Anji Reddy’s formula for India’s pharma success

Even in that stellar list of names, Kallam Anji Reddy stood apart for his audacious vision of turning India into a hub for discovering new drugs, and not just reverse engineering them. In his autobiography An Unfinished Agenda, he wrote that “nothing is more joyous (an) experience than the discovery of a new drug”.

The Indian pharma dream

It was once an improbable dream for a country that depended entirely on medicines made by multinationals. Today, India’s $25-billion generics export engine stands as a global success story—but it’s still far removed from the elite world of new drug discovery. Developing a single new drug can cost anywhere between $1 billion and $2.6 billion and take over a decade, with just one in every 5,000 compounds ever making it to patients. Globally, fewer than a hundred companies belong to this high-stakes club, still dominated by Western pharmaceutical giants.

Yet, America’s dependence on Indian generics has become so critical that even Donald Trump’s aggressive tariff regime spared them. With generic drugs accounting for nearly 90% of all prescriptions in the US but only 20% of total drug costs, any tariff-induced rise in prices would have devastated American patients. Indian drugmakers, in that sense, became indispensable to America’s healthcare system.

Anji Reddy can take some credit for that.

Born in 1941 in Tadepalli village near Guntur in Andhra Pradesh, he was the son of a turmeric farmer who made herbal pills and distributed them free, a prophetic glimpse of his son’s future calling. After graduating from the famed Institute of Chemical Technology in Mumbai and completing his PhD in chemical engineering, in 1967, Reddy joined the state-owned Indian Drugs and Pharmaceuticals Ltd (IDPL).

After a seven-year stint with IDPL, where he gained invaluable experience in bulk drug manufacturing, Reddy ventured out on his own. He co-founded Standard Organics and Uniloids before launching Dr Reddy’s Laboratories in 1984 with his life savings of ₹25 lakh. Driving his business was his pricing philosophy: “one dollar equals one rupee.”

Reddy found early success from manufacturing active pharmaceutical ingredients for export to Europe and Russia. But by the 1990s, Dr Reddy’s had transformed into a full-spectrum pharmaceutical company, entering the US generic market in 1997. In 2001, it became the first Indian pharma company to list on the NYSE, raising $132 million in what was seen as a watershed moment for Indian pharma. The stock debuted at $16.50 and climbed steadily, validating Reddy’s vision.

An inspiration

The landscape shifted dramatically in 2005 when India amended its patent laws to comply with WTO obligations under the TRIPS agreement. Until then, India’s 1970 Patent Act only recognized process patents, allowing Indian companies to legally reverse-engineer drugs patented elsewhere and manufacture them using different processes. The 2005 changes introduced product patents, meaning Indian companies could no longer simply copy patented drugs regardless of the manufacturing method used. This called for strategic changes if Indian pharma companies had to capitalize on their early success.

Anji Reddy bet big on drug discovery, investing large sums in this cause. Two new drugs, Ragaglitazar and Balaglitazone, reached Phase 3 trials but had to be eventually shelved. Reddy later acknowledged: “If my drug Ragaglitazar had been successful, we would have been getting royalties of thousands of crores of rupees every year.” The failure coincided with an acquisition gone wrong. In 2006, the company bought Germany’s Betapharm for €480 million but failed to realize any value, forcing a subsequent write-down.

Despite these setbacks, Reddy wasn’t a man to give up. He soldiered on, building on the company’s reputation for quality. When he passed away in March 2013 from cancer at age 71, Dr Reddy’s had become India’s second-largest pharma company with operations spanning 20 countries.

His influence extended beyond his company. He proved to be an inspiration for those who worked with him. Thus, Murali K. Divi set up Divi’s Laboratories, and B. Parthasaradhi Reddy founded Hetero Drugs after previously working at DRL.

Before his death, Reddy also managed a rarity in Indian family businesses: a smooth succession. His son Satish Reddy and son-in-law G.V. Prasad have together continued steering the company, keeping alive his unfinished agenda of making India a force in drug discovery while maintaining its generics strength. As the title of his autobiography suggests, it was a dream that remained tantalizingly incomplete but inspired an entire generation to dream bigger.

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