BackWe want to focus on growing faster: Dilip Shanghvi
Following the completion of the Ranbaxy deal, the Sun Pharma founder is now the richest man in India
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On Wednesday, as the Sun Pharmaceutical Industries Ltd-Ranbaxy Laboratories Ltd merger closed, the former’s founder Dilip S. Shanghvi overtook Reliance Industries Ltd’s Mukesh Ambani as India’s richest person, according to the Bloomberg Billionaires Index. Shanghvi has a net worth of $21.7 billion, while Ambani, who’s been India’s wealthiest man since the inception of the Bloomberg index in March 2012, has a $21.6 billion fortune.
Shanghvi, who is a commerce graduate from Kolkata University, learnt the ropes of the business from his father, a wholesaler of generic and branded pharmaceuticals in Kolkata. In an interview, the first generation entrepreneur spoke about the merger and his plans for the combined entity. Edited excerpts:
You became India’s richest man. Did you ever imagine that this day would come?
No, it just happened. That is it.
Going ahead, would you be open to more big ticket acquisitions such as Ranbaxy?
The Ranbaxy acquisition doesn’t preclude us from making more large acquisitions. The important issue is whether we have the management bandwidth to handle the acquisition. We have a balance sheet that allows us to pursue large acquisitions.
Ranbaxy has had its share of troubles with regulatory agencies. That didn’t stop you.
Whenever you look at any potential merger or acquisition you look at the potential to create value for your shareholders. In our own assessment, the regulatory issues that the company had been facing over the last few years had already been factored into the company’s performance. Anything that we could do to solve this could only add value. Because we are focused on fixing problems, not just superficially, but trying to understand the underlying issues..., so we felt comfortable that we would be able to integrate the two companies and create value for our shareholders.
Both Sun Pharma and Ranbaxy have had issues with the US Food and Drug Administration. Is this a matter of concern?
It’s not concern, but one has to manage this combined entity (so as to clear all regulatory hurdles).
Apart from the products which you had to divest on account of India’s anti-trust regulator’s order, are you looking at divesting any more products as you integrate the Ranbaxy product portfolio with that of Sun Pharma’s?
We haven’t looked at that yet.
What are the immediate focus areas for the combined entity?
When we announced the merger almost a year back, we said that the focus of the merger was to accelerate the growth of both the companies. India is a large market where our focus will be to grow faster than the market and add few percentage points to our market share every year. The US is the largest market and the focus will to be see how we can bring back many of the Ranbaxy products which are not in the market and improve market share, and strengthen our branded business. We want to focus on growing the business faster than historical growth rates.
Post the merger, the emerging market business has become a significantly larger part of the business than what it used to be. We have now five markets in which we have sales of close to $100 million, including Russia, South Africa and Romania. We will work on increasing market share in each of these geographies. Almost 40% of the turnover of the merged entity comes out of India and other emerging markets, which are high-growth markets.
We want to increase the presence of consumer healthcare business to geographies where we don’t have a presence now. The active pharmaceutical ingredient business, which we see as an enabler of the business, historically used to be a larger part of the business. We will look at how we can regain some of this lost business.
(Again), the idea is that each of the businesses should grow faster than the market.
Are you looking at workforce and manufacturing restructuring?
We are currently not looking at restructuring. We are looking at finding a way to utilize all the talent available within the company so that we can become a more successful company going forward.
On the manufacturing side, the combined company has a very large manufacturing footprint. At Ranbaxy, almost 40% of the turnover comes from products manufactured outside, so the idea would be to bring this production in-house. That would help use capacity more effectively and manage costs. Post this process, and if all the businesses continue to grow at the rate at which they have in the past, then we should be able to use any spare capacity we have.
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