New Delhi: Last year, after Malvinder Mohan Singh and his family sold their entire stake in Ranbaxy Laboratories Ltd to Daiichi Sankyo Co. Ltd, Singh stayed on as chairman, chief executive and managing director (he eventually exited the company late last month).
Dynamic duo: Malvinder Singh (left) and his younger brother Shivinder Singh, with whom he built Fortis Healthcare. Photographs courtesy India Today
By staying on, he was merely following in the path of Gurbax Singh—the “bax” in Ranbaxy is from the second syllable of his first name—who, 56 years ago, stayed on as president of the board after selling the company to Bhai Mohan Singh, Malvinder Singh’s grandfather, for all of Rs2.5 lakh.
The Singh family made many times that when it sold the firm to Daiichi, Japan’s third largest pharma company, earning Rs10,000 crore for its 34.82% stake.
Gurbax Singh’s sale and eventual exit from the company—the other co-founder, Ranbir Singh, from whom Ranbaxy gets the first part of its name, had left long before—was only one of the many changes the pharma company’s management and strategy would see in a tale of twists and turns. And the Ranbaxy story is as characteristic of what happens in most family-owned and -run businesses in India as it is of the Indian pharma industry’s evolution—from makers of cheap, illegal copycat drugs and suppliers of raw material to respected manufacturers of generics, legal copies of off-patent drugs and, ultimately, to research-driven firms.
Much of the early part of the company’s history, till December 2003, is well chronicled in business journalist Bhupesh Bhandari’s book The Ranbaxy Story. Bhandari, now an editor at Business Standard, would probably have had a better yarn to tell if he had waited.
When it was founded in 1937, the then Ranbaxy and Co.’s first business was reselling drugs made by Japanese firm A Shiniogi. Seven decades later, the Singh family sold out to a Japanese firm.
The second sell-out
In June 2008, the stock market knew the Singhs were looking to sell a significant stake in Ranbaxy. The company’s stock was up and “everyone knew that they were selling and it was just a question of who they would sell to and how much the valuation would be”, according to an equity analyst who has followed Ranbaxy’s progress for around 10 years.
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So, when the announcement finally came on 11 June, Ranbaxy’s shares remained almost flat, rising as high as Rs592.70 in intraday trade, but closing at Rs561. “Of course, investors thought the sell-out was a good thing, but they also wondered why Malvinder (Singh) was selling and whether he knew something about the company that others did not,” added the same analyst, who asked not to be identified because he is not allowed to speak to the media.