GV Prasad Leads Pharma Innovation, Sustainability at Dr. Reddy’s Laboratories
2020 YPO Global Impact Award
GV Prasad is the South Asia honoree for the 2020 YPO Global Impact Award. The award focuses on YPO members making impact outside the organization that is both sustainable and scalable, affecting people, prosperity, peace or our planet.
In the three decades since GV Prasad has been leading Dr. Reddy’s Laboratories (Dr. Reddy’s), the India-based company has grown to become one of the top 10 global generic pharmaceutical makers and India’s second largest, providing affordable medicine to millions while balancing profitability and impact.
“Affordability of pharmaceutical products, while ensuring a sustainable business, with surplus and profit to maximize impact” is how Prasad summarizes the transformation of Dr. Reddy’s from a domestic operation into a New York Stock Exchange-listed pharmaceutical (pharma) conglomerate with a market capitalization above USD6 billion.
Innovation and science driving profitability
The pharma firm was founded in 1984 by Prasad’s father-in-law, K. Anji Reddy, who passed away in 2013. Prasad has been a member of the board of directors at Dr. Reddy’s from its founding and became Co-Chairman and Chief Executive Officer in 1990 when the revenue of the company was less than USD50 million.
“Dr. Reddy’s was in the midst of a difficult transition. It was a company at a young stage, facing human resource as well as financial difficulties,” says Prasad. “Coming in when the company was in a crisis, I thought this would give me a head start in the pharma industry. I saw an opportunity to create something great.”
Prasad recognized early on that innovation was an integral part of the company’s core values. “Fundamentally, we were born as a scientific company. The India of the 80s was lagging behind in science and technology. Dr. Reddy’s started out of the need to develop indigenous technology by investing in research and development (R&D),” says Prasad. “Dr. Reddy himself was a scientist, so from the beginning the emphasis was on finding new ways of doing things.”
Prasad’s initial priority was to stabilize the company before preparing it to maximize profitability. “The way we started doing this was driven by the vision I set for myself to create an organization that does not depend on a few individuals but can sustain and thrive through change,” he says. “Science and innovation was one leg of the growth story. People practices and governance were the other two buckets.”
In 1995, with a strong team and governance structure in place, Prasad led the global expansion of the company, providing affordable medicines not just in India but also in highly regulated markets like the United States.
Pharmaceutical industry: Advantage India
By export volume, India is currently the largest provider of generic medicines globally, accounting for 18% of the global supply. As Prasad puts it, every third pill consumed in the United States and Europe is made by an Indian pharma company.
Thanks to its low cost of production, large pool of scientists and engineers, government policy support and increasing expenditure in R&D, India is expected to strengthen its global leadership in drug manufacturing, with exports estimated to reach USD20 billion by 2020.
Dr. Reddy’s leveraged these advantages to expand the business globally, building a team with robust knowledge of regulation and intellectual property to ensure quality regulatory-compliant medicines to millions.
“We were able to take products that were previously not affordable and bring them to the market first. That’s the way we define affordability, being the first alternative,” says Prasad who sees huge potential for further expansion to new areas of the pharma sector and new geographies like China.
A business portfolio with direct impact
Dr. Reddy’s generic formulations, in tablets, capsules, injectables and topical creams, offer more than 200 high-quality generic versions of expensive innovator medicines at a fraction of the cost. This constitutes the largest part of the business portfolio, addressing major therapeutic areas such as gastrointestinal ailments, cardiovascular disease, pain management, oncology, anti-infective, pediatrics and dermatology.
Diseases such as cancer or autoimmune disorders often require the long-term use of costly biologics, or large molecule protein therapies. Dr. Reddy’s was able to create high quality, equally effective, but significantly more affordable generic biosimilars, establishing the company as a leader in this relatively small, but fast-growing biosimilars segment.
Prasad explains that while the major markets include the United States, India, Russia, Commonwealth of Independent States (CIS) regions and Europe, Dr. Reddy’s also ensures their products are accessible in markets with limited availability to quality health care and medicines. These markets include South Africa, Australia, Jamaica, New Zealand, Brazil, China and the Association of South East Asian Nations (ASEAN).
“A large number of people would not have been able to afford these products and could have lost their lives as a result. We see this in all markets where patients pay out of their own pockets, in many parts of emerging world like India, Africa and South America,” says Prasad. “That’s where affordability makes the greatest exponential impact. But even in the best health care systems like in the United States and Western Europe, health care systems are under stress, so affordability has appeal universally.”
The sustainability imperative
At Dr. Reddy’s, achieving business goals while creating a positive impact on the environment and the community — with a focus on education and health care in rural India — was set as a strategic imperative early on in the company’s expansion.
Dr. Reddy’s was the first Indian pharmaceutical company to be registered under the Global Reporting Initiative (GRI) database. In 2001, it was among the first Indian companies to publish Sustainability Reports according to the GRI guidelines, providing detailed accounts of their economic performance, environment footprint and social responsibility.
“Sustainability is something at the heart of what we do. Our sustainability efforts create lasting value for all our stakeholders — shareholders, employees, partners and society — without a trade-off on their mutual or individual interests,” says Prasad.
Driven by his belief that to create true value, businesses must function in harmony with nature, Dr. Reddy’s was an early adopter and industry pioneer of green practices across the supply chain. Over the years, the company has undertaken a number of initiatives, including in green chemistry (designing products and processes that minimize the use and generation of hazardous substances); solvent recovery; waste reduction at source; water and energy audits; water harvesting; and recycling.
In 2004, Dr. Reddy’s became one of the first companies in India to ensure zero-liquid discharge by treating and recycling all wastewater, leaving no discharge at the end of the treatment cycle. In 2017, the company achieved zero hazardous waste to landfills across all its manufacturing units in India.
Dr. Reddy’s commitment to reduce greenhouse gas emissions for a sustainable planet was reinforced by joining the UK-based Carbon Disclosure Project (CDP). In the CDP’s 2014 India Climate Change Report, the company’s various measures to reduce the environmental impacts of the production processes were recognized as best practices in the health care industry.
Balancing profitability and purpose
Since stepping down as CEO in July 2019, Prasad continues his role as Co-Chairman and Managing Director while focusing on mentoring the next generation of leaders at Dr. Reddy’s.
Prasad has a few key insights to offer for other business leaders across different industries trying to create positive impact while pursuing profitability:
- Pursue an unmet need of society. Build a purpose-driven company that connects with people and society. Try to maximize the value for all stakeholders without trading off or compromising one interest against the others. Money will follow when value for all stakeholders is pursued. If you only follow the money, you will find it elusive.
- Once you have a purpose, recognize that it is not enough. You have to act with a sense of urgency and focus on outcomes. Doing this, resources are never limitations. Often a lack of imagination is our limitation. And people often think creatively when they are put into the box.
- Recognize what motivates people. Once they know their role and expectations from the role, people are motivated when given freedom to be self-directed. Provide them opportunities for mastering meaningful skills that matter to them and contribute to a higher purpose. Design your workplace, culture, policies and systems based on these elements to build an engaging workplace.
- Avoid creating dead-end jobs. These jobs will come to haunt you. Create opportunities for growth for everyone. While many will outgrow their current responsibilities and some will move on if there are not enough opportunities within the organization for everyone, they will add value as they pass through your company. The ones who stay back will make a big difference. This is a real win-win-win strategy — for your company, for the individual and for society.
- Prepare for constant digital disruption. As with most industries, the health care industry is facing a lot of changes due to emerging technologies, including in how medicines are developed. Disruption should be embraced for the opportunities it provides for a business that is ready to act.
Underlying all these actions, for Prasad, the key for aspiring CEOs ready to create more positive impact with their business is to widen their definition of success. “Business leaders are in a position of influence. If we can use our positions of influence to bring positive change, the world will be a better place.”