No more acquisitions only to expand global footprint: Arun Sawhney

Last Updated: Fri, Nov 30, 2012 03:22 hrs

Last week, Ranbaxy, India’s largest drug maker by sales, recalled batches of the generic version of cholesterol-lowering drug Lipitor from the US market, after it suspected the presence of foreign particles in some batches. The company, which is still trying to end its troubled phase in the world’s biggest drug market, is investigating the matter. Despite challenges, it says it is determined to set things right and move ahead with an agenda for growth. In an interview with Sushmi Dey, Ranbaxy CEO & Managing Director Arun Sawhney speaks about the changes in the past four years and how the company plans to address the US concerns. Excerpts:

What has changed at Ranbaxy since it was acquired by Japan’s Daiichi Sankyo?
The big shift has been in the company’s culture. It’s not that something was not right earlier or what we are doing now is absolutely the right way. It’s about the difference in the way we conduct ourselves. It is not unknown or unreal to expect there would be some difference at a company when it is run by professionals from when it was run by a promoter or a family. Those positive differences have begun to show at Ranbaxy.

Are you saying that there was a lack of professionalism at Ranbaxy before Daiichi Sankyo came on board?
Not at all. When it’s a company of Ranbaxy’s size, it does need professionals even when it is a promoter-driven or a family-driven one. However, in spite of professionals, the work culture could be different.

The promoters invested a lot of money in acquiring assets abroad. Has there been a shift from that strategy, too?
Yes, in certain respects. We will not shy away from more acquisitions in the future but we will be very sensible in those. We do not want acquisitions to expand our global footprint. Our acquisitions would be either business- or strategy-accretive or those that bring new technology. Unlike in the past, we would not be too passionate about acquisitions to increase top lines or be present in more geographies.

How confident are you about resolving issues in the US, given that you have repeatedly stumbled on that front?
I am very confident we will meet all the obligations in the consent decree, with timeliness. And, I think, the business agenda should be occupying our minds now. The consent decree will run parallel with our business agenda.

But your confidence, unfortunately, does not get reflected in practice. The recent recall of Lipitor batches seems to have reversed the positive and forward-looking sentiment you built over the past year.
It is an unfortunate incident. No company would like to have a recall. It has happened; we will deal with it with positive energy.

Do you suspect sabotage?
Had I known in advance, obviously, it would not have happened. The investigations are on and we will be able to say further only after it’s completed.

Will the investigation also look into the possibility of sabotage?
It will look at every aspect. I don’t think we should go down that path. If you want to be a respectable company, the first thing you need to see is that everything you have done is alright. Let that be clarified in the investigation.

What about the historical issues in the US? Have you ever conducted an investigation into those issues?
For historical issues, I would not blame anyone outside Ranbaxy. We have to own up. In the consent decree, we actually owned up and said we would set the system right.

It’s a setback for Ranbaxy. How do you plan to deal with it?
We should be strong enough to deal with the situation. Of course, there would be a setback for sales, and results, but we would make a comeback over a period of time. I would say, we have reset the clock. There was a troubled period we went through. What was 2007 is 2012; what we then wanted to be in 2012 will be 2017.

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