Will Dr Reddy’s step up IT investment after cyberattack?

Dr Reddy’s Laboratories faced a major data breach last week forcing the pharmaceutical company to shut down its key facilities.
Dr Reddy’s Laboratories
The Indian pharmaceutical company experienced data breaches in servers in the UK, the US, India, Brazil and Russia.

The drug maker in a media statement said it isolated all data centre services to implement preventative measures in the wake of a detected cyberattack from the malware. The firm did not reveal more details on the cyber security incident.

Dr Reddy’s, which clocked revenue of $2.4 billion, said it anticipates all services to be up within 24 hours and does not expect any major impact on operations due to the cyberattack.

Mukesh Rathi is the CIO of Dr. Reddy’s Laboratories. The generic pharmaceutical company is focusing on digital transformation to improve efficiency of its operations. The company never disclosed its IT partners.

Gartner report says IT spending in India will drop 8.1 percent to $83.5 billion in 2020 as a result of Covid-19 disruptions. This is the first decline in IT spending experienced in India in the last five years.

“The fear of a global economic recession due to the COVID-19 pandemic is forcing CIOs in India to be very cautious on their IT spending this year. In partnership with their CFOs, CIOs in India are reprioritizing their IT budgets on mission critical initiatives,” said Naveen Mishra, senior research director at Gartner.

Enterprise CIOs will be giving focus on technologies such as desktop as a service (DaaS), infrastructure as a service (IaaS), virtual private network (VPN) and security.

The cyberattack on Dr Reddy’s Labs is a reminder to strengthen its digital infrastructure and tighten cyber security control measures, according to a report by HSBC.

The report said damage control and restoration of operations is crucial. It said Dr Reddy’s is a front runner among peers in terms of investing for digital transformation initiatives as well as for new age cyber securities technologies.

Data breaches and cyberattacks are common place, with the pharmaceuticals industry one of the sectors most impacted, after healthcare, energy and finance as per a study by Ponemon Institute, and IBM Security.

Leading pharmaceutical company Merck had faced a cyberattack in June 2017 resulting into disruption of its operations and sales losses of $260 million due to nonfulfillment of orders. Merck incurred incremental costs (incl. remediation costs) of $285 million in 2017.

HSBC said the risk of cyberattacks on the pharmaceutical industry is amplified by remote working during the COVID-19 pandemic. Pharmaceutical manufacturers need to invest and strengthen cyber security systems to avoid or minimise operational disruptions, high costs of control, and to contain damages and any potential lawsuits or regulatory penalties.

Baburajan Kizhakedath

Related News

Latest News

Latest News