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Business News/ Companies / Petition against Sun Pharma for allegedly violating merger norms

Petition against Sun Pharma for allegedly violating merger norms

Union claims Sun transferred and demoted some employees belonging to Ranbaxy after acquiring the firm

A file photo of Dilip Shanghvi, managing director of Sun Pharmaceutical Industries. Photo: BloombergPremium
A file photo of Dilip Shanghvi, managing director of Sun Pharmaceutical Industries.
Photo: Bloomberg

Sun Pharmaceutical Industries Ltd, which acquired Ranbaxy Laboratories Ltd last year, is facing protests from its sales force after the country’s largest drug maker allegedly transferred and demoted some employees belonging to the acquired company.

On Wednesday, the Federation of Medical and Sales Representatives Associations of India (FMRAI), the largest grouping of medical sales representatives in the country, filed a petition against Sun Pharmaceuticals in the Punjab and Haryana high court.

In the petition, FMRAI alleged that Sun Pharma had violated the directions given by the court at the time of the merger approval by transferring senior medical sales representatives of Ranbaxy.

The petition also alleged that trainee medical sales representatives, recruited by Ranbaxy Labs, were issued probation letters as sales executives in an illegal manner. The salary paid to sales executives is much lesser than what is paid to medical sales representatives, FMRAI alleged in the petition.

“We are in compliance with all merger requirements. Furthermore, we are studying the matter and will take necessary steps," said a Sun Pharma spokesperson.

The $3.5 billion Sun-Ranbaxy merger was completed in March.

The petition alleged that hundreds of employees were transferred in July and 54 union leaders were transferred in November. It added that the management of Sun Pharma terminated a wage agreement signed between the union and the management of Ranbaxy in 2013.

“The medical sales representatives at Ranbaxy are not used to the unfair marketing practices which are followed by Sun Pharmaceuticals. Hence, they need to terminate former Ranbaxy staff, especially the union leaders," said Alok Banerjee, secretary, FMRAI.

“We knew that Sun Pharma’s managing director Dilip Shanghvi said on several occasions that any kind of union activities will never be allowed in Sun Pharma," Banerjee said.

The petition is asking the court to quash the probation letters issued to the trainee medical sales representatives as sales executives and to direct Sun Pharma to issue fresh probation letters appointing them as medical sales representatives.

Last month, FMRAI filed a separate case against Sun Pharmaceuticals under the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act.

That case was filed citing unfair labour practices in the transfer of 54 sales representatives, most of whom belonged to FMRAI.

Integrating two large businesses is a challenging task, said Kewal Handa, a former managing director of Pfizer Ltd. “The synergy of the merger will be captured only through restructuring and consolidating the businesses. There would be cha-llenges for the management as well as for sales representatives while the organization should be fair enough to create a good climate for the exits," he said.

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Published: 08 Jan 2016, 12:42 AM IST
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