea were subsidized by governments with government policy interacting with firm strategies. The rise of second wave MNEs from emerging countries is less driven by 18

cost factors per se, but more by a search for markets and technological innovations to compete successfully in the Global economy (Yueng, 2000). The sudden appearance of the second wave of firms and their capacity to create competitive positions to existing incumbents has raised interesting questions as they are not simply occupying space vacated by incumbents instead in many cases they are creating new economic space by their organizational and strategic innovation. Thus the changes in the world economy, specifically its globally interlinked character is responsible for driving the new approaches to and patterns of internationalization in firms from peripheral countries. Therefore Mathews (2006) suggests that existing theories and framework of internationalization have failed to capture organization and strategic innovations adopted by developing country MNEs for new modes of internationalization. In this context the Indian pharmaceutical industry provides an ideal case to investigate approaches and motives of second wave MNEs firms from developing countries. From the beginning of the 1990s, the Indian government started liberalization by removing restrictions on trade such as regulations on FDI and opened Indian market to overseas firms. As a result of liberalization policy Indian Economy witnessed dramatic growth, changes in domestic market and firm activities specifically in relation to overseas expansion strategies. The cumulative number of overseas project approved during the 1990s is estimated to be 2652, a nearly 11 fold increase from the number of projects permitted during 1975-90 (230) (Pradhan,2004). The growth of overseas investment is been characterized by significant changes in location and sectoral distribution. In the 1990s the majority of investments has originated from the service sector and was increasingly developed country-oriented with majority ownership in most cases. The

19

most important destination of Indian outward FDI to date is the USA which accounted for 19% of total cumulative outflows from 1996-2003. In 2005 Indian firms acquire 136 firms overseas with a total value of US $4.3 billion. The Indian pharmaceutical Industry is at the forefront in international expansion compared to other manufacturing sectors in the Indian Economy.

The Indian pharmaceutical industry is the thirteenth largest in the world in terms of market output; accounting for a market of about US$ 2.5 billion (Ramani, 2002). It is ranked as the most advanced pharmaceutical industry amongst developing countries and is one of Indias best science-based industries. Indian firms have been investing abroad for many years but it is only since the late-1990s that outward FDI flows have risen considerably. The liberalization of government policies and relaxation of regulations on FDI abroad have helped Indian firms to expand internationally. In the last decade some Indian pharmaceutical firms have successfully internationalized their operations and emerged as a major producers and suppliers of generic drugs all over the world. This study of internationalization motives and strategies adopted by Indian Pharmaceutical firms. In the absence of more systematic longitudinal firm level data this research is based on case study evidence. The findings suggest that Indian pharmaceutical firms are accessing advanced markets and acquiring new technology through the process of internationalization. Indian firms augmenting existing skills in production capabilities and process R&D by acquiring technology focused firms in advance markets. The analysis suggests that Indian pharmaceutical firms have adapted to the realities of globalization and are finding new niche through the process of internationalization.

20

2. The Indian pharmaceutical industry: India currently represents just US $6 billion of the $550 billion global pharmaceutical industry, its share is increasing at 10 % a year. The organized sector of Indias pharmaceutical industry consists of 250 to 300 companies, which accounts for 70 % of the market, with the top ten companies representing 30%. The Indian pharmaceutical industry has developed wide ranging capabilities in the complex field of drug process Development and production technology. It is well ahead of other developing countries in process R&D capabilities and the range of technologically complex medicines manufactured. The Indian government adopted a new Patents Act in 1970, which laid the foundations of the modern Indian Pharmaceutical industry. It removed product patents for pharmaceuticals, food and agro-chemicals, allowing patents only for production processes. The statutory term for production processes was shortened to five years from grant or seven years from application. The 1970 Patent Act greatly weakened intellectual property protection in India, particularly for pharmaceutical innovations. It started the era of reverse engineering where firms developed new products by changing their production processes like Dr. Reddy. Trained manpower, comparative ease of imitation and a strong chemistry base among Indian research institutes supported manufacturers and gave the Indian pharmaceutical industry its current profile. The industrys exports were worth more than US $ 492.30 in 2005-06 and they have been growing at a compound annual rate of 22.7 percent over the last few years (National pharmaceutical policy, 2006).

The value of the Indian Pharmaceutical industrys overseas acquisition has grown from just US $8 million in 1997 to $116 million in 2004. Indian firms have acquired over US 21

$1 billion worth of pharmaceutical companies overseas in 2005. There are 3 developments which are pushing expansion of the Indian pharmaceutical industry into overseas markets;

A. Opportunities opened in the US generic market due to the Hatch-Waxman Act, B. Increasing outsourcing by MNC pharmaceutical firms and C. Strengthening of patent laws in the domestic market. D. Implement all these techniques in India for producing good medicines.

These three developments are creating new challenges and opportunities for Indian industry and internationalization is one of route adopted by Indian to succeed in this new environment. The generic opportunity is a result of the passing of the Hutch Waxman Act in the US in 1984. Under this new law, manufacturers of generic drugs no longer had to go through a lengthy period of extensive clinical trials in order to market a generic drug - demonstration of bio-equivalence was sufficient to acquire a patent on a generic drug. procedures were established for the resolution of disputes between branded drug manufacturers and generic manufacturers. Western markets were a lucrative business opportunity and the low cost advantage enjoyed by Indian firms on account of the cheap availability of scientific labour combined with scale economies inherent in the manufacture of bulk chemicals made for big margins. Between 1999 and 2005 drugs worth $ 64 million went off patent allowing generic companies to take advantage of better business opportunities. In the generics industry prescription drugs worth $40 billion in the US and $25 billion in Europe are due to loose patent protection 22

by 2007-08. In 2004 the US senate passed the Greater Access to Affordable Medicine Act diluting some of the proinnovator provisions of 1984 Hatch-Waxman Act, giving a big boost to the generic business in the US. Similarly Europe is emerging as a key market and a potential growth driver. The size of market in 2006 was US $ 14.2 billion with Germany, France, the UK and Italy accounting for more than 50% of market. Governments in Europe are trying to reduce healthcare costs by embracing generic drug companies. Liberalization facilitated the ability of Indian firms to exploit this opportunity to market generics drugs to the US and other Western economies. Indian firms are preparing themselves to take a share of this increasing global market. Indian drug manufacturers currently export their products to more than 65 countries worldwide; the US being the largest customer. However Indian firms face some difficult challenges such as non tariff barriers, decreasing profits in the generics market, competitive threats from big pharma MNEs and reputation in western markets. For example, US regulation disqualifies Indian firms from bidding for government contracts and Indian firms have to submit separate Applications for each state even when firms have FDA approved products and facilities. Another challenge is the reduction in profit margin due to intense competition from Chinese and Eastern European manufacturers as well as authorized generics produced by main manufacturer. Currently Indian industry is estimated to account for 22% of generics in the world market. Indian firms are aiming to move up the value chain by developing capabilities to produce super generics rather than generics generics to branded generics.

23

Furthermore, stronger patent protection under the new patent law of 1999 has shut down the avenues for exploitation of generics opportunity in domestic market, but promised large rewards to Indian firms that could leverage their reverse engineering capabilities in advanced markets. The stronger patent law restricts reverse engineering of newly patented molecule, thus affecting an important source of growth for Indian firms. Also multinational pharmaceutical firms have entered India after 2005 and using the same resource base as Indian firms to compete in the Indian domestic market further increasing pressure on profit margins of Indian firms. The contract research and manufacturing services (CRAM) market has emerged as huge opportunity for the Indian pharmaceutical industry. According to Frost and Sullivan (2005), the global outsourcing market is worth $37 billion and growing at almost 11%; 50% of the contract manufacturing market is in North America, 40% in Europe and just 10% in Asia and the rest of the world. Indian firms possess requisite capabilities to cater for the requirements of outsourcing markets, still India accounts for barely 1.5% of the global CRAM industry. Due to untested patent protection law and lack of data protection MNC firms are reluctant to outsource early stage R&D work to Indian firms. Therefore Indian firms are trying to increase their share in the outsourcing market by moving closer to the market.

Geographically the overseas acquisition by Indian pharmaceutical firms continues to be directed at developed countries specifically the US and Europe (Table 1). Out of 32 acquisitions listed in Table 1 only 6 are in developing markets and the remaining rest of 26 are in advanced markets such as the US and Europe. The major acquisitions are in

24

the area of marketing although some companies are investing in building manufacturing and R&D capacities in developed markets. Indian companies have already established manufacturing plants in the US, Europe, Brazil, Russia and China.

Table 1 Recent acquisition by Indian pharmaceutical firms

Company Dishman Pharma

Focus area Contract manufacturing and research

Year 2005

Target Syprotec (UK)

Value US $ Million 93.5

Dr. Reddys Laboratories

service US generics, speciality products, APIs, formulations, custom synthesis

2004 n/a

Trigenesis (US) BMS Laboratories and Meridian

11 16

2005

Health care Roches API Business (Mexico)

59

Glenmark

Drug discovery

2006 2004 25

Betapharm Kinger Lab ( Brazil)

572 5.2

Pharma Hikal Jubilant Organosys

research, formulations APIs contract manufacturing CRAMS, pharma speciality, chemicals, intermediates, formulations, medical (US) chemistry and clinical

2005 2005 2004 2004 2005

Uno-Ciclo (Brazil) Servycal SA (Argentina Marsin (Denmark) PSI (Belgium) Trinity Laboratories (along with subsidiary Trigen

4.6 n/a 6 millio for 50% stake 16 20.25 million for 75% stake

2005

Laboratories ) Target Research Associates

33.5

Matrix Labs

services CRAMs, generic APIs, intermediates and formulations

2005 2005 2005 n/a

MICHEM (China) (JV) Docpharma (Belgium) Explora Laboratories (Switzerland) Fine Chemicals corp (South

n/a 263 n/a n/a

Nicholas Piramal

CRAMS space contract

2004 2004

Africa) Doubtrex brand acquisition (US) Rhodias inhalation business

n/a 14

manufacturing, APIs, branded formulations 2005 (UK) Biosyntech (Canada) 6

26

2005 Strides lab Generics, OTC and 2005 nutraceuticals 2005

Avecia Pharma (UK) Manufacturing plant (Poland) Beltapharm (Italy)

16.9 8 EUR 1.6 million (70%

Sun Pharma

Branded formulations, US generics, APIs US and Europe generic Markets

2005

Two facilities from Valent

stake) 10

Ranbaxy

1997 2005 2008 2004 n/a

Pharma (Hungary, US) Caraco (US) Able Laboratories (US) Dai Chii Sanque RPG Aventis (France) 18 generic products from Efarmes

7.5 23.15 84 n/a

2005

S.A. (Spain) Brand veratide from P&G

Torrent

Formulations, European generic

2005

(Germany) Heumann Pharma (Germany)

n/a

Zydus Cadilla Wockhardt

Market Contract manufacturing and generics Biogenerics, US and Europe generic

2003

Alpharma (France)

6.6

2003 2004

CP Pharma (UK) Esparma (Germany)

20 11

27

market, Branded generics

The major Indian companies such as Ranbaxy, Dr. Reddys Laboratories, Wockhardt and others have established their own brand image in the international market as well as domestic market and are taking steps to consolidate their activities.

Indian firms are compensating for the spiraling cost of selling and marketing in advance countries by setting wholly owned subsidiaries or acquiring local firm. Thus reinforcing the argument that Indian firms internationalization through acquisition is directed towards acquiring new knowledge in different areas such as R&D capabilities, regulatory skills and distribution networks.

7.

Firms under investigation

The findings of this research are based on the study of internationalization motives and patterns adopted by five well established Indian pharmaceutical firms, viz. Ranbaxy Laboratories, Dr. Reddys Labs, Wockhardt, Nicholas Piramal and Sun Pharmaceuticals Ltd.

Table 2 Firms under investigation

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Name of the Firm

Year established

No. of overseas Manufacturin g Plants

No. of overseas

Turnover (2008)

% of turnover from overseas (2008)

IPO

acquisitions RS. from 1990 Million

Ranbaxy

DRL Wockhardt NPIL Sun

1962 1984 1959 1988 1983

8 2 3 5 4

11 4 4 3 3

41205.88 50006 26531.54 28789.1 32776

69.90 79.1 70.55 71.67 68.78

1994 2001 2003 2007

All these firms are privately owned business with family ownership and ranked amongst top ten firms in India. Table 2 shows that large part of their turnover comes from overseas markets while advance regions such as US and Europe account for more than 80% of overseas revenue. All these firms raised money through IPOs (Initial Public Offerings) before embarking on the overseas acquisitions.

But my focus is only on Dr. Reddy, through this analysis we can find out that in the previous time period the pharmaceutical companies were interested in overseas development but now the scenario is changed completely. These companies are focusing in the national market with the help of using generic patent off drugs by changing their process and their contents.

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Dr. Reddys M&A:

Table No. 3 DRLS Mergers & Acquisitions:

S.No. 1 2

Year 2002 2004

Acquired Firm
BMS laboratories and Meridian labs Tregenesis (US)

Focusing Area
UK generics market Specialty products access

Value
US $16 million US$11 million

drug delivery platforms in the

3 4 5 6 7 8

2005 2006 2008 2008 2008 2008

Roches Generic Business (Mexico) Betapharma (Germany) Jet Generici SrI Dow Pharma (UK) BAFS-SE Pharma(US) Perlecan Pharma Pvt. Ltd. (India)

dermatology segment US generics market European Generic Market Itly Generic Market Small molecule business Performance Products, Functional Solution Indian Manufacturer of Functional solution

US $ 59 million US $ 572 million n/a n/a n/a n/a

With the help of this table(Table:3) it is clear that DRL shown their presence in the pharmaceutical industry by a large number M&A. DRLs international and national marketing successes were built on a strong manufacturing base which itself was a result of

30

inorganic growth through acquisition of international and national facilities. DRL merged with Cheminor Drug Limited (CDL) with the primary aim of supplying APIs (active pharmaceutical ingredient) to the technically demanding markets of North America and Europe. This merger also gave DRL entry into value added generics business in the regulated markets of APIs. DRL began its major international production by entering Russia through a joint venture with Biomed in 1992 and in 2002 DRL converted the joint venture into a fully owned subsidiary. It strengthened its Indian manufacturing operations by acquiring American Remedies limited in 1999. This acquisition made DRL the third largest pharmaceutical company in India, after Ranbaxy and Glaxo (I) Ltd., with a full spectrum of pharmaceutical products, which included bulk drugs, intermediates, finished dosages, chemical synthesis, diagnostics and biotechnology. So through this way now DRL is the secong largest pharmaceutical company in the India.

Flow Chart: DRLs Expansion in the World

THE HIERACHY OF MARKETING DEPATMENT

CHAIRMAN

31

SENIOR DIRECTOR

Sales Manager (SM)

Production Management Team

(PMT)

North-West South Sales East Manager Sales Manager

Group Therapy Management

Regional Manager Product Manager Area Sales Manager Scientific Business Officer (SBO)

Professional Service Representative

MOLECULES INTRODUCTION

WHAT IS GEMIFLOXACIN?

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Gemifloxacin is a synthetic broad spectrum antibacterial agent for oral administration. Gemifloxacin, a compound related to the fluoroquinolone class of antibiotics, is available as the mesylate salt the sesquihydrate form. As recognized by the US Food and Drug Administration in their approval statement for gemifloxacin in April 2003, it is the only agent that displays activity against both fluoroquinolone target sites at therapeutically achievable levels. Clinical success rates ranged from 93.9-95.9% in patients with community-acquired pneumonia and 96.1-97.5% in those with acute exacerbation of chronic bronchitis. Gemifloxacin is a dual acting fluoroquinolone with excellent activity against S. pneumonia including those strains demonstrating resistance to other classes of antibiotics. Gemifloxacin targets both DNA gyres and Topoisomerase IV of S. pneumonia. The brand under this molecule is GEN ONE .

WHAT IS DELAZACORT (ASTERIDE)? Deflazacort, a synthetic oxazolone of prednisolone with 0.84 times anti-inflammentory effect of prednisolone. When in-vitro immunosuppressive effect of deflazacort, a new bone-sparing glucocorticoid, and its biological active metabolite, 21-deactyl deflazacort, was examined on phytoaemagglutinin (PHA) stimulated human peripheral blood lymphocytes (PBL) as well as on natural killer and killer cell activity, Deflazacort and the 21-deacetyl metabolite were as potent as prednisolone and hydrocortisone in suppressing PHA stimulated lymphocytes in a dose dependent way. On visit 2, FEV1:122.2 and 126.5 %( p<0.05); PEFR: 164 AND 149 L/min ( p<0.05) ; symptoms score: -4.4 and -3.8 ( p<0.05). On visit 3 all variables continued to show

33

improvement: FEV1: 133.2 and 132.5% (p<0.05); PEFR: 1115.7 AND 187.6 L/min (p<0.05); symptoms score: -5.4 and -5.9 (p<0.05).

WHAT IS DOXOFYLLINE? Methylanthine are a group of structurally related substances, used in the clinical management of patients with obstructive respiratory disorders, in particular chronic obstructive pulmonary disease (COPD). Their effect is a generalized dilation of the bronchi that reduces the overall resistance of airways to the airflow, improves blood gas exchange, and decreases the respiratory effort.

PRODUCT POSITIONING

DRLs market share on the basis of positioning strategy-

34

COMPETITOR ANALYSIS

The major competitor of DRL through out the survey area is Macleod. Following will give a brief of the competition between the rivals:

Although the goals of both the companies are the same, the two companies rely on somewhat different marketing strategies. DRL has always taken the lead in developing new products. Further, DRL has always taken more risks, acted rapidly, and was always developing new drugs at a lower cost than Macleod

In the foreign markets, DRL has been more successful then Macleod. In the 35

Middle East countries DRL has a good strength than Macleod & now in India DRL has established new plants for increase the production of drugs so now it can export ready medicine instead bulk.

While Macleod has been playing safe with introducing new drugs with good working and trap the market share than DRL. DRL has introduced a new drug in deflazaort category-Asteroid, to cover the area of asthma drugs and it is going in good direction.

DRL has positioned itself as a quick copy which is considered to be more modern and lively as compared to other companies because in this industry any company is not sure about its share. Also, DRL has always played around innovations so as to lead the market.

This chart show the market share of DRL & Macleod:

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In the same manner for ths gemifloxacin molecule the main competitor is Gicin, cmpany is using same strategy for this molecule product(Gem One). The condition is cleared with the chart.

The third molecule for analysis is Deflazacort, the market share of DRL for this molecule is smaller than other companies product. As we know the pharmaceutical industry is fragmented industry, so it is quite difficult to a company to rule over market with one product. DRL is also doing work on this drug & strenghning the marketing strategy for this drug. The market share of this drug is cleared by following chart-

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Conclusion:-

According to study DRL is maintaining its position as a quick copy who introduces drugs on the basis of patent off pattern. For existing in the market always innovation is necessary.

SWOT ANALYSIS
STRENGTHS-

Aggressive decision maker Cost leadership 38

Tactful reengineering process Copy the manufacturing process of patented drugs Adapting quickly changed environment Quality of drugs Cross licenses , joint ventures & alliances Talented workforce

WEAKNESSES Concentrate only process improvement Marketing arms are split Mainly focused on bulk drugs Focus on therapeutic segment

OPPURTUNITIES: Develop new process Research driven company Sustain for growth & diversification

Field Work

Market Analysis of Doxophylline, Gemifloxacin, Deflazacort SITAPUR 39

The product of these molecules is, Doxophylline- Doxobid, Gemifloxacin- Gem One and Deflazacort- Asteroid. These drugs are prescribed by doctors to the asthma patients and availability of products on the shops depends on the medical representatives. My job was to visit all the chemists of main five hospitals area in the SITAPUR. The name of hospitals are1 Sethi Hospital 2. Dr Dhawan Clinic 3. Sakshm Nurasing home 4 Pragti Nurasing home

During the initial stage of the project, I came to know about the all the brands of these molecules of existing companies. On visiting chemists on various routes, I realized how important a strong distribution channel was for a company to be able to retain its position as an industry leader. I used to visit all the retail outlets of a particular route each day and learnt how to applied a companys drug in the market, how to tackle the various problems related to knowledge of drug to the doctor & chemist. Having done this, an overall market scenario of the distribution channel and methods became clear. In the process of increasing the market share of drugs market representatives give doctors about the drugs & clarify all the queries of them. In this way they tried to motivate them to prescribe more and more of the products of DRL. I also analyzed: 1. Whether the MR is telling about the actual working of drug to the doctors & chemists properly? 40

2. Whether the availability of drugs on the shops? 3. Whether the doctors are prescribing the drugs of the company

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RESEARCH METHEDOLOGY

A market research survey has been conducted for the purpose of above study. The research data has been collected through out this procedure.

A. Data collection The success of any research project depends critically on data. So data collection is the most important aspect of a research project. Primary and secondary data are used in this project.

B. Sample survey: Survey has been conducted after preparing the questionnaire and the focus was to know the market share of company.

C. Sampling:

a) Nature of Universe The research was carried on doctors and chemists.

b) Sample Size Sample size has been 42 chemists of various places in SITAPUR.

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c) Secondary Information Companies documents, various journals, pamphlets and companies portals were studied for relevant information regarding the subject of the projects. These documents were very useful for theoretical, conceptual and organizational background. Detailed analysis of information and data collection was carried on and then it has been possible to complete the task.

d) Question Design The question was designed keeping in mind the need of the project. The questions were simple and concise. Questions were prepared for chemists.

PRIMARY DATA: Primary data is collected through chemists, questionnaire, and personal interviews of chemists and different employees of DRL (MRs.).

For example: Condition of sale of drugs Very Good Good Above Average 43

 Average Below Average Bad

DATA ANALYSIS

Q1. Have you all the brands of Doxophylline?

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Q2. Have you all the brands of Gemifloxcin?

Q3. Have you all the brands of Deflazacort?

45

Q4. Give name of available brands of Doxophylline molecule. Ans. Doxopick Doxiflo Doxomax Doxobid(DRL) Doxofree Doxovin Doxorill(Macleod) Doxious

Q5. Give name of available brands of Gemifloxacin molecule. Ans. Gen One (DRL) Gicin Gemimac Gem2kuin Gemic Gemz

Q6. Give name of available brands of Deflazacort molecule. Ans. Defcoat Asteroid (DRL) Defza Depsure Deflanol Defzacore

Q7. Market status of DOXOBID in SMS Hospital. Ans.

46

Q8. Market status of GEM ONE in SMS Hospital. Ans.

Q9. Market status of Asteroid in SMS Hospital. Ans.

47

Q10. Market status of DOXOBID in Kawatia Hospital. Ans.

Q11. Market status of GEM ONE in Kawatia Hospital. Ans.

48

Q12. Market status of Asteroid in Kawatia Hospital. Ans.

Q13 Market status of DOXOBID. Ans.

49

Q14. Market status of GEM ONE.

Ans.

Q15. Market status of Asteroid. Ans.

50

Q16. Market status of DOXOBID. Ans.

Q17. Market status of GEM ONE. Ans.

51

Q18. Market status of Asteroid. Ans.

Overall Status of DRL Product: Q19. Market status of DOXOBID. 52

Ans.

Q20. Market status of GEM ONE. Ans.

Q21. Market status of ASTEROID. 53

Ans.

PROFIT & LOSS ACCOUNT

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Mar '12 12 mths Income Sales Turnover Excise Duty Net Sales Other Income Stock Adjustments Total Income Expenditure 2,122.9 0 Power & Fuel Cost 177.50 Employee Cost 831.20 Other Manufacturing Expenses 163.10 1,554.4 Selling and Admin Expenses 0 Miscellaneous Expenses 80.30 Preoperative Exp Capitalised 0.00 4,929.4 Total Expenses 0 Mar '12 Raw Materials 12 mths 6,780.2 0 93.90 6,686.3 0 -191.90 104.80 6,599.2 0

Mar '11 12 mths

Mar '10 12 mths

Mar '09 Mar '08 12 mths 12 mths 3,428.4 0 84.51 3,343.8 9 197.29 93.87 3,635.0 5

5,285.80 97.30 5,188.50 117.00 79.00 5,384.50 1,749.50 144.60 702.70 129.50 1,256.70 65.00 0.00 4,048.00 Mar '11 12 mths

4,469.60 74.00 4,395.60 254.00 117.30 4,766.90 1,599.40 104.10 516.40 117.30 1,036.60 50.60 0.00 3,424.40 Mar '10 12 mths

4,080.40 80.90 3,999.50 212.20 64.10 4,275.80 1,534.00

1,347.3 3 90.00 77.12 412.50 366.28 105.90 130.35 45.30 0.00

1,117.90 896.54 37.44 0.00 2,855.0 3,305.60 6 Mar '09 Mar '08 12 mths 12 mths

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Cash Flow for Dr. Reddy\'s Laboratories Ltd.

Mar' 12 Profit Before Tax Net CashFlow-Operating Activity Net Cash Used In Investing Activity NetCash Used in Fin. Activity Net Inc/Dec In Cash And Equivlnt Cash And Equivalnt Begin of Year Cash And Equivalnt End Of Year 1,403.00 -423.50 -194.90 784.60 64.40 849.00

Mar' 11 246.30 61.00 -305.70 371.90 66.20

(Rs in Cr) Mar' 10 Mar' 09 Mar' 08 1,084.80 1,253.20 -152.20 378.10 368.00 729.50 481.30 105.60 541.10 384.40 584.10 555.87 46.15 -913.91 1,451.25 537.34

1,259.20 1,051.90

-613.00 -1,111.10 -743.60 -1,515.93 -10.10 -156.70

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Balance Sheet of Dr Reddys Laboratories Mar '12 12 mths Sources Of Funds Total Share Capital Equity Share Capital Share Application Money Preference Share Capital Reserves Revaluation Reserves Networth Secured Loans Unsecured Loans Total Debt Total Liabilities 84.80 84.80 0.00 0.00 6,633.00 0.00 6,717.80 0.50 1,532.90 1,533.40 8,251.20 Mar '12 12 mths Application Of Funds Gross Block Less: Accum. Depreciation Net Block Capital Work in Progress Investments Inventories Sundry Debtors Cash and Bank Balance Total Current Assets Loans and Advances Fixed Deposits Total CA, Loans & Advances Deffered Credit Current Liabilities Provisions Total CL & Provisions Net Current Assets Miscellaneous Expenses Total Assets Contingent Liabilities Book Value (Rs) 3,507.80 1,611.00 1,896.80 637.60 2,477.70 1,326.70 1,943.50 93.10 3,363.30 1,291.40 755.90 5,410.60 0.00 1,534.30 637.20 2,171.50 3,239.10 0.00 8,251.20 2,018.90 396.19 3,025.00 1,334.00 1,691.00 570.40 2,462.00 1,063.20 1,770.50 66.20 2,899.90 1,663.80 0.00 4,563.70 0.00 1,565.20 256.90 1,822.10 2,741.60 0.00 7,465.00 1,526.00 355.69 84.60 84.60 0.00 0.00 5,935.60 0.00 6,020.20 0.70 1,444.10 1,444.80 7,465.00 Mar '11 12 mths Mar '11 12 mths

------------------- in Rs. Cr. ------------------Mar '10 12 mths Mar '09 12 mths Mar '08 12 mths

84.40 84.40 0.00 0.00 5,830.20 0.00 5,914.60 0.80 562.40 563.20 6,477.80 Mar '10 12 mths

84.20 84.20 0.00 0.00 5,174.90 0.00 5,259.10 2.60 637.70 640.30 5,899.40 Mar '09 12 mths

84.09 84.09 0.00 0.00 4,727.72 0.00 4,811.81 3.40 458.91 462.31 5,274.12 Mar '08 12 mths

2,425.70 1,110.10 1,315.60 745.40 2,652.70 897.40 1,060.50 47.90 2,005.80 1,321.40 320.10 3,647.30 0.00 1,543.80 339.40 1,883.20 1,764.10 0.00 6,477.80 2,016.10 350.30

2,157.30 946.50 1,210.80 411.20 1,865.10 735.10 1,419.70 84.30 2,239.10 1,331.20 300.10 3,870.40 0.00 1,163.30 294.80 1,458.10 2,412.30 0.00 5,899.40 1,934.80 312.17

1,750.21 762.80 987.41 245.71 2,080.71 640.93 897.71 67.19 1,605.83 1,272.02 470.15 3,348.00 0.00 786.36 601.38 1,387.74 1,960.26 0.00 5,274.09 1,892.55 286.12

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FINDINGS
According to market analysis of Dr. Reddys product, conditions of some drugs are better and some have very low market share. As per findings, the condition of Doxobid is quite good comparisons of other drugs. But Doxobid face a great completion to Macleods Doxorill. Doxorill has a large share of market. The condition of Gem One is best among the other drugs. It is market leader in the Gemifloxacin molecule. Beside this Asteride is a low performer in the market and it needing a lot of attention. The works of representatives are going on very well and it is right for DRL that it has well workforces which make possible every step of company in right direction. The products of DRL are working in a good manner than its competitors. The reasons for this success areo Availability of drug at a low cost. o Workings of drugs are better. o Work of representative is in an effective manner.

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RECOMMENDATIONS

Doxobid:
Doxobid is going on very well, but company need to put little bit pressure on its sales through Involving new ingredients in the product which make it more effective. As we know in India cost play a major role on sale, so company need to decrease the price of product from Rs. 50 to Rs. 48. This can play a vital role in the growth of company.

Gem One:
Gem one is the market leader in its category. Comparison to other brands its effectiveness is far better. Doctors are prescribing this drug in large numbers. It alone generates a huge amount of revenue. But company need to always focus on this strategy so that they cant lose its leadership in the market. Like regularity of representatives, availability of appropriate amount of drug.

Asteride:
Asteride is not performing according to company vision; it has a low market share than above two drugs. So company need to keep eye on this product performance. Company need to regularly take update of this drug from representatives. It needs to remind doctors about the product availability in the market. According to result of analysis it has shown that on many places chemists has not availability or knowledge about drug, so company need to strong tis distribution units and give representative an extra task to give proper knowledge to chemists about drug.

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CONCLUSION
Without any hesitation we can say that the unit is doing tremendously well and the sales are increasing. Launching of drugs like Gem One, Doxobid & Asteroid works like a panacea for increasing the sales of the company, but today looking at the competition of the market there is an immense scope of improvement.

If we have to compete with our rivals then we have to make concrete marketing strategy and follow it strictly. We also have to keep a keen watch on our rivals strategy and take steps according to them.

We should create new drugs, and new process for manufacturing drugs with low cost, effectiveness that can add to our sales. Besides we also have to work on other possible areas of marketing like maintain good relation with doctors & chemists that can strengthen our sales.

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BIBLIOGRAPHY
WEBSITES

1. www.drreddy.com.in 2. www.wikipedia.org 3. www.google.com

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