Dr Reddy’s Laboratories: Problems in the Mexico Plant

Abstract

The case focuses on the problems faced by Dr. Reddy’s Laboratories (DRL), a leading Indian pharmaceutical company, with respect to its Mexico plant in 2011. The company had acquired the plant, which supplied these bulk drugs to other pharmaceutical companies in the West, from Roche. DRL received a warning letter from the US drug regulator, USFDA, for violating current good manufacturing practices. USFDA inspected the plant and found it non-compliant with the manufacturing practice norms for APIs. The FDA sought an answer from DRL within 15 days of the letter. Though the company managed to submit a report to the USFDA within the stipulated time, a ban was imposed on the import of products from the Mexico plant as USFDA was not satisfied with the company’s response.

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Issues

The case is structured to achieve the following teaching objectives:

• Understand the link between strategy and operations.
• Understand the issues and challenges in quality management.
• Understand the issues and challenges for a company from an emerging market competing in the global markets, particularly markets in the West.
• Understand the issues and challenges in competing on low cost and sustaining the low cost competitive advantage.
• Understand the importance of operational effectiveness in sustaining a low cost strategy.

Keywords

Quality management; Quality assurance; Good manufacturing practices; Link between strategy and operations; Competitive strategy; Low cost strategy; Strategy clock; Sustaining Low cost advantage; Porter’s Diamond model; PESTEL; Mergers and acquisitions; FDA warning letter

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