You have to take business risks: Dilip Shanghvi on buying Ranbaxy

Was the move to acquire Ranbaxy more of an entrepreneurial decision than one driven purely by numbers and related due-diligence? Yes, says Dilip S Shanghvi, founder and managing director of Sun Pharmaceutical Industries.

"You have to take business risks," he said while speaking to the media in Hyderabad on January 23 on the occasion of the launch of the memoirs of Dr Reddy's founder Kallam Anji Reddy.

In April 2014, he had jolted the Indian pharma industry with his move to acquire the beleaguered Ranbaxy Laboratories.

Shanghvi was candid about the challenges on the regulatory front given that all the four Ranbaxy manufacturing units in India today are facing compliance issues with the US Food and Drug Administration.

"More than anything else, the ability to regain the confidence and trust of the regulator is the most important challenge for us," says Shanghvi.

Listing out what he thought are the key challenges before him once the decks are cleared for the integration of the two companies (today they need to clear a couple of regulatory hurdles), Shanghvi says, "Ranbaxy has a product portfolio that is very different from ours.

So, as a company we have to rapidly learn to manage an acute (therapy for ailments like cold, cough, malaria) portfolio of products.

Also, Ranbaxy has a significant presence in other countries whereas we have either very small presence or no presence at all.

So, how do we use their experience and our lack of familiarity with those countries to help the company succeed in those geographies. I see these as important challenges for our future growth."

On the existing spread of manufacturing sites of the two companies and the plan ahead, he said, "The first challenge for us would be to look at the manufacturing footprint of the combined company and then take a decision on how we wish to expand."

He said this in the context of Sun's plans to enter a new place like Andhra Pradesh, known for its pharma ecosystem. He said the company will take a call on this after the two companies fully integrate.

"We don't have too much information for Ranbaxy facilities at the moment." After integration, he said, "We will spend time understanding their capabilities, infrastructure and capacity utilisation. We continue to look at Andhra Pradesh. (both the states of Andhra and Telangana). We currently have no investments here but looking at the way the industry has progressed in Andhra Pradesh both in APIs (active pharmaceutical ingredients) and in dosage form, it does make sense to seriously look at this because there is significant availability of talent and universities that produce world-class graduates."

On the demands on the managerial front, he said, "Ultimately our ability to succeed with the scale that we will achieve (post Ranbaxy integration) is linked with a few things that we will need to do well: one being the ability of the managers to perform on a much broader scale and second being our ability to work well as an effective team." On what's occupying his mind today and the evolution in his role, he said, "I need to reach a situation where I am not responsible for anything. In the sense of direct accountability because if there is something I am managing myself then there is nobody reviewing it."

In this context, he says, he has tended to get involved in some areas like R&D for instance because of his interest.

On succession planning within Sun Pharmaceuticals, he gave the impression that it was an issue that was actively engaging his attention but did not wish to spell out the details of his thought process. "My general approach is that there are things that I am actively involved about which I try not to talk too much about. This is one such area," he says.