Dilip Shanghvi Curated
Founder of Sun Pharmaceuticals
CURATED BY :
What are the future plans?
In each of the key geographies including North America, India, Europe, and emerging markets our plan is to grow faster than the market. We have added specialty as a new engine of growth and invested approximately $1 billion in this business over the last 4-5 years. Seven of our specialty products are already in the US market. It is currently a small part but we expect reasonable revenue contribution from this business over the next 3-5 years. Besides, we are also focusing on entering new growth markets like China. We have big expectations from markets like Japan and China.
Are you the face of Sun Pharma and continue to be or will we see your son be on the front foot in days to come?
Traditionally, Sun has a reputation of being reserved with the media. We prefer to let our work speak for ourselves. While this I believe is the right decision for the company, it has led to a perception that Sun has only one visible face. Sun is a professionally run company managed by a world-class team. I don’t plan to retire anytime soon.
Do you think acquiring Ranbaxy was a wise decision?
The acquisition of Ranbaxy has given us size and scale. We have gained market leadership in India and expanded our presence in emerging and other regulated markets. It has given us entry into the OTC space with established brands like Revital and Volini. All parts of Ranbaxy business are growing and as it starts contributing fully to our future growth, there will be a greater appreciation.
In 2015, you were the wealthiest person in India, surpassing Mukesh Ambani. What went wrong? Do you think some bad decisions have been taken?
I believe that valuations based on how the company’s stock price reacts are transitionary.
Do you think pricing pressure in US generic pharma has impacted your profits? Have you made any revamp strategies to cope with the pricing pressure?
The market dynamics in the US have changed in the last few years and it has impacted the entire pharmaceutical industry. To address these challenges, we have taken some steps. We have added specialty as an additional engine of growth in the US. On the front of the generic, we are focusing more on complex & value-added products. Given the tough pricing conditions in the US market, we will continue to focus on cost optimization including the rationalisation of generic R&D investments.
How do you plan to ensure that these corporate governance issues will not take place again? What measures have specifically been taken by the company on that front?
As a leading global pharmaceutical company, we have been adhering to global best practices in the industry. Our board has initiated necessary steps to strengthen the governance standards further.
Are there more issues that need to be settled with Sebi? Or are these issues beyond Sun Pharma now?
We received two sets of queries from Sebi and have shared the requisite information. We hope that they will close the investigation at the earliest.
Do you think Sun Pharma handled the issue well? Do you think it was blown out of proportion?
We are not a very media-savvy company. We tried to swiftly respond to all queries within the constraints of operating as a public company.
You have maintained that there was nothing illegal that the company did. Why did you then make some corrective measures then?
As I have explained earlier we may be legally right but perception is important. Some investors gave us feedback that if it does not significantly impact the company’s cost structures, we should make the changes and we did.
How do you plan to restore the faith of investors? Do you have a correction plan in sight?
Sun has provided consistent returns to its shareholders in the last 25 years and we remain committed to creating long term shareholders value. We have always believed that if you perform well, people will appreciate and acknowledge. In line with this philosophy, we will continue to focus on performance and producing consistent returns that we are known for.
Do you think it has shaken the belief of some small investors, with many exiting the company?
While there has been an erosion of shareholder value for some small investors, we have seen some long term institutional investors have used this opportunity to increase their holding. We have to continue to perform consistently to regain shareholder trust and valuation.
Corporate governance directly impacts the profits and reputation of the company. What problems have you faced ever since these issues surfaced? Do you think the company has lost credibility and reputation?
Our learning is that apart from being right - legally and technically, we also have to take into consideration how the transaction would be perceived by the world outside. Even though our actions were legal and in the best interest of the company, we thought it is important to address investor concerns. There were some perception issues that have already been addressed.
Will Sun continue to be a strategic investor in Taro even if it fails to wrest management control?
We haven't given any thought to this, as it appears to be a low probability outcome, considering the Israeli Supreme Court verdict.
When do you expect Taro to turn a Sun subsidiary?
Once we get a controlling stake.
What will, then, be the acquisition cost for Sun, if all outstanding ordinary shares are rendered in the open offer?
Approximately $200 million (including payment to the Levitts).
Is there a possibility of a revised offer/higher price?
Why should the offer price of $7.75 be attractive to the Templeton/ordinary shareholders?
There is no force on any shareholder to tender their shares in the tender offer. The offer provision was included as an extremely shareholder-friendly move, to ensure that if in the event Taro's share price remains lower than $7.75 per share, then minority shareholders get an exit option at the same price ($ 7.75) as was being paid to the promoters.
What if the promotor family declines to tender their shares for the price offered by Sun?
We hope better sense prevails, but if it does not, we would decide our next step in consultation with our lawyers.
Does this signal an end to the three-year legal battle for control over Taro?
We sincerely hope so. The district court in Tel Aviv was extremely critical of the behaviour of Taro and its directors. The Supreme Court has reaffirmed the district court's finding that Taro and its directors had acted in bad faith. We hope the independent directors now stop using Taro resources to support litigation that solely benefit the Levitts in their personal capacity, at the cost of the minority shareholders. While a request for review by a larger bench of the Supreme Court is possible, from the advice received by us the current case does not appear to qualify. We hope the independent directors don't waste any further resources of the company.
What do you think are the key attributes of a good entrepreneur?
A good entrepreneur is able to spot an opportunity before others see it. He is able to risk money for opportunities that don’t exist today, and he’s able to create a team around him who share his vision and helps in execution and I think continues to learn all the time.
What’s the progress in R&D in your innovation company?
If your question is related to our innovation company (Spark) then I think we are quite excited about our products that are in development for treatment of cancer, certain opthalmological conditions, we see big opportunities when these products will come to market in the next 3-4 years.
What would be your strategy going forward for Sun Pharma as well as Taro?
We would like to create centres of excellence in technology in different research sites that we have in India as well as now in Israel and Canada, and leverage these capabilities to produce innovative and differentiated products and sell them not only in India and the US, but also in regulated and semi-regulated markets as a brand company.
What does this award mean to you?
I think it is a recognition of what Team Sun has been able to deliver in terms of consistently producing above-average growth by focusing on fulfilling what our customers expect from us. So, our focus is on research, manufacturing high-quality products, and looking for products that our customers need to treat our patients with.
What are the key attributes of a good entrepreneur?
"A good entrepreneur is able to spot an opportunity before others see it. He is able to risk money for opportunities that don’t exist today; he’s able to create a team around him who share his vision, helps in execution and, I think, continues to learn all the time."
Will majority growth from launches in complex and specialty spaces?
Do you expect the Indian market to do well more than double-digit growth over the next 5 years?
Sir do you expect US pricing will go up?
What you did to grow your business and acquiring business?
What is your message to companies struggling with sluggish global growth?
What do you have to say about the acquisition?
What do you have to say about the acquisition?
How do you look up at the journey of Sun Pharmaceutical Industries Ltd.?