New Delhi: Japanese drug maker Daiichi Sankyo Co. Ltd said on Sunday that Malvinder Mohan Singh had stepped down with immediate effect as chairman, chief executive and managing director of Ranbaxy Laboratories Ltd, as it strengthens its involvement in running the Indian pharma company it acquired last year.
While Atul Sobti, previously Ranbaxy’s chief operating officer, was named the new chief executive and managing director under a three-year contract, Tsutomu Une, previously a non-executive director, was promoted as the new chairman of the board.
Parting ways: Singh will address Ranbaxy employees on Monday. Ramesh Pathania / Mint
The decisions were taken at a Ranbaxy board meeting held on Sunday evening.
Ranbaxy has been hit by a US ban on some products for alleged falsification of data, and by foreign exchange hedges that went wrong. Last year, Daiichi Sankyo bought a 63.9% stake, including the founders’ entire stake, in Ranbaxy, aiming to take advantage of rising demand for generic drugs.
But the stake lost at least two-thirds of its value by the end of the fiscal, primarily hit by the weak rupee and the ban imposed by the US Food and Drugs Administration on some Ranbaxy products. Last month, Ranbaxy forecast a loss of $150 million (around Rs700 crore) for this year.
Mint had reported on 14 May that Daiichi Sankyo would soon be strengthening its involvement in Ranbaxy. During a conference call with investors, Daiichi chief executive officer Takashi Shoda had said, “...facing the FDA issues, we have come to the conclusion that we will strengthen our management involvement in Ranbaxy.”
When asked if Singh’s resignation was a personal decision or one taken by Daiichi, Sobti said it was “Singh’s decision that was accepted by the board of Ranbaxy”. Meanwhile, Une ruled out any plans to delist the company.
Singh had assumed the additional role of chairman in December for a five-year term, following the company’s takeover by Daiichi Sankyo. Singh joined Ranbaxy in 1998 and its board in 2003.
Besides the positions he held in Ranbaxy, Singh is also a non-executive chairman and promoter of Religare Enterprises Ltd, a financial services company, and is also the chairman of the board of Fortis Healthcare Ltd.
In a statement issued by Ranbaxy, Singh said: “It was a difficult decision to separate from Ranbaxy. But it was the right time for me to do so. I leave with complete confidence that initial transition phase following Daiichi’s acquisition of majority shareholding interest in Ranbaxy has been completed successfully...”
Daiichi acquired the 35% equity stake in Ranbaxy held by the Singh family for around Rs10,000 crore. This month, Daiichi, which paid almost $5 billion for its 64% stake in Ranbaxy, posted a loss of 335.8 billion yen (Rs17.15 trillion) for the year to 31 March, due to its one-time write-down of goodwill of 351.3 billion yen that related to its investment in Ranbaxy. The company also announced a freeze in bonuses to its executives and a cut in its dividend for the fiscal.
“Singh will address Ranbaxy employees on Monday and further decisions regarding the board will be taken at the company’s AGM (annual general meeting) on Thursday,” said Sobti.
Two other Ranbaxy board members also stepped down—Sunil Godhwani, chief executive and managing director, Religare Enterprises, and lawyer Balinder Singh Dhillon. The new board currently comprises seven members.
Commenting on the changes, Shoda said in a statement, “We very much appreciate the efforts of the Singh family, which grew Ranbaxy from a small, local Indian company to the large multi-national company it has become today. We especially acknowledge the contributions of Singh. His strategic vision and passion for the pharmaceutical industry will be missed in Ranbaxy’s operations.”
Reuters contributed to this story.