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Drug cos pull up socks to stay in race

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P.T. Jyothi Datta

Mumbai, April 3

SHAPE up or ship out is the writing on the wall for drug companies in the country, as their operations become more global and competition hots up at home. And to stay in the race, the companies are injecting a sense of urgency into their HR (human resource) practices and research strategies, observes a pharma sector analyst.

Take for instance Wockhardt's leadership development programme, where promising employees were hand-picked for a week-long multi-disciplinary training at the Indian Institute of Management, Bangalore. This was part of an initiative called "Wheel" or Wockhardt Holistic Excellence Enhancement Lever, kicked-off by the company last year for it's estimated 4,000-odd employees.

Over the last couple of years, drug majors such as Nicholas Piramal India Ltd (NPIL) and Ranbaxy too have rolled-out similar visions for its employees, with the objective of streamlining processes and becoming more competitive, he points out.

Last year, Mumbai-based NPIL unveiled `Project Agya Chakra' or `Third Eye' a five-year plan that prioritised `organic growth'. The three-fold plan sought to drive the company's growth at the domestic, exports and research and development (R&D) levels.

In 2003, Ranbaxy unveiled its `Vision Garuda' strategy, a 10-year plan that aimed at clocking a revenue of $5 billion by 2012.

In fact, points out a pharma industry representative, the sense of urgency gripping domestic companies is even reflected in Dr Reddy's Laboratories' recent deal to get outside funds to support risk-ridden research efforts and Ranbaxy's efforts to settle price-related allegations in the United Kingdom. Niggling issues are being dealt with using innovative and effective strategies, he adds.

The Dr Reddy's deal formalised last week brought in about Rs 245 crore to its research kitty, supporting even the litigation that came with it. More recently, Ranbaxy exorcised an old ghost by settling the price-related case in the UK by paying up about Rs 36 crore.

Unlike multinational companies, domestic drug companies do not have deep pockets. And with the Patents Bill closing the tap on producing copy-cat drugs, local drug companies see their revenues coming from the export markets rather than the local market, a pharma industry representative observed.

So as global drug companies wait in the wings with plans to increase their activity in India, as research and intellectual property gets protected on the ground domestic drug majors are pulling up their socks to stay in the race both at home and abroad.

(This article was published in the Business Line print edition dated April 4, 2005)
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