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TABLE OF CONTENT
Executive Summary
Introduction
S.No
.
Contents Page No.
1 5
2 7
3 Objective 11
4 About Dr. Reddys Lab. Ltd.
a) History of company
b) Board & Management
c) Infrastructure
12
5 Pharmaceutical Industry 17
6 Heriarchy of marketing department 26
7 Molecule Introduction
a) Gemifloxacin
b) Deflazacort
c) Doxophylline
27
8 Managing sales force 30
9 Product positioning 31
10 Competitor analysis 32
11 SWOT analysis 35
12 Field work 3713 Market surfing 39
14 Research & methodology 43
15 Data analysis 45
16 Finding 55
17 Recommendation 56
18 Conclusion 58
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19 Bibliography 59
20 Questionnaire 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
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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.
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Board & Management Team
Whole-Time Directors-
Dr. Anji Reddy G V Prasad Satish Reddy
Chairman Executive Vice Chairman and Managing Director & Chief
Chief Executive Officer Operating Officer
Management Team-
Abhijit Mukherjee Amit Patel Dr. Cartikeya Reddy
President,Pharma Services Senior Vice President & Senior Vice President &
& Active Ingredients (PSAI) Head - North America Head- Biologics
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Jeffrey Wasserstein KB Sankara Rao Prabir Jha
Executive Vice-President, Executive Vice President, Senior Vice President,&
NA Specialty Integrated Product Development Global Chief- HR
Advisor, Dr. Rajinder Kumar Saumen Chakraborty
Legal & Strategy President, President- Corporate &
R&D, Commercialization Global Generics
Umang Vohra VS Vasudevan Vilas Dholye
Senior Vice President President & Head of Executive Vice President &
& Chief Financial Officer Europe Operations Head Formulations
Manufacturing
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INTRODUCTION
Indias second largest pharmaceutical company by revenue, Dr Reddys Laboratories
Ltd
(DRL) .The Company consists ofActive Pharmaceutical Ingredient Business (API),
Custom Pharma Services (CPS), Generics, Generics Biopharmaceuticals,
Differentiated Formulation, New Chemical Entities (NCEs).
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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
GenericsGenerics Bio-Pharmaceutica
ls
DifferentiatedFormulation
NCEs
API
CPS
Dr. Reddys
Business
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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 fun-
for-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:
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DIVIDEND HISTORY
Year ended Interim % Final % Total %
2000 01 - 40 40
2001 02 100 50 150
2002 03 - 100 100
2003 04 - 100 100
2004 05 - 100 100
2005 06 - 100 100
2006 07 - 75 75
2007 08 - 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.
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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;
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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 Ltdand 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
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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
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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
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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-
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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
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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
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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
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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
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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.
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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
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$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
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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.
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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
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Pharma research,
formulations
2005 Uno-Ciclo (Brazil) 4.6
2005 Servycal SA (Argentina n/a
Hikal APIs contract
manufacturing
2004 Marsin (Denmark) 6 millio for
50% stake
Jubilant
Organosys
CRAMS,
pharma
speciality,
chemicals,
intermediates,
formulations,
medical (US)
chemistry and
clinical
services
2004 PSI (Belgium) 16
2005 Trinity Laboratories
(along with
subsidiary Trigen
Laboratories )
20.25 million
for 75% stake
2005 Target Research
Associates
33.5
Matrix Labs CRAMs,
generic APIs,
intermediates
and
formulations
2005 MICHEM (China) (JV) n/a
2005 Docpharma (Belgium) 263
2005 Explora Laboratories
(Switzerland)
n/a
n/a Fine Chemicals corp
(South
Africa)
n/a
Nicholas
Piramal
CRAMS space
contract
manufacturing,
APIs, branded
formulations
2004 Doubtrex brand
acquisition (US)
n/a
2004 Rhodias inhalation
business
(UK)
14
2005 Biosyntech (Canada) 6
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2005 Avecia Pharma (UK) 16.9
Strides lab Generics, OTC
and
nutraceuticals
2005 Manufacturing plant
(Poland)
8
2005 Beltapharm (Italy) EUR 1.6
million (70%
stake)
Sun Pharma Branded
formulations,
US generics,
APIs
2005 Two facilities from
Valent
Pharma (Hungary, US)
10
1997 Caraco (US) 7.5
2005 Able Laboratories (US) 23.15Ranbaxy US and Europe
generic
Markets
2008 Dai Chii Sanque
2004 RPG Aventis (France) 84
n/a 18 generic products
from Efarmes
S.A. (Spain)
n/a
2005 Brand veratide from
P&G
(Germany)
5
Torrent Formulations,
European
generic
Market
2005 Heumann Pharma
(Germany)
n/a
Zydus
Cadilla
Contract
manufacturing
and generics
2003 Alpharma (France) 6.6
Wockhardt Biogenerics,
US and
Europe generic
2003 CP Pharma (UK) 20
2004 Esparma (Germany) 11
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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
acquisitions
from 1990
Turnover
(2008)
RS.
Million
% of
turnover
from
overseas
(2008)
IPO
Ranbaxy 1962 8 11 41205.88 69.90 1994
DRL 1984 2 4 50006 79.1 2001
Wockhardt 1959 3 4 26531.54 70.55 2003
NPIL 1988 5 3 28789.1 71.67
Sun 1983 4 3 32776 68.78 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. Year Acquired Firm Focusing Area Value
1 2002 BMS laboratories and
Meridian labs
UK generics market US $16 million
2 2004 Tregenesis (US) Specialty products access
drug delivery platforms in
the
dermatology segment
US$11 million
3 2005 Roches Generic Business
(Mexico)
US generics market US $ 59 million
4 2006 Betapharma (Germany) European Generic Market US $ 572
million
5 2008 Jet Generici SrI Itly Generic Market n/a
6 2008 Dow Pharma (UK) Small molecule business n/a
7 2008 BAFS-SE Pharma(US) Performance Products,
Functional Solution
n/a
8 2008 Perlecan Pharma Pvt. Ltd.
(India)
Indian Manufacturer of
Functional solution
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
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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
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CHAIRMAN
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MOLECULES INTRODUCTION
WHAT IS GEMIFLOXACIN?
32
SENIOR DIRECTOR
Sales Manager
SM
Production Management Team
(PMT)
North-West Sales ManagerSouth East Sales
Manager Group Therapy Management
Regional Manager
Area Sales Manager Scientific Business
Officer
SBO
Professional Service
Representative
Product Manager
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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
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improvement: FEV1: 133.2 and 132.5% (p
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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
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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
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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
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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 are-
1 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?
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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
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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?
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Q4. Give name of available brands of Doxophylline molecule.
Ans. Doxopick Doxobid(DRL) Doxorill(Macleod)
Doxiflo Doxofree Doxious
Doxomax Doxovin
Q5. Give name of available brands of Gemifloxacin molecule.
Ans. Gen One (DRL) Gemimac Gemic
Gicin Gem2kuin Gemz
Q6. Give name of available brands of Deflazacort molecule.
Ans. Defcoat Defza Deflanol
Asteroid (DRL) Depsure Defzacore
Q7. Market status of DOXOBID in SMS Hospital.
Ans.
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Q8. Market status of GEM ONE in SMS Hospital.
Ans.
Q9. Market status of Asteroid in SMS Hospital.
Ans.
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Q10. Market status of DOXOBID in Kawatia Hospital.
Ans.
Q11. Market status of GEM ONE in Kawatia Hospital.
Ans.
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Q12. Market status of Asteroid in Kawatia Hospital.
Ans.
Q13 Market status of DOXOBID.
Ans.
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Q14. Market status of GEM ONE.
Ans.
Q15. Market status of Asteroid.
Ans.
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Q16. Market status of DOXOBID.
Ans.
Q17. Market status of GEM ONE.
Ans.
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Ans.
Q20. Market status of GEM ONE.
Ans.
Q21. Market status of ASTEROID.
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Ans.
PROFIT & LOSS ACCOUNT
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Mar '12 Mar '11 Mar '10 Mar '09 Mar '08
12 mths 12 mths 12 mths 12 mths 12 mths
Income
Sales Turnover6,780.2
05,285.80 4,469.60 4,080.40
3,428.40
Excise Duty 93.90 97.30 74.00 80.90 84.51
Net Sales6,686.3
05,188.50 4,395.60 3,999.50
3,343.89
Other Income -191.90 117.00 254.00 212.20 197.29Stock Adjustments 104.80 79.00 117.30 64.10 93.87
Total Income6,599.2
05,384.50 4,766.90 4,275.80
3,635.05
Expenditure
Raw Materials 2,122.90
1,749.50 1,599.40 1,534.00 1,347.33
Power & Fuel Cost 177.50 144.60 104.10 90.00 77.12Employee Cost 831.20 702.70 516.40 412.50 366.28Other Manufacturing Expenses 163.10 129.50 117.30 105.90 130.35
Selling and Admin Expenses1,554.4
01,256.70 1,036.60 1,117.90 896.54
Miscellaneous Expenses 80.30 65.00 50.60 45.30 37.44Preoperative Exp Capitalised 0.00 0.00 0.00 0.00 0.00
Total Expenses4,929.4
04,048.00 3,424.40 3,305.60
2,855.06
Mar '12 Mar '11 Mar '10 Mar '09 Mar '08
12 mths 12 mths 12 mths 12 mths 12 mths
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Cash Flow for Dr. Reddy\'s Laboratories Ltd.
(Rs in Cr)
Mar' 12 Mar' 11 Mar' 10 Mar' 09 Mar' 08
Profit Before Tax 1,259.20 1,051.90 1,084.80 729.50 584.10
Net CashFlow-Operating Activity 1,403.00 246.30 1,253.20 481.30 555.87
Net Cash Used In Investing Activity -423.50 -613.00 -1,111.10 -743.60 -1,515.93
NetCash Used in Fin. Activity -194.90 61.00 -152.20 105.60 46.15
Net Inc/Dec In Cash And Equivlnt 784.60 -305.70 -10.10 -156.70 -913.91
Cash And Equivalnt Begin of Year 64.40 371.90 378.10 541.10 1,451.25
Cash And Equivalnt End Of Year 849.00 66.20 368.00 384.40 537.34
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Balance Sheet of Dr Reddys Laboratories ------------------- in Rs. Cr. -------------------
Mar '12 Mar '11 Mar '10 Mar '09 Mar '08
12 mths 12 mths 12 mths 12 mths 12 mths
Sources Of Funds
Total Share Capital 84.80 84.60 84.40 84.20 84.09
Equity Share Capital 84.80 84.60 84.40 84.20 84.09
Share Application Money 0.00 0.00 0.00 0.00 0.00
Preference Share Capital 0.00 0.00 0.00 0.00 0.00
Reserves 6,633.00 5,935.60 5,830.20 5,174.90 4,727.72
Revaluation Reserves 0.00 0.00 0.00 0.00 0.00
Networth 6,717.80 6,020.20 5,914.60 5,259.10 4,811.81
Secured Loans 0.50 0.70 0.80 2.60 3.40
Unsecured Loans 1,532.90 1,444.10 562.40 637.70 458.91Total Debt 1,533.40 1,444.80 563.20 640.30 462.31
Total Liabilities 8,251.20 7,465.00 6,477.80 5,899.40 5,274.12
Mar '12 Mar '11 Mar '10 Mar '09 Mar '08
12 mths 12 mths 12 mths 12 mths 12 mths
Application Of Funds
Gross Block 3,507.80 3,025.00 2,425.70 2,157.30 1,750.21
Less: Accum. Depreciation 1,611.00 1,334.00 1,110.10 946.50 762.80
Net Block 1,896.80 1,691.00 1,315.60 1,210.80 987.41
Capital Work in Progress 637.60 570.40 745.40 411.20 245.71Investments 2,477.70 2,462.00 2,652.70 1,865.10 2,080.71
Inventories 1,326.70 1,063.20 897.40 735.10 640.93
Sundry Debtors 1,943.50 1,770.50 1,060.50 1,419.70 897.71
Cash and Bank Balance 93.10 66.20 47.90 84.30 67.19
Total Current Assets 3,363.30 2,899.90 2,005.80 2,239.10 1,605.83
Loans and Advances 1,291.40 1,663.80 1,321.40 1,331.20 1,272.02
Fixed Deposits 755.90 0.00 320.10 300.10 470.15
Total CA, Loans & Advances 5,410.60 4,563.70 3,647.30 3,870.40 3,348.00
Deffered Credit 0.00 0.00 0.00 0.00 0.00
Current Liabilities 1,534.30 1,565.20 1,543.80 1,163.30 786.36
Provisions 637.20 256.90 339.40 294.80 601.38
Total CL & Provisions 2,171.50 1,822.10 1,883.20 1,458.10 1,387.74
Net Current Assets 3,239.10 2,741.60 1,764.10 2,412.30 1,960.26
Miscellaneous Expenses 0.00 0.00 0.00 0.00 0.00
Total Assets 8,251.20 7,465.00 6,477.80 5,899.40 5,274.09
Contingent Liabilities 2,018.90 1,526.00 2,016.10 1,934.80 1,892.55
Book Value (Rs) 396.19 355.69 350.30 312.17 286.12
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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 are-
o 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
http://www.drreddy.com.in/http://www.drreddy.com.in/http://www.google.com/http://www.drreddy.com.in/http://www.google.com/
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