dr reddy strategy
TRANSCRIPT
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Indian PharmaceuticalsMarket
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Indian Pharmaceuticals Market(IPM)
Third largest in the world
Size – FY09 – US$ 21 bn (Domestic – 12 bn, Exports – 9
bn)
Growing at a CAGR of 14 % over last 5 years
PwC report estimates size at US$ 50 bn by 2020Astonishing demand for drugs
Country with most heart patients
40 million+ people with diabetes
5.1 million HIV/AIDS patients
14 million tuberculosis patients
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Industry Classification
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Confidential | Copyright © Larsen & Toubro Infotech Ltd. 4
Industry Analysis – Porters 5 ForcesModel
SU PPLIER PO W ER
Low to M od erate
H ig h n o o f su p p lie rs ,A t tim e s u se o f sin g le su p p lie r a s so le
so u rce fo r p a rticu la r m a te ria l
D ela y in su p p lyin g m a te ria ls h a m p e rs th e ir a b ility to d e live r prod u cts
B U Y E R P O W E R
M o d e rate to H ig h
• For g e n e rics an d O TC d ru g s its hig h
• ’N ee d to ke e p b u ye r s satisfie d o th e rw ise w ill risk to lo se to co m p e tito rs
• For som e of the pa ten ted an d Life saving drug s b u ye r po w er w illb e m od erate
B A R R IE R S T O E N T R Y M o d e ra te to H ig h
• .H igh no O fleg alp roced ures
an d lice n ce s
• H ig h ca p ita lre q u ire m e n t fo r, & &m fg su p p ly c h a in R D
• &Low success ratio in R D
• Pa te n t issue s
• B a rrie rs a re m o d e ra te in&case of ge ne rics as R D
exp en ses are low
• E xp o rts re q u ire h ig h
re g u la to ry cle a ra n ce s
TH RE AT O F SU BS TITU TE S A N D C O M P L E M E N T S
M o d e rate to H ig h
• &For R D in ten sive d ru gs th re a t is m o d e ra te
• For ge n erics a n d off p aten t d ru g s th rea t is
ve ry h ig h
• A lte rn a tiv e m e d icin e s like,auy rveda U na nip osing
threat
C O M PE TITIO N
– , - &V e ry H ig h G e n e ric s V e ry Lo w R DIn te n siv e
• H ig h co m p e titio n a cro ss co m p a n ie s fo r g e n e rics
• V e ry le ss d iffe re n tia tio n p o in ts ing e n e rics
• Price d isco u n tin g a n d m argin p re ssures in g e n e rics
• For p ate n ted d ru g s it acts a lm ost asm o no po ly
•
4
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Generics Continued
• Key growth drivers
– Significant patents expires through2011
– Government priority to rationalizehealthcare costs
– Cost Competitiveness
• Key Challenges – Foreign currency fluctuations
– Incresaing costs and cost of capital
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Bulk Drugs (APIs)
• Major players : Ranbaxy, Cipla, DrReddy’s, Lupin, IPCA Labs
•
( )US$bn Increasing share in DMF
Lisitings Indian API Exports
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APIs Continued
• Key growth drivers – Increasing share in DMF listings
– Contract manufacturing opportunities
– 2nd highest US FDA approved facilities
– Cost competitiveness
• Key Challenges – Maintain the pace of new drugs in pipeline
– IP Competence – Faster turnaround time
– Research facilities
–
–
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Confidential | Copyright © Larsen & Toubro Infotech Ltd. 9
Industry Analysis – Porters 5 ForcesModel
SU PPLIER PO W ER
Low to M od erate
H ig h n o o f su p p lie rs ,A t tim e s u se o f sin g le su p p lie r a s so le
so u rce fo r p a rticu la r m a te ria l
D ela y in su p p lyin g m a te ria ls h a m p e rs th e ir a b ility to d e live r prod u cts
B U Y E R P O W E R
M o d e rate to H ig h
• For g e n e rics an d O TC d ru g s its hig h
• ’N ee d to ke e p b u ye r s satisfie d o th e rw ise w ill risk to lo se to co m p e tito rs
• For som e of the pa ten ted an d Life saving drug s b u ye r po w er w illb e m od erate
B A R R IE R S T O E N T R Y M o d e ra te to H ig h
• .H igh no O fleg alp roced ures
an d lice n ce s
• H ig h ca p ita lre q u ire m e n t fo r, & &m fg su p p ly c h a in R D
• &Low success ratio in R D
• Pa te n t issue s
• B a rrie rs a re m o d e ra te in&case of ge ne rics as R D
exp en ses are low
• E xp o rts re q u ire h ig h
re g u la to ry cle a ra n ce s
TH RE AT O F SU BS TITU TE S A N D C O M P L E M E N T S
M o d e rate to H ig h
• &For R D in ten sive d ru gs th re a t is m o d e ra te
• For ge n erics a n d off p aten t d ru g s th rea t is
ve ry h ig h
• A lte rn a tiv e m e d icin e s like,auy rveda U na nip osing
threat
C O M PE TITIO N
– , - &V e ry H ig h G e n e ric s V e ry Lo w R DIn te n siv e
• H ig h co m p e titio n a cro ss co m p a n ie s fo r g e n e rics
• V e ry le ss d iffe re n tia tio n p o in ts ing e n e rics
• Price d isco u n tin g a n d m argin p re ssures in g e n e rics
• For p ate n ted d ru g s it acts a lm ost asm o no po ly
•
9
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ATEGIC GROUPS IN THE INDIAN PHARMA INDUSTR
&pplied R D &asic R D
ocal Branding
lobal Branding
CIPLA
Torrent
NOVONORDISK
GlaxoSmithklin
e
-SANOFIAVENTIS
.R’EDDY S
LAB
RANBAXY
Generics
In ternational Formulation
Domestic Formulation
TORRENT
CIPLA
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Dr. Reddy’sLaboratories Ltd
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The Company
OriginEstd. Feb ‘84
Founder: Dr. Anji ReddyDr.Reddy’s under Dr. AnjiReddy
Pioneer and Trendsetter inIndian Pharmaceuticalindustry
– Turned around Indian BulkDrug industry
– Indian Bulk Drug industry
Indian Bulk Drug Industry
– Mid-80s: Import-dependent
– Mid-90s: Self-reliant
– 2000 on wards: Export-oriented industry
Global Presence• Focus on US, Germany, India
and Russia• Wholly-owned subsidiaries in
the USA, UK, Russia,Brazil, New Zealand, Turkey and Mexico
• Joint Ventures in China,South Africa and Australia
• Representative Offices in 16countries
• 3rd party Distribution setupsin 23 countries
First Indian Pharmaceutical Company to take up r u g D i s co ve r y
r e s e a r c h
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Revenue distribution
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Purpose: Providing affordable &innovative medicines forhealthier lives
Strategy: Leaverageindustry-leadingscience & technology, product
offering and customer service withexecution excellence
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Shareholding Pattern
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Competitor Analysis
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RanbaxyIncorporated in 1961
Ranked among the top 10 generics companies in the world
Ground operations in 49 countries and manufacturingoperations in 11 nations
Exports contribute to around 80 per cent of the total
revenues
The company’s net profit in first quarter of 2008 was US$ 39million.
Aspires to become a research based pharmaceutical
company with revenues of US$ 5 billion by 2012Envisions being in top five global generics players by 2012
TC presence: Anti-infectives, CVS, diabetes, dermatological,neuro-psychiatry, Pain management, GI and Nutritional
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CIPLASet up in 1935
World’s largest manufacturer of cost effective anti-retroviraldrugs
Cipla’s products are bought by over 170 countries across allthe continents
Partnerships with nine companies for over 125 products
Recorded a turnover of US$ 800 million in 2009
Exports account for over 50 per cent of the overall sales
Over 100 Drug Master File (DMF) registrations in the US andover 85 in Europe
Presence across most of the therapeutic category
•
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GSK
Two manufacturing units in India, located at Nasik and Thane
2000-strong fieldworkers and a countrywide network of over4000 stockists
Net sales of the pharmaceuticals business segment was US$326 million, which constitutes 92 per cent of the company’s
total sales
It exported bulk drugs and formulations worth US$ 7.1 million
Two R&D centers which are approved by the Department of Scientific and Industrial Research, Government of India
TC presence: Anti-infectives, CVS, diabetes, dermatological,pain management, CNS, GI, nutritional, gynaecological,respiratory, sera and immunoglobulin, hormones
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Peer Comparision
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SWOT Analysis
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Management DiscussionAnalysis
FY 11 Guidance : RoCEof 18 – 22%. FY13 Goal : Revenues $3bn & RoCE of 25%
Strong & sustained cash flows expected from productopportunities suchas Omeprazole Mg OTC, Fondaparinux &
Fexofenadine pseudoephedrine
Attractive Emerging Markets presence with stronghold in twokey ‘BRIC’
Markets – India & Russia
Strategic alliance with GSK for Emerging Markets
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Key priorities
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DRL Businesses
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Business Model
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APIs
Active Pharmaceutical
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Active PharmaceuticalIngredients
Acquisitions in Mexico and UK Services
Ø Process research
Ø Product development
Ø Pilot scale manufacture
Ø Product regulatory support
Large Client base
•
Active Pharmaceutical
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Active PharmaceuticalIngredients
Adds strategic value to the Finished Dose business75% of global Generics requirement sourced
internally
High degree of Vertical Integration and Costadvantage
Servicing more than 800 customers spread over100 countries and Six continents
Active Pharmaceutical
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Active PharmaceuticalIngredients
%CAGR of 22
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Global Generics
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Global Generics
Deepening market presence
Widening scope of portfolio offering
Achieving supply chain excellence
Addressing the need for infrastructure / capacityincrease
Focus on emerging markets
Global Generics North
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Global Generics- NorthAmerica
Portfolio of 50+ products with 3/4th
of the portfoliovertically integrated
Sumatriptan contributed 36% of total NorthAmerica revenue
FDA approved manufacturing facilities in India andShreveport, USA
Supply chain excellence
•
•
Global Generics North
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Global Generics- NorthAmerica
•
•
•
%Growthof 53
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Global Generics - Germany
Acquisition of Betapharm in 2006 The emerging trend – Increasing tender activities
by State Health Insurers
Long term planØ Focus on increasing market share, increased
scale and growth
Ø Launch of new products and higher shelf space
–
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Global Generics - Germany
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Global Generics - Russia
Portfolio of 22 brandsOTC segment contributes 11% of total sales
High growth potential with attractive margins
80% of products vertically integrated
Market Rank
ØPharma – 16th
ØGenrics – 7th
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Global Generics - Russia
. %Growth of 20 8
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Global Generics - Russia
Improve Coverage
Ø Improve market share in Moscow & St Petersburg
Ø Expand hospital coverage
Portfolio
Ø Focus on cardiovascular & oncology
Ø Expansion in OTC segment
Supply chain excellence
Ø Improve availability
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Proprietary Products
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Proprietary Products
Biologics, Differentiated Formulations and NewChemical Entities
1st Indian Company to fully develop a Biosimilar in-house
Rituximab launch proved to be a large success inIndia
Expect to launch 2 products in FY10 and thereafter1 product every year
Capacity Expansion ongoing for large scalemammalian cell culture plant
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India Business
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India Business
7 brands among Top 300 brands
Omez achieves sales of Rs 100 crs per annum
Emerging leadership presence in niche areas
Ø Dental, oncology & dermatologyRural markets provide a huge opportunity
di i
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India Business
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profitability
E i M k t i t
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Emerging Markets in nextdecade
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Strategic Issues &Recommendations
St t i I
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Strategic Issues
Betapharm (Germany) needs to turn profitable
Increasing market share in Northern andEastern parts of India
Too much dependence on US and EU markets
Need to find new marketsRural markets in India provides hugeopportunity which needs to be tapped
Increased regulations and change in
government policies can prove detrimental asin case of Germany
R d d t t i
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Recommended strategiesRecommended strategies for Indian markets
Ø Focus on Chronic therapy market since the growth inchronic therapy is approximately 20%
Ø Identify merger and acquisition opportunities withrobust product pipeline
Ø Increase presence in the rural markets – Hugeopportunity
Recommended Strategies for Overseas market
Ø Focus on markets other than the US
Ø Emerging markets like Africa provide a huge
opportunities
Ø Tie up with other players to reach these emergingmarkets
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Market Strategy
Emerging Markets Regulated Markets Aggressive alliancing efforts
. ’outside core Dr Reddy s territories to leverage sole
generic position
Regulatory clarity is emerging though market dynamics will take
some time to mature
Variable approval pathways and patent situation means that
potential of pipeline will begin to be evident from FY12
Emerging markets strategy will“ ”create clinically proven full
width portfolio of biosimilarproducts
, -Vertically integrated India based development and manufacturing create a high
. ’margin portfolio for Dr Reddy s
Retain strategic flexibility to-alliance for detailing driven;market dynamics prepare for
-substitution driven price competition
R f
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References
• Marketing Intelligence report – IMS ORG
• Annual report 2009-10 Dr. Reddy’s
• http://www.drreddys.com
• Dr Reddy’s Investor presentations
• http://www.ibef.org/economy/ruralmarket.aspx
• Indian pharmaceutical report-Yes Bank
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THANK YOU !!