Leveraging Capabilities at DRL (2003)

Abstract

The case discusses the history, growth and prospects of India's second largest pharmaceutical firm — Dr. Reddy's Laboratories (DRL). It details the strategies, actions, resources and capabilities of the company since its inception in 1985 to the close of the case in 2003. In the period up to the mid 1990s, DRL exploited the Indian process patent regime by leveraging its skills in reverse engineering patented drugs quickly and launching these faster than the rivals in the Indian market. However, the environment changed once India signed the GATT agreement in 1994. Competition in the domestic market had also heated up in mid 1990s. DRL maintained its lead by moving up the value curve and positioned itself in domestic formulations market while simultaneously exploiting its existing capabilities in developed markets by filing Abbreviated New Drug Applications (ANDAs). Realizing that it must quickly build such resources and capabilities that would be valuable in the post-WTO world, it started moving up the value curve into drug discovery for New Chemical Entities (NCEs). It met with some success as some multi-national firms licensed their molecules for clinical research. It was also successful in being the first to launch a generic version of a patented drug, thereby enjoying marketing exclusivity for six months in the US. As the date for India's integration with the world draws close, DRL was seen to proactively develop resources to thrive in the new post-WTO world. This case is useful in learning about effective responses to deregulation and the post-WTO environment.