Pharma major Dr Reddy’s Laboratories has retrenched a couple of hundred employees in the past few months.

According to sources, those who lost their jobs were mostly from the mid-manager level upwards, including high salaried executives. Those given the pink slip were also from across units and geographical locations. Performance-related issues and cost-cutting were the key reasons cited for the retrenchments.

Falling revenue

The Hyderabad-based company has been facing pressure from falling revenues in the US and on the pricing front there. For instance, the revenues from the US declined to ₹6,360 crore in FY17 from ₹7,545 crore during FY16.

In addition, it has been at the receiving end of several regulatory issues, especially with the US Food and Drug Administration including inspections of production units..

The company also had a relatively muted fourth-quarter performance. According to GV Prasad, CEO & Co-Chairman, this was mainly on account of the headwinds in the US markets and a temporary drop in sales in Russia, attributable to a shift in the channel purchasing pattern.

Revenues from India, too, showed 1 per cent YoY growth at ₹2,330 crore.

In an effort to handle these challenges, the company appointed a top executive from Teva, Erez Israeli, as the COO in April. He succeeded Abhijit Mukherjee, who retired after a 15-year tenure.

Dr Reddy’s HR issues have been drawing attention with the many exits and retirements “creating some gaps in management team,’’ according to an investor who did not want to be named. However, while responding to queries recently, Prasad said: “I don’t think that we ever had a gap in our team. We replaced the people who left, with even better people.’’

Last year, Chandrasekhar Sripada, President & Global Head of HR, quit Dr Reddy’s. The position was filled by Archana Bhaskar, who is now Chief Human Resources Officer.

Company’s response

When asked about retrenchments, Dr Reddy’s spokesperson said: “We are focussing on optimising costs as an organisational priority in multiple areas of our operations. We would not like to comment on the specifics of these initiatives at this point in time.’’

The number of employees on the rolls of the company, however, had gone up to 23,524 as on March 31, 2018 (including 904 on contract) compared to 22,681 in the previous year.

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