Born in a family of farmers, Penaka Venkata Ramaprasad Reddy, co-founder of Hyderabad-based Aurobindo Pharma had remote odds of building a pharmaceutical enterprise. But with an astute sense of business from the early days, Reddy's drive pushed him to do something of his own. Early in his career, a brief association with late Dr. K Anji Reddy, the legendary doyen and founder of Dr. Reddy’s Labs, perhaps kindled new ideas in the young mind of Ramaprasad Reddy.
Dr. Anji Reddy, a scientist to the core, was then trying to stabilise a fledgling business. His deep knowledge of synthesising drugs with easier and cost-effective techniques helped Ramaprasad Reddy get a fundamental understanding of the sector. Thus, the intrepid explorer and a sworn workaholic, set up his first venture, a trading house for bulk drugs, recalls one of Reddy's former associates, who requested anonymity.For the business to reach a scale, the makings were ripe. With India emerging as a potential sourcing hub for raw materials or bulk drugs for the US and European multinational companies, which had to align with stiff environmental regulations and control production overheads, Reddy's unit had a headstart and to keep pace, was his growing ambitions.
As demand for low cost active pharmaceutical ingredients (APIs) firmed up further, a determined Ramaprasad Reddy sensed an opportunity to move into toll manufacturing of small batches of antibiotic drugs. The expansion followed, and in 1986, it was time to give shape to Aurobindo Pharma, along with his long-trusted partner K Nityananda Reddy. From building a single semi-synthetic penicillin manufacturing site, Aurobindo has now expanded its network of manufacturing facilities. At last count, its latest presentation shows 23 facilities of which three are in the US.
The company stands among the most vertically-integrated players in India drawing as much as 70% of its own material for formulations. The distinct advantage is unmistakable. In its latest USFDA approval for the generic versions of Genzyme’s (now Sanofi) Renvela (sevelamer) tablets used to treat end-stage kidney ailments, Aurobindo scored a significant win, while others fell short of crossing the regulatory green signal. Aurobindo’s product filings is said to be from its indigenous facilities and therefore, navigate the technological barriers countered by others in the process of making the APIs.
The ride, however, has not been without its share of setbacks. Adverse observations from close monitoring by the USFDA has at times threatened to hobble plans. But the product launches in the US, for most part, have remained on track as the company tightened its quality management systems.
Spanning the three decades of its existence, industry executives reminisce, Aurobindo had at one stage nearly caved in to competitive pressures. In the nineties, Aurobindo had a tough choice to make when the Chinese manufacturers virtually took siege of the Indian market, dumping raw materials at throwaway prices, flattening out scores of Indian manufacturers. In 2002, executives say, Ramaprasad Reddy sensed a looming uncertainty of a squeeze out crushed under the sheer scale of Chinese domination. Showing deft, he moved upstream tilting the business model to line up a blitzkreig of filings for formulations in the US. The gambit paid off and a long runway opened, eventually moving Aurobindo in the league of Sun Pharma, Ranbaxy and Dr. Reddy’s. While dozens of pure-play bulk drug makers were brutally chocked in the rate war with China, Aurobindo saw opportunity in those challenges.
“If he trusts you, he firmly backs your decisions. If he does not, he can be tough,” said an industry veteran about Reddy, who worked for the company for nearly a decade. Around the time of his exit, the executive recalls, media speculations were rife about Aurobindo engaging in serious discussions with a large US generic drug-maker. He rubbished those rumours as myth crytpically indicating Aurobindo had more intriguing plans.
If true, that grand design reflected Ramaprasad Reddy’s global ambitions. It was to get a bigger size through a merger or a share swap, a unique construct, that could leapfrog Aurobindo and give it a worldwide footprint. Although that deal never materialised, the offer, says the executive, was structured to enable a controlling shareholding for the Indian firm. In effect, Aurobindo was close to acquiring the management control of the combined entity, far from being sold. Ramaprasad Reddy is reticent and has very rarely (if at all) spoken to the media, mirroring industry stalwart and billionaire Dilip Shanghvi, the founder of Sun Pharma.
An ex-colleague says Reddy has no hobbies other than sinking deep in work and passionately plan market strategies. One exceptional moment of triumph for Reddy and his team, the executive recalled, was when at the peak of a global shortage of low-cost drugs for AIDS, Aurobindo trumped Cipla, offering a much lower rate to the MSF, the global aid agency.
Shuttling between India and the US, Ramaprasad Reddy may have more aces up his sleeve. The ongoing momentum of product approvals in the US show his company is primed to add heft. Last year, after a fierce bidding war with Intas Pharma to buy select assets of Teva in the UK, Aurobindo took an unexpected step back in the final stages of the deal. People familiar with that transaction say Reddy had second thoughts on the actual benefits of the deal versus a pay out of Rs 5,100 crore. Ramaprasad has struck deals that are typically smaller or bolt-on targets that add to the technological capabilities of the company, results in expansion of the geographical presence and adds to the company’s bottom line in a relatively shorter time.
As an executive working in a rival drug firm in Hyderabad puts it, Reddy puts the company ahead of any other considerations. He adds, Reddy never fails to reward his employees, not just in terms of incenntives but also generously doling out stock options down to the lowest rank of colleagues. From a modest family of farmers to now leading a business that exceeds Rs 15,000 crore in revenues, the 58-year old Ramaprasad Reddy is not showing signs of retiring yet. The game is on.
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