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'Ranbaxy will always be run independently'

September 12, 2008 17:22 IST

The open offer from Daiichi Sankyo of Japan for 20 per cent of Ranbaxy Laboratories' shares closed last week and another milestone in the acquisition of India's largest pharmaceuticals company was reached. Ranbaxy CEO and Managing Director Malvinder Mohan Singh spoke to Joe C Mathew, Siddharth Zarabi and Bhupesh

Bhandari on what the deal means for him and the company. Edited excerpts:

What led to the Daiichi deal?

Last year, we had taken a call to demerge our new drug discovery research business. At that time, a lot of players had approached us seeking partnerships for this business. I was open to an alliance. Daiichi Sankyo was one of those companies and said it was very keen to partner us. That's how the discussion started.

So it was Ranbaxy's R&D that attracted Daiichi?

Big Pharma wants to engage with generic companies in a larger way to get a better presence in emerging markets, to leverage Indian capability in backend manufacturing and R&D and to get into the generics business. Then there is the innovation that can be leveraged out of India. Ranbaxy fitted in into each of these boxes. We are the eighth largest generic company globally, with a market presence that is broadly spread. Most global generic players are not into developing markets and don't have an India strategy or an Indian base.

There is certainly an out-of-box thinking in what we did. When the world was looking at acquisitions at developed markets two years ago, Ranbaxy was looking at emerging markets. We were the first to get into strategic alliances. We are probably the first in the entire industry to look at settlements of patent disputes with Big Pharma.

Were the patent settlements a pre-condition for the Daiichi deal?

They weren't. These are all independent decisions with different companies. You need to look at each of them independently. There is nothing like everything should be settled or should not be settled. We have got the first-to-launch advantage in 19 cases and only five or six of these are settled. Some are not under litigation, some are. You could win those litigations and launch your product at a much earlier date. You could also lose and get completely knocked out. If you get certainty of launching at a point, then American consumers get certainty that they are going to get this product on a date before the patent expiry. Big Pharma gets certainty, generic producers get certainty.

Is the proposed hive-off of your new drug discovery research arm on hold?

The reason for the demerger was to attract more alliances and partnerships. It was to create an independent vehicle for the growth of innovation. But with Ranbaxy and Daiichi Sankyo coming together, we have that. The two companies put together will rank among the top 15 pharmaceutical companies globally. At present, we were close to number 50 and Daiichi is 22nd.

Do you a board position?

Not a board position. I am part of its senior management team.

Why not a board position?

It's not there (laughs).

You have a joint venture in Japan. What happens to that?

We will have to evaluate different options to best optimise the opportunities in Japan. We will get into those once the current transaction is closed.

How will Ranbaxy look different once Daiichi is in the driving seat?

As a company, Ranbaxy will always be run independently. The board will comprise of some people from Daiichi, some from the family and some independent directors. It will get reconstituted, but nothing changes in the operations of the company. In the management team, nobody comes from Japan. It will be the team I choose to have with the approval of the board. It is really our call on how to run the business. Certainly, the growth will be higher and so will be the size and scale of the investments. It is an aggressive company and you will see a lot more aggression in terms of leveraging opportunities for the next few years.

Ranbaxy has no scientist or doctor on its board...

We have a leading doctor on the board. In the past, we had Nitya Nand and he continues to work with us on the R&D side. He is on the scientific advisory board which meets on a yearly basis to gauge our scientists and work with them. You don't need to have all the skill sets and capabilities at the board level but we need to be able to leverage them.  

MNCs and domestic companies have conflicting views on IPR. What will Ranbaxy's position be?

Ranbaxy has always been pro-IPR. We have always been encouraging the government to have an environment which is conducive for growth, investments and innovation. But, at the same time, we have also said avoid ever-greening.

You have said there were companies trying to scuttle the Daiichi deal?

I think there is enough competitive activity happening against us. And it's still on. I think they all see the potential for Ranbaxy. But, at the end of the day, the deal is on. There is absolutely no change in that. We are working step-by-step on everything that needs to happen. There is absolutely no need for anybody to be concerned or worried. There are some interested parties trying to create confusion.

What will you do with the money?

I haven't thought about it. We have heavily invested in Religare, in healthcare and we will continue to make more investments to grow those businesses and evaluate other opportunities.

Is there a non-compete clause in the Daiichi deal which prevents you from investing in pharma?

I am the CEO of the company and a professional, so obviously I cannot do that. How can you put in your money in a competing business when you are heading that business? I am going to head this company so how can I create another competing brand? But I have an option to buy Ranbaxy shares after the deal is closed. I can buy up to 5 per cent shares from the open market every year.

How long do you see yourself in your current role?

I am here. I am very passionate and clear about the industry and we as a company.

You will be the first person to do so after selling a business.

You are right. This deal is different in many ways. It has never happened before, but you will see more of that happening. What you need to do is to take the right call and do what you think is good for the company.

As a businessman, do you think this is the best option before you? Can't you spend your time elsewhere where you can generate more wealth?

But I am generating wealth anyway.

Now, you just get your salary...

It's my passion. It is the vision for the company and the reason you have done this transaction is to take it to the next level. I need to make it actually happen.

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