Dr Kallam Anji Reddy, the Founder-Chairman of
India’s Dr Reddy’s Laboratories (DRL) and an undisputed doyen of the Indian
pharmaceutical industry passed away in Hyderabad on March 15, 2013. In his sad
demise, the country lost a brilliant and creative first generation entrepreneur
who was driven by a passion for science and technology. He was truly a game
changer for the Indian pharmaceutical industry who placed the company on the
global pharmaceutical map with cost-effective bulk drugs (or, active pharmacutical ingredients) and affordable generic
formulations (or, finished drug products), several of them with path-breaking patent challenges. He was the
first to lay the path of basic research and drug discovery in the Indian
pharma, and was the inspiration and motivation for several other firms to
emulate him in terms of not only APIs and generics but more importantly, drug discovery research. Under his stewardship, DRL
which was set up with a seed capital of just Rs 25 lakhs (USD 50,000) in 1984 grew
to be a Rs 10,000 crore (USD 1.8 billion) globally diversified pharmaceutical
corporation by 2012 with several core research and manufacturing facilities in
India, and employing over 16,000
employees in India and abroad.
Dr Anji Reddy, a recipient of India’s third
highest civilian honour Padma Bhushan in 2009, rose from humble agricultural
roots. A son of a turmeric farmer in a village called Tadepalli, near Guntur of
Andhra Pradesh was a combination of science and technology. He graduated from
Bombay University in B. Sc. (Tech) with specialization in pharmaceutical
science and fine chemicals, and went on to obtain his Ph. D. in chemical
engineering from the famed National Chemical Laboratory in Pune. After his
studies, he joined in 1969 the government owned Indian Drugs and
Pharmaceuticals Ltd, which was set up to ensure self-sufficiency in drugs and medicines.
His entrepreneurial spirit made him set up Uniloids in 1976 with his partners,
which he later sold of, and Standard Organics Limited in 1980. He later on went
on to set up Dr Reddy’s Laboratories in 1984 and built it into a global
pharmaceutical corporation, listed in Indian stock exchanges and New York Stock
Exchange (NYSE). The current market capitalization of DRL is Rs 30,000 crore
(USD 5.4 billion).
In demeanor, Dr Anji Reddy was always
unassuming and self-effacing, belying his stature and the great regard in which he was
held. There would, in the coming days and weeks, be many tributes and eulogies to
the life and achievements of Dr Anji Reddy from his family, peers and
organizational followers, bringing out several known and unknown facets. His
own biography, which he is reported to have completed despite his illness of
the last several months, would probably sharpen his expressed thoughts and
obvious achievements and unravel his embedded ideology and silent initiatives.
When an accomplished leader passes away, the best way to pay a tribute to his
memory is by synthesizing and distilling his leadership model so that budding
entrepreneurs and aspiring professionals can have a template that they can
follow or adapt. This blog post endeavors to delineate Dr K Anji Reddy’s
scientific and business leadership model, reflecting the germination and growth
of DRL as an institution of repute. The
Kallam Anji Reddy-Dr Reddy’s Laboratories saga has six praiseworthy features of
world-class entrepreneurship.
Science, engineering and economics
Business leaders in their use of science and
engineering are of three kinds. The first class views science and engineering
in terms of products and processes, and costs thereof as platforms for
businesses. The second class views science and engineering as creators of value
for customers and businesses. The third class, to which Dr Anji Reddy belongs,
views science and engineering not only in terms of products and processes, costs
and value, and markets and businesses but also in terms of sound and sustainable
economics. Dr Anji Reddy transformed the economics of the Indian pharmaceutical
industry both in a macroeconomic sense, laying the foundations of affordable
generic medicines, and in a microeconomic sense, with scope and scale of
production redefining industrial costs and global value arbitrage. His simple
economic formula of what a drug costs in the US in terms of a Dollar should be made and sold in
India for a Rupee was a simple but effective paradigm of considerable economic foresight. His unique combination of pharmaceutical science and
chemical engineering became his, as well as DRL’s, core competence in
developing high quality active pharmaceutical ingredients through reverse
engineering and establishing operationally efficient global scale generic
formulations. From Dr Reddy's accomplishments, it emerges that Science, Engineering and Economics is a
knowledge triad of a higher elan business leader that transforms human
development.
Quality as the Q.E.D.
Dr Anji Reddy was one of the early
entrepreneurs who recognized that the higher quality of requirements of
advanced markets such as the USA and Europe and complying with the regulatory
standards of international regulatory agencies such as the US FDA was the sine
qua non of sustainable pharmaceutical business. His first failures in meeting
the quality requirements of Merck & Co for its bulk drug only prompted Dr
Reddy to lay the foundations of quality focused US FDA compliant bulk drug plants, and later generic
formulation plants. As early as in 1987, DRL secured approval from the US FDA
for DRL’s Ibuprofen, opening up the US market for DRL. The series of bulk drugs
such as Ibuprofen, Ranitidine, Ciprofloxacin, Methyldopa, Norfloxacin and
Omeprazole as well as their follow-on products from DRL enjoyed huge world
markets. Whenever standalone formulation companies desired complex products of
high quality they preferred to rely on DRL despite the price premium. When new
startups desired to establish US FDA compliant plants they sought talent from
DRL. These establish that Quality is the paradigm of virtue that successful
business leaders seek to prove and eventually establish beyond doubt. “Quality
Enterprise Diffused” is literally and figuratively the Q.E.D. of sustainable
business.
Talent in teams, teams with targets
The engine of growth for any organization is
the intellectual power. DRL illustrates that when the founder’s intellectual
power is reinforced by his team’s broader intellectual competencies, the
organization moves into a targeted high trajectory of sustainable growth. Dr Anji
Reddy has built DRL on three principles of talent, teams and targets. Whether it
is bulk drugs, formulations or drug discovery world-class indigenous talent laid
the foundations and built the superstructure of the DRL seen today. Some of the
best names of Indian pharmaceutical science and technology are identified with
DRL, even if they are no longer with the company. Dr Anji Reddy was also one of
the earliest first generation entrepreneurs who saw merit in coalescing talent
into business teams and eventually into strategic business units. The growth of
bulk drugs, global generics, branded formulations, custom synthesis and basic
drug discovery was based on custom-inducted and business-focused talent teams. The
third component of a talent-focused organization is targets. The best targets
that an entrepreneur develops are not metrics of turnover or profits but are
mega visions of transformation. When as a student Anji Reddy who saw a Pfizer
plant thought of building a Pfizer-like plant as his entrepreneurial venture or
after he set up his business targeted his pharmaceutical corporation to be a
"Pfizer" or "Merck" of India driven by innovation, he was articulating concisely
and passionately a visionary target that inspired him and his talented teams.
Professional family, family of professionals
DRL as a first generation enterprise has been
an entrepreneur driven business. With the induction of Dr Anji Reddy’s son-in-law
G V Prasad and son Satish Reddy as the
chief executive officer and chief operating officer in 1986 and 1993
respectively, DRL became a compact family run business. Yet, it was a highly professional
second generation that came on board. Both the next generation leaders were very well qualified and have admirably learnt the
ropes on the job, building businesses and operations. Dr Anji Reddy ensured that
the leadership roles to them played to their strengths, with GV Prasad focusing
on strategy and generics business and Satish focusing on operations and
emerging markets, and Dr Anji Reddy himself focusing on drug discovery and
overall mentorship. In addition, the troika of family leadership ensured
that they were governed by a strong board of directors of eleven, in which all
directors except the three were independent directors of high repute
representing diverse domains. In fact, in a recent survey DRL board was judged
to be a top ranking board in India acclaimed for its corporate governance. The
uniqueness of the family team at the helm has been that it surrounded and
reinforced itself with professionals of outstanding expertise in their domains.
Classy chemistry expertise, outstanding generics
leadership, creative medicinal chemistry and discovery biology and savvy commercial,
business, financial and legal strengths, among other domains, together made DRL
a professional powerhouse. Dr Anji Reddy established that entrepreneurial
chemistry and creativity is highly synergistic with professional expertise and
integrity, both needing to be perpetual partners in progress.
Risky challenges, global rewards
Most successful leaders are intelligent and
empathetic using their traits for planning and executing but all are not adept
at taking investment and business risks based on the organization’s
intellectual competencies as well as networking and negotiating capabilities. Dr Anji
Reddy took intellectual and investment risk-taking progressively up four
levels, ahead of most Indian pharmaceutical companies. DRL was the pioneer, in
the 1980s, in taking the first risk of reverse engineering patented molecules
through innovative non-infringing processes, and manufacturing them, leveraging India’s
prevailing patent regime. This risky initiative handsomely paid off with the bulk drugs becoming
the foundational cash generating business for the next wave of generics risk-taking. The next was in the 1990s when the generics business unit began
embarking on the Paragraph IV, First to File (P4 FTF) challenges under the Hatch-Waxman’s
Act of the USA which provided options for innovative challenges based on patent
litigation in the US legal system. DRL’s Fluoxetine P4 FTF patent challenge
against the innovator of the molecule has been a game changer leading to the
dominance of the Indian pharmaceutical industry in the US. DRL has since built
up one of the largest portfolios of P4 FTF products in the generics world. This second level of risk-taking enormously
benefitted DRL and positioned it as an awe-inspiring player in the generics
space. The third level of risk pertains to aggressive internationalization of its
branded formulations business. Russia has been a beacon of success in this
dimension while a few others have been less than successful. DRL's success in
creating the dossier framework for global markets has prompted GSK to ally with
the company for emerging markets. The fourth level of risk pertains to Dr Anji Reddy’s
passion for basic drug discovery research with the aspiration of globally
commercializing a DRL discovered new chemical entity. Despite the high
investments and overwhelming uncertainty of payback in drug discovery, he founded as
early as in 1993 Dr Reddy’s Research Foundation with chemistry and biology
infrastructure in India and also established overseas discovery infrastructure
progressively. Though the early discoveries failed to make it past all the
human clinical phases, Dr Anji Reddy still remains the icon of drug discovery
in India. Calculated risk taking initiatives based on indigenous intellectual
capability have been part of Dr Anji Reddy’s leadership profile.
Enabling and sustaining good life
Pharmaceuticals support life, and the
pharmaceuticals industry is a noble industry by any yardstick. If
pharmaceutical corporations and the leaders of the pharmaceutical industry
deploy their corporate and personal wealth to enable and sustain good life,
they would be even more significant corporate citizens. DRL’s focus has primarily been on three
life-altering areas: Patient Care,
Education and Livelihood. The company channels its wide network of social activities through Dr. Reddy’s Foundation (DRF) and Dr. Reddy’s Foundation for Heath Education (DRFHE) which address health education needs and patient care activities. DRL also creates positive impact on communities through Corporate Social Responsibility (CSR)
teams in each location. Two of the social responsibility
initiatives undertaken by Dr Anji Reddy illustrate a silent social facet of his
entrepreneurial profile. He spearheaded
the Neo-natal Intensive Care and Emergencies Foundation called NICE Foundation,
the only institute for new-born babies in India. He also set up Naandi Foundation
(Naandi meaning start of a new initiative) for providing safe drinking water in
rural areas. The foundation provides midday meals to 1.3 million government school-going
children and farmers. Anand Mahindra, the
Head of the automobile conglomerate Mahindra & Mahindra tweeted “R.I.P. Dr
Anji Reddy. Your business achievements were well known, but you were an unsung
hero for your transformational philanthropy.”
Game changing techno-entrepreneur
The author of this blog post has had no
direct professional contact with Dr Anji Reddy except meeting him in a few pharmacutical forums. However, as an observer of Dr Anji Reddy's leadership model and DRL's continuous growth, the author believes that Dr Reddy’s contributions of
entrepreneurial and business leadership have been truly exceptional as
synthesized in this blog post. Successful entrepreneurs typically create
sustainable institutions that create products and services for markets and
generate returns for investors. A few entrepreneurs, however, craft and execute
game changing strategies for their enterprises that fundamentally redefine the very
structure and strategy of entire industries. Dr Anji Reddy clearly belongs to
this illustrious genre of “super-entrepreneurs” in so far as the Indian
pharmaceutical industry is concerned. His transformational contributions to the
Indian pharmaceutical industry will remain unsurpassed for a long time to come.
The epithets “doyen”, “icon” and “pioneer” describe his game-changing techno-entrepreneurial
leadership perfectly. Dr Kallam Anji Reddy, the super-entrepreneur who wanted
to create a "Merck" in India has certainly created, in Dr Reddy’s Laboratories, a
robust and growth oriented pharmaceutical corporation that has earned global
respect, and has in the process left an indelible mark on the Indian
pharmaceutical canvas.
Posted by Dr CB Rao on March 17, 2013
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