Dr Reddy's Laboratories To Cut Workforce Costs By 25 Per Cent, Layoff Employees With Salary Over Rs 1 Crore: Report

Additionally, some employees in the 50-55 age bracket, primarily within the research and development division, have been reportedly offered voluntary retirement packages.

A 25 per cent cut in workforce costs is estimated to generate savings of around Rs 1,300 crore annually for the drugmaker.

Source : Freepik

In a strategic move to rein in rising expenses, Dr Reddy’s Laboratories has reportedly undertaken a major cost-cutting drive that could lower its workforce-related expenses by nearly 25 per cent. According to media reports, the pharmaceutical firm has begun reducing headcount, particularly targeting employees drawing annual salaries exceeding Rs 1 crore.

Additionally, some employees in the 50-55 age bracket, primarily within the research and development division, have been offered voluntary retirement packages. The company’s reported decision to trim its employee base is being seen as part of broader efforts to sharpen operational efficiency, reported IANS. As of now, no official comment has been made by the company regarding the reported layoffs.

Cost Savings Of Rs 1,300 Crore

The restructuring comes at a time when the company is facing performance concerns linked to recent business ventures. These include forays into nutraceuticals through a partnership with Nestlé and investments in digital therapeutics and new product categories. According to the reports, early signs of underperformance in these areas may have triggered the internal review leading to the current downsizing. 

Notably, speculation is also mounting around a potential winding down of the digital therapeutics business, while the nutraceuticals division may also see headcount reductions. If executed as reported, these changes could affect approximately 300 to 400 employees across departments.

The cost benefits, however, could be significant. A 25 per cent cut in workforce costs is estimated to generate savings of around Rs 1,300 crore annually for the drugmaker.

Employee Costs On The Rise

In the third quarter of FY25, Dr Reddy’s reported consolidated employee benefit expenses of Rs 1,367 crore—an increase of 7 per cent from the Rs 1,276 crore recorded during Q3 FY24. During the FY23-24 period, the company hired 6,281 new employees and spent Rs 39.2 crore on training and development. Its overall employee benefits expenditure for the year stood at Rs 5,030 crore, with the median salary rising 7 per cent year-on-year.