Of course, getting into the organization and stabilizing it, I know it was something very new to me. And I was 30 years old at that time. A few months into my job, there was an anti-dumping suit on us. I thought Dr. Reddy will help me and guide me and tell me what to do and I went and met him, but he just said, 'It's your problem, go and deal with it.' We had safety incidents in the plants. The final big one was the warning letter. Biggest thing that affected me at that time was how did I allow this to happen? I think we could have done more in terms of innovation. And we never did any game-changing acquisition as such. Many big things are happening, actually. And I think we in the industry should be both concerned and also interested and excited. I don't see a lot of that in India happening. We can learn a lot from how the Chinese companies emerged on the global arena for innovation. AI is helping us design the molecules, help us design the biological as well as small molecules more precisely. Knowing the structures of all proteins is accelerated. But the bottleneck is not in drug discovery. The bottleneck is in drug development. I want to connect the dots between discovery to market through a strong development framework or probably a partnership or in-house capability. In 10 years time, I want us to get at least 30 to 50% of our revenue from innovative products.
GV Prasad has run Dr. Reddy's for over 30 years. He's seen the US regulator FDA come knocking. He's lost people in plant accidents. He's watched deals fall apart. And he will still tell you the company should have been bolder. Most executives don't say that out loud. He does. Now, at this stage of his career, he's not slowing down. He realizes the wide gap between discovery and clinical development of a drug better than anyone else. He's cautious about celebrating the impact of AI in pharma yet. And he wants half the company's revenue coming from innovation.
That's what we have for you today. It's Monday, the 23rd of March. I'm your host and ET's Pharma editor Vikas Dande here. This is Corner Office Conversation.
So, thank you, Prasad, for joining us for our Corner Office Conversation. What I will start with is what I had read in the unfinished agenda of Dr. Anji Reddy. When you actually came in, there was a crisis to be handled and you were in the US. Can you recall some of those old days?
Well, I joined the company in 1990. Before that, I was on the board of the company, but not in an active role. At that time, one of the co-founders of the company had moved on. He was a very strong leader and he had a lot of followership in the company. So, when he left, a lot of the company left with him. So, it was a kind of an upheaval in the organization. And Dr. Reddy asked me to come in and help him with the company. I was not in this business at that time. I was in my father's business, which was construction. But I had some experience of building a pharmaceutical company earlier on, but I had moved away from that. So, I came back and worked to stabilize the organization initially with the help of the team. The team was a big help. They were all veterans already in the company. Three, four of them were the anchors around which we built the organization back. And in fact, we didn't miss anything. And that was a big lesson for me in understanding how organizations can overcome, be resilient with the commitment of people, having the right people on the team.
Right. Would you like to kind of remember some of your most defining moments, some of the most toughest challenges that you have faced?
Some of the toughest ones were of course getting into the organization and stabilizing it. I was 30 years old at that time, and the organization was fairly successful. So, I was very concerned about letting Dr. Reddy down and letting the people down. That was one defining moment. A few months into my job, there was an anti-dumping suit on us. Most of our business was in the US, especially for ibuprofen, because the US was giving good pricing and good premium. An anti-dumping suit was for me the first time handling US lawyers at the age of 30. I thought Dr. Reddy will help me and guide me, but he just said, 'It's your problem, go and deal with it.' So I caught the flight to the US, met lawyers, selected a good law firm and tried to fight that. But suddenly, the company which filed the anti-dumping suit withdrew it when the government was considering their claim seriously and looking at the supporting data. The data wasn't adding up to them, so they just withdrew the case and life was back to normal. After that, we had safety incidents in the plants. Some lives were lost and that was very tragic for me. It took a lot from me to overcome that point at which we had fire accidents and we lost some people, young people especially. That brought in a big focus into safety, environmental protection, and making the operations really robust. The final big one was the warning letter. In the 2014-15 period, we had kind of not paid attention to what was happening in the plants. And as a result, there was laxity. We ended up getting warning letters for three sites. Our Bimetrum site, our Miryalaguda site, and the Duvvada site. Duvvada was the main target because it was sterile operations. The biggest thing that affected me was how did I allow this to happen on my watch? I was very proud of being committed to doing the right thing ethically, from a quality perspective, from a patient perspective. This happened on my watch, so it really was a difficult time. After that, we put in a lot of effort to remediate the lapses and elevate quality to a higher standard. Today, I'm convinced we have some of the best compliance, quality, and robustness of operations. On the business side, when we lost the case on amlodipine maleate, that was a big blow as we had high hopes of building a branded business in the US. And we continue to face the drug discovery challenge. The unfinished agenda is still there. We went close, had some successes, had some phase three failures. Each of those built the organizational muscle for resilience.
Sir, recently you said we should have become more bolder. And that has been one of your regrets. And at the same time, in the Indian pharmaceutical industry, I think the company which probably experimented the most on discovery research was Dr. Reddy's. 97-98, the two big licensing deals that happened and then the build-up of the entire industry because they saw Dr. Reddy's can do it. What more could have been done?
I think earlier on, we were not very aggressive in investing in some of our businesses. I think we could have done more in terms of innovation. In 2009, we moved into formulation innovation, built the pipeline, but divested it at the wrong time because we were hit by a warning letter and overall we couldn't fund that journey. We also were not very strong in doing inorganic things because we made one mistake and then became a little gun-shy and didn't do a lot after that. So we could have been more bold in those decisions, in what we didn't do and what we could have done. And we never did any game-changing acquisition as such.
Most of our acquisitions have been incremental. Some of them have been big, but none of them really transformed the organization.
Right. From one flavor to another. Right. A word on Dr. Anji Reddy. So he's been like the tremendous force that actually built this organization. You followed him also and you know his passion for invention and networking with researchers. So the ones where you actually agreed with him and the ones where you actually disagreed with him.
We didn't always agree with him. While he was very passionate, his passion was very much in the drug discovery field. He moved quickly from APIs and branded generics into innovation. And once he got into innovation, being a scientist, he was single-minded about that. In fact, he never got too involved in the building up of the company to scale, to generics. Both Satish and I did that kind of work, and he delegated to us. The lesson I learned from him was just to delegate, trust people, find the right people, empower them, liberate them, really get the best out of them. You can't achieve scale if you don't have that kind of leaders. That was one big lesson. The second lesson was his love for science, which I also inherited. I go a little broader than him. He was largely into drug discovery. I enjoy process development, synthesis, biologics, all of that at a broader level. I'm not as deep as he was. He was really a chemist and was so fluent with his understanding of the science. My understanding is a little broader, but not as deep. The third thing is about moving on. He would always move on from a failure and look forward. Don't look back and spend too much time on what didn't work. And that is something I'm yet to learn, but I think I should pick it up and be more optimistic. I tend to see what's not going well more than what's going well. Absolutely. And he was always very optimistic and forward-looking, finding ways to motivate people to do great things.
Right. In the industry also, you're actually seen as someone who sees the big picture. A couple of times we met, you'd also said there is some big storm brewing somewhere. So do you think this is the time we see the forces coming together, when you actually see something really big happening?
Many big things are happening actually, and I think we in the industry should be both concerned and also interested and excited. The rate at which biology is advancing is unprecedented. The rate at which science is advancing is also unprecedented. Understanding various aspects of science, not just chemistry, biology, but also medicine, understanding of the human body, how it functions, the basis for disease, the basis for aging, the understanding of cellular mechanisms — all this is exploding. Genomics is finally starting to see application in improving health. Overall, this is a period of unprecedented advancement of science. Companies have to invest thoughtfully, look at the future, really understand where they want to compete and where they want to make a difference. And those are not easy choices today.
Right. So you also mentioned that the transformational side has not really happened and companies are actually pivoting big time into innovation.
Are they? And I don't see a lot of that in India happening. Not yet. But actually we started, the direction is very clear now. More companies like Sun Pharma — 20% of revenue is coming from innovation. Glenmark.
Yeah. You have been actually bolstering your own discovery research. So maybe in 10 years we will be there.
I think we can learn a lot from how the Chinese companies emerged on the global arena for innovation. I would love for the governments to identify five or six areas. I'm glad they're talking the language now. An AI summit is happening and the Prime Minister is talking a lot about AI, about pharmaceuticals, biotech. To identify these four or five areas and really put thought into how we can support innovation in these areas could be a great thing. Biotech, healthcare, medicine, AI, renewable energy — all these are important areas for the country to invest in.
Right. What I'm trying to understand is, because all of these are coming into play now, AI is actually crunching the time taken for drug development, the costs also.
Not so much yet. AI is helping us design the molecules, help us design the biologic as well as small molecules more precisely. Knowing the structures of all proteins is accelerated. But the bottleneck is not in drug discovery. The bottleneck is in drug development.
The clinical trials, the cost of them, the time it takes. Isn't AI helping there because, in terms of identifying trial sites, in terms of understanding whether there will be a patient dropout?
Yeah, so that's a 5 to 10% efficiency gain. Not massively transforming that. But I think there is also a period of hype. I think we're on the hype cycle. We have to be adopting these tools certainly. They're very powerful. But the regulatory system has to change. A lot has to change to enable that.
Right. Talking about transformation, talking about the next big leap. Since you mentioned that you've not done something that could actually be transformational — it's been mostly incremental and then the setbacks you saw with the German buyout and the entire picture changed and gave you the brakes. You didn't move ahead. Do you think that can happen now? Do you think the big challenging bets can be taken?
Yes, of course. I think today the company is much stronger in technology. We were in small molecules, we are now in mAbs, we are in peptides, we are in the newer modalities like oligonucleotides. We have a fairly large portfolio of technologies that we have in-house capability in. My job today is to improve those capabilities to really cutting edge. We are capable, but we are not experts. We are experts in chemistry, in formulation, small molecules. I want the company to, in the next two to three years, become exceedingly good at biologics, peptides, oligos, and fermentation. Also, I think we've been discovery rich, but development poor. I want to connect the dots between discovery to market through a strong development framework or probably a partnership or in-house capability. These are things which will take the company forward in the next 10 years.
Difficult to predict the area of discovery research and whether there will be a commercial success, but any internal approach that you've drawn? One is to do it organically, or through licensing, through partnership, through co-development, or through acquisition.
Earlier our approach has been largely organic. Now I think we will go across all these routes.
Right. So the generic side — you've seen that you spend two, three billion dollars, you get a little. You spend more on the innovator side, you actually get more. So is that pivot expected?
