The Indian pharmaceutical industry is trying to
find its place
in a crowded global marketplace, and many companies will have to
change strategies just to survive. Motital Oswal analysts
recently met with Dr. Reddy's Laboratories (
) CEO G.V. Prasad to learn his plans for the next ten years.
Prasad was educated in the United States, earning a degree in
Chemical Engineering and an MBA in the early 1980s. He has been
CEO of Dr. Reddy's since 2001, and is widely credited as the
architect of the company's successful generics strategy.
Now Prasad wants to transform Dr. Reddy's from a "pure
generics" company to "innovation-driven generics." To do this,
the company will scale up its presence in global bio-generics
while focusing on complex and difficult-to-manufacture
pharmaceuticals. Geographic expansion will take a back seat to
investment in innovation, and the company will stay focused on
its five key markets of the U.S., India, Russia, Germany, and the
Motital Oswal analysts are skeptical of the strategy, saying
that "this transformation could entail significant investments in
the coming years," and expressing concern that the company will
not hit its FY13 revenue targets. They reiterated a "Neutral"
stance on Dr. Reddy's stock.
Investors looking to gain exposure to Indian pharma
should also examine the iShares S&P India Nifty 50 Index Fund
). Pharmaceuticals have been a small part of this ETF in the
their share is likely to grow.