Q&A with Dr. Reddy’s Marc Kikuchi
MedAdNews: Since joining Dr. Reddy’s North America business in February 2019, what are some of the company’s accomplishments you are most proud of?
Marc Kikuchi: You know, what I’m most proud of is that prior to my joining our North America operations, we had a few years of declining sales, and now this will be the third consecutive year of growth, and not a lot of companies our size in the generics business can say that. There’s been top-line growth during this phase, and I think it’s the result of a lot of hard work from the team here and a lot of execution. During this three-year time frame, we’ve launched almost 80 new products and nearly doubled our product portfolio. So, these are the things that I’m most proud of. It’s this back-to-basics mentality, focusing in on executing and getting the results.
MedAdNews: Where do you see the potential for growth in the next few years?
Marc Kikuchi: In the next few years I think we’ll continue to expand our portfolio in our core areas of retail, institutional and OTC. We have the traditional oral solids as well as the injectables portfolio, but most of the rapid growth will come from the significant expansion of our health systems portfolio. Also, a lot of people don’t realize we’re the second largest OTC manufacturer in the United States, albeit a distant second behind Perrigo, and we now have our presence in Canada. We’ve gone from having no sales there about six years ago to a decent presence now.
And, you’ll see us transition more into the specialty products, the specialty generics, more complex generics.
We’re also branching out more into what we’re calling the self-care space. COVID really accelerated the adoption of this self-care, where patients could go to an app and the app would connect patients either with physicians or products. I think that’s definitely an accelerating trend.
MedAdNews: Regarding the self-care, is that to a large extent app-centered? Does that mean bringing on more IT people?
Marc Kikuchi: One of the things we’ve done in the past three years is a heavy investment in digitalizing some of our core processes, such as product management, key account management and bid management. We’ve invested a lot of time and energy in this area. We collate all of that data and then we can access it through different platforms. So, we’ve really invested heavily in digital. We also launched Dr. Reddy’s Direct.com which is a vehicle for hospitals to be able to order products directly from us. If they want a particular product, and the wholesaler doesn’t have it, or it’s not on a particular contract, we’ve created this portal, which the hospitals can use. So, yes, we’re continuing to evolve our digital journey.
MedAdNews: Does the growth mean that the company is scaling up as far as personnel?
Marc Kikuchi: You need to be competitive in this industry, but unfortunately if we’re doubling our portfolio we don’t have the luxury of doubling our staff. So, we have to figure out how we can automate or digitize some of the routine or mundane activities such as how the same amount of people can do twice as much work. It’s the proverbial we need to do more with less, which you hear a lot of companies saying. I’m saying we need to do more with the same.
MedAdNews: How has Dr. Reddy’s changed the way the business operates during the pandemic?
Marc Kikuchi: So, from a global perspective it was a huge wake-up call for us, and thankfully we were prepared. We’ve always carried a few months of safety stock of our APIs. What it did is remind us the importance of having that safety stock so that we can weather through supply chain disruptions.
It also forced us to become more thoughtful in terms of production. One of the silver linings with the COVID restrictions, you were only allowed to have maybe 55 percent of your historic staffing out on site at any one time, just so you could have social distancing. Well, with 55 percent of our staff, we were still producing about 85 percent of our historic levels. Now we’ve been able to ingrain some of those efficiencies. Previous to the pandemic there’d been some discussion about us carrying too much inventory. Well, the pandemic showed exactly why we have three months of inventory on hand here in the United States. And during the pandemic we were absorbing almost $1 million a month in extra supply chain costs. It was almost that much extra in air freighting products from India to here. Having the inventory available enabled us to keep our costs down and products available, at affordable prices for the patient. So, we ended up not passing on those costs to our customers.
MedAdNews: There has obviously been a big shift towards working remotely. How is that trend affecting Dr. Reddy’s?
Marc Kikuchi: Yes, and I think you’re seeing this trend across several industries, whether you call it the great resignation or the great migration. It’s not that people who are resigning are not going somewhere, they’re resigning from one company and showing up at another one. And, I think what’s become very apparent for us is that people are looking for more work-life balance, and I think that’s a positive sign. Maybe we were spending way too much time in the office, 50 to 60 hours a week, and COVID has reminded us of the importance of balance. We have flexible hours and we were remote up until the fall, and then we had employees come back to two days a week. And they could pick which two days they wanted to come into the office. Our office has actually been open since September, but after not being in the office for about a year, it’s tough to come back from zero to five days. And, that’s why we’ve been trying to be very accommodating and even today it’s just three days a week in the office. Fortunately, we have enough space so people can social distance while they’re here.
The one thing I missed being out of the office was those spontaneous interactions, the five minutes between meetings where you’re walking from one conference room to another. Or, those little conversations if a situation arose, where you can walk one floor down, go find the head of quality, and have quick conversation rather than trying to ping him on your phone or have a TEAMS meeting. There’s a lot of benefit in not having to schedule a 30-minute TEAMS meeting for a four or five-minute conversation.
We’ve hired close to 40 people during COVID and some of them that I interviewed virtually I’m finally getting to see in person. Now that they’re here in the office they’re not just a picture on TEAMS, or initials. One of the guys we hired, when I saw him in person I realized he was way taller than I thought. On the video, you can’t tell if someone is 5’6” or 6’5”.
MedAdNews: How has your business experience helped you after joining the company?
Marc Kikuchi: Let me tell you a little bit about my background. I’m actually a biochemist by training and I started my career at Incyte Pharmaceuticals as a researcher prior to them going public. So, two great things happened when I worked at Incyte – they went public, and I met my wife. She prefers I switch around the order when I tell this story. That period of my life was a lot of fun but after being there for four years I realized I wasn’t a very good scientist. So, I went back and got my MBA from Carnegie Mellon and then did management consulting for a boutique firm that was ultimately bought by PwC.
And then in the late ‘90s everyone was becoming an entrepreneur, millionaires overnight. So, three of us from grad school got together and raised $13.5 million dollars in venture capital based on a business model of high-quality childcare for low-income families. We built 50 childcare centers across Michigan, Ohio, Pennsylvania, and New Jersey. We renovated dilapidated buildings, turning them into childcare centers, hiring local folks. Unfortunately, when we needed additional funding, we went from owning the company to working for it.
In the early 2000s, I went to work for a medical device company in Pittsburgh call Medrad, a subsidiary of Bayer. There, my team was responsible for setting up manufacturing operations in China and Western Europe. It was my first true global management experience.
After that, I went to AmerisourceBergen, and I spent almost a dozen years there. I was responsible for the generics program that represented less than 10 percent of revenue, but over half of the profitability for the company.
During my last few years there, I was the procurement officer, responsible for all the manufacturing relationships, spanning branded, specialty, consumer, animal health and of course, generics.
And, you know, generics is all about relationships, so in 2015 Zydus Pharmaceuticals reached out to me to run the Americas for them. I worked there for three years before coming here to Dr. Reddy’s. So, I was able to combine the global experience with the entrepreneurial experience of building your own company from a zero entity to a $50 million a year business.
In my entrepreneurial venture I was doing everything, HR, legal, finance, quality, business development. You learn all aspects of what it takes to run a company.
MedAdNews: Let’s shift the focus a little here. How do you position Dr. Reddy’s to differentiate itself from competitors in the generic segment?
Marc Kikuchi: So, this is where I wear my customer hat for a second, right? Customers usually have four criteria. The price, and you still need to be competitive on price. The next is about your quality track record and then consistent supply. Those are three keys and then if everything was equal amongst those then it comes down to the relationship with the manufacturer. We pride ourselves on being easy to do business with; we’re very responsive to customer inquiries and proactive in terms of communication. When we have a delayed shipment we give our customers a heads up. That’s how we differentiate ourselves, through the ease of doing business, because price is the price and we do have a strong quality record and consistent supply. Finally, an additional consideration is the breadth of our portfolio of products.
The fact that we are getting close to 200 product families for our customers means that hopefully we can become a more meaningful partner with them and move the conversation to more of a strategic portfolio discussion on how we can better work together.
Marc Kikuchi serves as CEO, North America Generics, Dr. Reddy’s Laboratories. He is based in the company’s Princeton, New Jersey, office. Kikuchi has more than 20 years of experience in the pharmaceutical industry with extensive knowledge and understanding of generics.