Organisational Study of Ranbaxy

Submitted By: Ankita Gupta 2009069 Ankur Jaggi- 2009070 Jaspreet Singh 2009081 Kaveri Kshirsagar- 2009085 Mayur Nayak 2009090 Salil Sharma - 2009106

Table of Contents
About the Company ................................................................................................................................ 3 Vision, Mission & Values ..................................................................................................................... 3 Company History:................................................................................................................................ 4 Timeline and achievements: ............................................................................................................... 4 Financials:............................................................................................................................................ 5 Products: ............................................................................................................................................. 5 Worldwide Operations: ....................................................................................................................... 6 Environment in which Ranbaxy operates ............................................................................................... 7 Indian Pharmaceutical Industry: ......................................................................................................... 7 Reasons for successful development of Indian pharmaceutical sector:......................................... 8 Generic Environment: PEST Analysis .................................................................................................... 9 Specific Environment: .......................................................................................................................... 11 Competitors:...................................................................................................................................... 11 Government Regulation: ................................................................................................................... 11 Patent Protection: ......................................................................................................................... 11 Business Strategy of Ranbaxy: .............................................................................................................. 12 R&D-Creativity and Innovation: .......................................................................................................... 15 Novel Drug Delivery Systems (NDDS) ............................................................................................... 15 New Drug Discovery Research (NDDR) ............................................................................................. 15 R&D Infrastructure ............................................................................................................................ 16 People ................................................................................................................................................... 17 Work Environment ............................................................................................................................ 18 Employee Development.................................................................................................................... 19 The Management Trainee Programme ......................................................................................... 20 Succession planning at Ranbaxy: ...................................................................................................... 20 The Daiichi-Sankyo Deal ...................................................................................................................... 22 Shareholding Pattern (Before Acquisition) ....................................................................................... 23 Shareholding Pattern (After Acquisition).......................................................................................... 23 Advantages from the deal:................................................................................................................ 23

About the Company

Ranbaxy Laboratories Limited (Ranbaxy), India's largest pharmaceutical company, is an integrated, research based, international pharmaceutical company, producing a wide range of quality, affordable generic medicines, trusted by healthcare professionals and patients across geographies. Ranbaxy today has a presence in 23 of the top 25 pharmaceutical markets of the world. The Company has a global footprint in 46 countries, world-class manufacturing facilities in 7 countries and serves customers in over 125 countries.

In June 2008, Ranbaxy entered into an alliance with one of the largest Japanese innovator companies, Daiichi Sankyo Company Ltd., to create an innovator and generic pharmaceutical powerhouse. The combined entity now ranks among the top 20 pharmaceutical companies, globally. The transformational deal will place Ranbaxy in a higher growth trajectory and it will emerge stronger in terms of its global reach and in its capabilities in drug development and manufacturing.

Vision, Mission & Values

Ranbaxy is driven by its vision to achieve significant business in proprietary prescription products by 2012 with a strong presence in developed markets. The Company aspires to be amongst the Top 5 global generic players and aims at achieving global sales of US $5 Bn by 2012. Mission: To become a research based International Pharmaceutical Company Vision: Achieve significant business in proprietary prescription products by 2012 with a strong presence in developed markets. Values: Achieving customer satisfaction is fundamental to the business Provide products and services of the highest quality. Practice dignity and equity in relationship and provide opportunity for people to realize their full potential.

Ensure profitable growth and enhance wealth of shareholders Foster mutually beneficial relationship with all business partners. Manage operations with high concern for safety and environment. Be a responsible corporate citizen.

Company History:
Ranbaxy was started by Ranbir Singh and Gurbax Singh in 1937 as a distributor for a Japanese company Shionogi. The name Ranbaxy is a portmanteau word from the names of its first owners Ranbir and Gurbax. Bhai Mohan Singh bought the company in 1952 from his cousins Ranbir Singh and Gurbax Singh .After Bhai Mohan Singh's son Parvinder Singh joined the company in 1967, the company saw a significant transformation in its business and scale.

Timeline and achievements:

1961 Company incorporated. 1973 Ranbaxy went Public, A special multipurpose chemical plant set up at Mohali for manufacture of APIs. 1985 Ranbaxy Research Foundation established. 1988 Ranbaxys Toansa plant gets US FDA approval. 1990 Ranbaxy is granted its first US patent for Doxycyline. 1992 - Joint venture with Eli Lilly & co of USA. 1993 Corporate mission established. 1995 Acquisition of Ohm Labs, a manufacturing facility in the US. 1998 Ranbaxy enters USA, the worlds largest pharmaceuticals market with products under its own name. 2000 Ranbaxy acquires Bayers Generics Business in Germany and forays into Brazil, South Americas largest pharmaceutical market.

2001 Ranbaxy USA crosses sales of US $ 100 million, fastest growing company in the US. 2003 Economic times awards Ranbaxy The Company of the Year, 2002-2003. 2008 Ranbaxy redefines its business model. Brings in Daiichi Sankyo Company limited as majority partners to create a strategic combination of an innovator and generic powerhouse.

Financials:
Ranbaxy was incorporated in 1961 and went public in 1973. For the year 2008, the Company recorded Global Sales of US $ 1,682 mn, reflecting a growth of 4%. The Company has a balanced mix of revenues from emerging and developed markets that contribute 54% and 39% respectively. In 2008, North America, the Company's largest market contributed sales of US $ 449 mn, followed by Europe garnering US $ 330 mn. Business in Asia has been going strong with India clocking sales of around US $ 300 mn with market leadership in several business segments, backed by strong brand-building skills.

Products:
Using the finest R&D and Manufacturing facilities, Ranbaxy Laboratories Limited manufacture and markets generic pharmaceuticals, value added generic pharmaceuticals, branded generics, active Pharmaceuticals (API) and intermediates. The Company remains focused on ascending the value chain in the marketing of pharmaceutical substances and is determined to bring in increased revenues from dosage forms sales. Ranbaxy's diverse product basket of over 5,000 SKUs available in over 125 countries worldwide encompasses a wide therapeutic mix covering a majority of the chronic and acute segments. Healthcare trends project that the chronic treatment segments will outpace the acute treatment segments, primarily driven by a growing aging population and dominance of lifestyle diseases. Its performance in Cardiovasculars, Central Nervous System, Respiratory, Dermatology, Orthopedics, Nutritionals and Urology segments, clearly indicates that the Company has strengthened its presence in the fast-growing chronic and lifestyle disease segments.

Worldwide Operations: Global Pharma Companies are experiencing an ever changing landscape ripe with challenges and opportunities. In this challenging environment Ranbaxy is enhancing its reach leveraging its competitive advantages to become a top global player. Driven by innovation and speed to market we focus on delivering world-class generics at an affordable price. The unwavering determination to achieve excellence leads the company to new global benchmarks. The people have consistently risen above all challenges maximized opportunities and positioned Ranbaxy as a leader in the global generics space. Ranbaxys global footprint extends to 46 countries embracing different locales and cultures to form a family of 50 nationalities with an intellectual pool of some of the best minds in the world.

Fig 1: Ranbaxy Worldwide operations.

Environment in which Ranbaxy operates

Indian Pharmaceutical Industry:
The Indian Pharmaceutical Industry today is in the front rank of Indias science-based industries with wide ranging capabilities in the complex field of drug manufacture and technology. A highly organized sector, the Indian Pharma Industry is estimated to be worth $ 4.5 billion, growing at about 8 to 9 percent annually. It ranks very high in the third world, in terms of technology, quality and range of medicines manufactured. From simple headache pills to sophisticated antibiotics and complex cardiac compounds, almost every type of medicine is now made indigenously. Playing a key role in promoting and sustaining development in the vital field of medicines, Indian Pharma Industry boasts of quality producers and many units approved by regulatory authorities in USA and UK.International companies associated with this sector have stimulated, assisted and spearheaded this dynamic development in the past 53 years and helped to put India on the pharmaceutical map of the world. The Indian Pharmaceutical sector is highly fragmented with more than 20,000 registered units. It has expanded drastically in the last two decades. The leading 250 pharmaceutical companies control 70% of the market with market leader holding nearly 7% of the market share. It is an extremely fragmented market with severe price competition and government price control. The pharmaceutical industry in India meets around 70% of the country's demand for bulk drugs, drug intermediates, pharmaceutical formulations, chemicals, tablets, capsules, orals and injectibles. There are about 250 large units and about 8000 Small Scale Units, which form the core of the pharmaceutical industry in India (including 5 Central Public Sector Units). These units produce the complete range of pharmaceutical formulations, i.e., medicines ready for consumption by patients and about 350 bulk drugs, i.e., chemicals having therapeutic value and used for production of pharmaceutical formulations.

Following the de-licensing of the pharmaceutical industry, industrial licensing for most of the drugs and pharmaceutical products has been done away with. Manufacturers are free to produce any drug duly approved by the Drug Control Authority. Technologically strong and totally self-reliant, the pharmaceutical industry in India has low costs of production, low

R&D costs, innovative scientific manpower, strength of national laboratories and an increasing balance of trade. The Pharmaceutical Industry, with its rich scientific talents and research capabilities, supported by Intellectual Property Protection regime is well set to take on the international market.

Reasons for successful development of Indian pharmaceutical sector:

Competent workforce: India has a pool of personnel with high managerial and technical competence as also skilled workforce. It has an educated work force and English is commonly used. Professional services are easily available. Cost-effective chemical synthesis: Its track record of development, particularly in the area of improved cost-beneficial chemical synthesis for various drug molecules is excellent. It provides a wide variety of bulk drugs and exports sophisticated bulk drugs.

Legal & Financial Framework: India has a 53 year old democracy and hence has a solid legal framework and strong financial markets. There is already an established international industry and business community. Information & Technology: It has a good network of world-class educational institutions and established strengths in Information Technology. Globalisation: The country is committed to a free market economy and globalization. Above all, it has a 70 million middle class market, which is continuously growing. Consolidation: For the first time in many years, the international pharmaceutical industry is finding great opportunities in India. The process of consolidation, which has become a generalized phenomenon in the world pharmaceutical industry, has started taking place in India.

Market

BULK DRUGS

FORMULATIONS

EXPORTS

DOMESTIC

EXPORT

PATENTED DRUGS

GENERICS

GENERICS

Generic Environment: PEST Analysis

Political : 100% FDI permissible for the manufacture of Drugs and Pharmaceuticals Price Regulation by DPCO drug price control order: Prices for scheduled bulk drugs are fixed by NPPA national pharma pricing authority to make them available at fair price from different manufactures. There is other limitation of pricing authority which hampers the companys profitability and without permission no new drug can be imported. Pharma industry in India is facing multiple indirect taxes like customs duty on import of goods, excise duty on manufacture of goods, VAT and CST on sale of goods which fuels up the cost of production and results in high prices Pricing pressures and shrinking margins in the generics space and the increasing litigation instances in the US are compelling Indian companies to consider opportunities beyond US. Indian companies have invested more than US$ 1.2 billion in the European markets Economical : A deduction of 125 % for R&D outsourcing will also open the doors for various companies to enhance their R&D potentials in India. The 125 percent weighted deduction granted on expenditure for outsourced R&D was a welcome incentive. The

move is likely to boost contract research organisations (CROs) in the country. However, it disappointed many leading companies who have hived off their R&D units as this weighted deduction would not be applicable to these demerged outfits Manufacture of low cost products due to its significant cost arbitrage : Basic production cost in India up to 50 per cent lower than in the US. Tax exemption on clinical research & trials services Cut in custom duty and excise duty on certain drugs Inorganic growth route : Increased penetration, access to established distribution networks and increase in buyer confidence due to localised presence, have been the key factors driving inorganic/ acquisition led growth Social : Lifestyle-related illnesses More awareness and openness about diseases like AIDS Inter-country movement results in carrying of diseases from one country to another like SARS Rise in spending power of citizens: Average household income in India has grown. During 2003-04, Indias total personal disposable income was Rs. 23,585 billion and 24.6% of this income was directed into savings by the household sector. By 2008-09, our estimates show that Indias total annual personal disposable income has grown to Rs 36,059 billion (about 52% being urban) and the annual savings have grown to Rs 9,239 billion. Medical value travel investment spurt in the private healthcare services Increasing penetration of customized insurance plans: Increasing penetration of customised insurance plans would drive the affordability, influencing the consumption of medical and healthcare products Technological : Automated and nano-scale drug diagnosis, new cell imaging technologies and drugdelivery

More penetration of media so more healthcare awareness: Due to Government and Labour Union regulations.

Enhanced level of R&D capabilities. Advances in Bio-technology, Stem-cell research Biosimilars and superior reverse engineering capabilities IT and IT-enabled services (ITES) companies expanding their activities in India to bioinformatics and life sciences.

Huge unemployment in India prevents industries from going fully automatic

Specific Environment: Competitors: Dr. Reddys Laboratories: Dr. Reddys Laboratories Ltd. (Reddy's), is Indias third biggest pharmaceutical company. Reddy's manufactures and markets a wide range of pharmaceuticals in India and overseas. Much of Reddys early success came in those unregulated markets, where process patents not product patents are recognized. Despite its high base, acute segment bounced back with high growth rates, while the chronic segment continued with its double-digit growth thanks to new introductions, price increase and greater volumes of existing products. Cipla: Cipla, originally founded as The Chemical, Industrial & Pharmaceutical Laboratories is a prominent Indian pharmaceutical company, best-known outside its home country for producing low-cost anti-AIDS drugs for HIV-positive patients in developing countries. Cipla products are bought by over 170 countries.

Government Regulation:
Patent Protection:

Given the high number of pharmaceutical firms in the informal/unorganized sector, foreign drug companies in India run a large risk that their patented drugs will be pirated. Lack of adequate patent protection has been one of the main reasons that investment in the industry has slowed over the past several years. However, due to pressure from the WTO the Indian government was forced to shift its patent coverage from process to product protection.

India has also established compulsory licensing provisions, under which the government can withdraw an EMR from a company if it feels that the product is unsafe. The provisions also allow the government to fix floor prices for essential drugs, and places the burden on the company to prove that an application filed for patent is its invention. In response to the new patent regime, Indian pharmaceutical companies started to form new joint ventures with multinationals to strengthen R&D in the industry. Multinationals have also accelerated their patent applications and many international companies are also eyeing the strong Indian network of public sector laboratories and research capabilities at private Indian companies for development work in India.

Business Strategy of Ranbaxy:

The Indian pharmaceutical industry has long struggled with an international image that has collectively labelled its members as trespassers of Intellectual Property Rights. Even as the industry attempted to rid itself of this label, there were few who actually ventured out to test their mettle with the best in the world. Ranbaxy Laboratories was one such company. For nearly two decades, it has had its sights focussed outwards. The last 10 years saw this spotlight intensified. Whether the world of pharma took India seriously or not, this company was serious about its image as an international player and fought hard and long to improve its perception. Today Ranbaxy is amongst the top 10 generics companies in the world. It closed 2002 with revenue worth $764 million, with more than 70 percent of this coming from international operations. The lions share, or 38 percent, came from the United States alone. Excerpts from an interview with Managing Director of Ranbaxy, Mr. Malvinder Singh, signify that the company has done some serious soul-searching as an organization. In 1990s, the company was nothing more than a global trader of pharmaceutical goods with an exports mindset. But this was not what the company inspired for. The self realization exercise led them to think what actually their vision was and this all led to the coining of their Vision 2004 and framing their mission statement that they aspire to be a research based international pharmaceutical company. This had three elements attached to this and as soon as the company set its mission it started working in this direction. First, pharmaceutical signified that the company will not look at

diversification into unrelated or even related areas and it will stick to its core area of pharmaceuticals. Second, it stated their intent to be an international company. This implied a focussed and rapid expansion into foreign countries. Third, it clarified that it will be a research-based company, which meant that they should discover their own proprietary innovative drugs. To achieve this, the company devised a three-way business strategy and some recent moves clearly signify that the company is working towards achieving its mission.

This strategy is a combination of:

Organic Growth In-licensing Acquisitions

Ranbaxy has established growth plans for its generics business with a well-defined pathway for ANDA submissions over the next several years. The company is also focusing on securing products and services through strategic alliances with other companies and bringing in products with complex formulations which may present entry barriers for other companies. This strategy will help the company to reach the market with selected generic products well before other competitors. The company is also executing plans to challenge the intellectual property of several existing branded products by producing these products using processes that do not infringe on patents. Using its vertical integration capabilities and continuous market monitoring, the company is developing "niche" products. The Company has successfully pursued its inorganic growth strategy and concluded over 15 acquisitions since 2004, including the latest 9 acquisitions valued at US$ 450 Mn (4 in Europe, 1 in the US, 3 in India and 1 in South Africa). These acquisitions have significantly expanded its business in emerging and profitable markets. The Company will continue to evaluate acquisition options in US, Europe, India and emerging markets to accentuate its business and competitiveness in these markets.

R&D-Creativity and Innovation: Ranbaxy views its R&D capabilities as a vital component of its business strategy that will provide the company with a sustainable, long-term competitive advantage. The company today has a pool of 1,200 scientists who are engaged in path-breaking research. The robust R&D environment within the company for both drug discovery & development reflects the Company's commitment to be a leader in the generics space and offer value added formulations based on the Company's Novel Drug Delivery System (NDDS) and New Chemical Entity (NCE) research outcomes.

Novel Drug Delivery Systems (NDDS)

The NDDS research at Ranbaxy focuses on maximizing the overall therapeutic and commercial value of commonly prescribed pharmaceutical formulations by enhancing their performance and reducing their adverse event profile. Such innovation also helps to improve the overall patient convenience and compliance The company's NDDS focus is mainly on the development of New Drug Applications (NDA) / Abbreviated New Drug Applications (ANDAs) of oral controlled- release products for the regulated markets. The Company's first significant international success using the NDDS technology platform came in September 1999, when Ranbaxy licensed its once-a-day Ciprofloxacin formulation on a worldwide basis to a multinational Company. Ranbaxy's in-house NDDS programs are primarily focused on the oral segment. Inhalation (patented devices) and trans-dermal (patented adhesive polymers) programs are also being pursued through collaborations.

New Drug Discovery Research (NDDR)

R&D was becoming a concern for Ranbaxy in 2005 when the R&D costs came up to 7-8% of Total Sales in its critical US market. The impact of growing R&D costs was also visible on global earnings with a profit of Rs 743 Crore for the year ending December 31, 2004, which was a 2.1 per cent dip below last years profits. Fourth quarter net profits dipped 10.9 per cent, compared to the same period last year, at Rs 156.5 Crore. The drop in profits was despite a quarterly sales rise by 24 per cent year-on-year in the fourth quarter as well as a yearly global sales growth of 21 per cent to $1.17 billion. Clearly Ranbaxy needed to do something about its R&D arm. (Indian Express, 2005)

Since March 1, 2008 Ranbaxy has hived off its New Drug Discovery Research (NDDR) unit into a subsidiary, Ranbaxy Life Science Research (RLSRL). The de-merger will result in cost savings of approximately $25 million this year, which is likely to increase significantly in coming years. (Hindu Business, 2008) The Companys NDDR program focuses on select therapeutic segments of Infectious diseases, Metabolic diseases, Inflammatory/ Respiratory disease and Oncology. Presently, the Company has 8-10 programs in the area of NDDR.

R&D Infrastructure
Ranbaxy is among the few Indian pharmaceutical companies in India to have recognized the importance of Research & Development (R&D) and invested early in it. The first research activity at Ranbaxy was initiated way back in the year 1973. Later when Ranbaxy drew its ambitious global plans, it embarked on R&D in a significant way by establishing its first R&D centre in 1994.Ranbaxy today has state-of-the-art multi-disciplinary centre at Gurgaon (near New Delhi) in India, with dedicated facilities for generics research and innovative research. The prowess of Indian scientists is widely acknowledged today and it is believed that the cost of developing a new drug in India can be one third to one fifth of doing the same, in the developed world. It is a long term objective of Ranbaxy to build a proprietary prescriptions business, based on its prowess in NDDS and NCE research.

People
Agile, competent and a high achievement orientation is what defines the globally competitive workforce of today. For an organisation to firstly survive and further develop this diverse asset, it needs to constantly reinvent its patterns and practices. Aligning organisational and individual goals is a challenge for human resources and formulating career planning tools for ensuring growth to employees is fast becoming a global phenomenon. Ranbaxy Laboratories Limited, Indias largest pharmaceutical company, has made a foray in this direction. Ranbaxy Chairman Sri Parminder Singh, said No amount of assets, capital, inventory, financial reserves, sophisticated technology, plant, process, product or wealth of any kind that an organisation builds can match the treasure of its human resource". The management claims that career at Ranbaxy means an opportunity for ample learning & growth. It offers avenues to work across the globe along side the finest minds. The Company offers a challenging assignment, a world class working environment, professional management, competitive salaries, stock options along with exceptional rewards. To aid career development, Ranbaxy urges its employees to develop a distinct career path. The path is developed through a series of discussions between the employee and his manager. A plan is developed about the employees career aspirations and a very precise career path is laid out. The supervisors of the employees are also asked to share their views on the employees performance and thus, measures are taken to help the employees to reach their desired growth levels. This helps us increase retention as well as develop a blueprint for succession planning, states Bhavna Kataria, human resource manager, Ranbaxy. Ranbaxys focus on creating value for the employee is further illustrated with their Mentorship Programmes. Ranbaxy believes that mentoring often functions as an important component of leadership development and also goes a long way in predicting career success. It aims not only at developing and building strong leaders, but also helps develop a loyal team of employees who know how to perform their jobs and how to turn to each other for advice. Through this programme, mentors can serve as sounding boards at critical points during a professionals career development. Chairman of the Company says "Our singular strength in the journey I have described, has been our vibrant human assets. We have often faced intimidating odds in entering new markets and moving into areas of innovative research. The undying spirit of our people and

their intense competitive and entrepreneurial energy sustained us through these odds. Their ability to steer through seeming chaos in a diversity of new markets has progressively powered our growth. Be it with core business activities, consistent support for operations or the spirit of innovation that drives research, Ranbaxy owes in no small measure to the vitality of its workforce.

Work Environment
Autonomy and entrepreneurship: Ranbaxy believes in providing autonomy to its employees and let them discover their potential while working. Individuals are given responsibility quite early in their careers and their actions impact the business. This has helped in fostering a culture of entrepreneurship within the organisation that we are extremely proud of. Creativity and Innovation: Supporting this entrepreneurial culture is the spirit of innovation and creativity. You do not need to be part of Research and Development to bring about innovations. Creativity is promoted in every part of the organisation. Genuine mistakes are considered as part of learning and calculated risk taking is encouraged. Shri Tajendra Khanna - Chairman, Ranbaxy - 1999 spoke in his message to the shareholders: I have stressed the need for maintaining the highest standards of honesty and ethical commitment as well as diligence and alertness in the pursuit of assigned tasks. I have also invited innovative suggestions from all members and suggestions will be considered carefully on merits, irrespective of the level from which they happen to originate. Diversity: Ranbaxy is an equal opportunity employer and that gets reflected in the rich and diverse workforce. This diversity provides us the strength to reach out to the world and touch the lives of millions of people in different parts of the globe. We value the diversity that exists within our employees and leverage this to bring about synergy within the organisation. Ranbaxy workforce of over 12,000 people is represented by 50 nationalities. Dr Brian W. Tempest, Joint Managing Director and CEO (designate), said the company was using the team-building approach to streamline and consolidate the human resources front and build the human bridge. "The people side is as critical as the product side," he said explaining that different kinds of teams have been put in place for specialised functions. There are cross-functional teams that

work together on particular projects. For instance, a specific R&D team would have members across the countries working on a specific project. There are regional as well as geographical (the company currently operates in five geographical zones) teams. "The idea is to build team work - the approach of working as a team, which is not necessarily a strength in all companies. This needs conscious working at. That's the dimension we are looking at,'' said Mr Atul Malhotra, head, Global Consumer Healthcare and Regional Director (Asia Pacific & Middle East), Ranbaxy

Employee Development
Employees represent what a company stands for. The value an organisation produces is unequivocally linked to collective efforts of its people. We at Ranbaxy realize that the growth of the company can be sustained through the continuous development of people who contribute to the business success. Hence we focus our attention to harness the innate potential each individual brings to the organisation. Identifying Potential While the initial years in the career of a Ranbaxy manager is used in developing the professional skills, the focus changes as a person moves to the middle management level. Here leadership potential becomes critical. We have a robust process of identifying potential in individuals. Each of our middle level managers goes through a process that clearly identifies their strengths, development areas and aspirations for the future. This is supported by a structured process of development, which includes movement within the organisation. Opportunities The global spread of Ranbaxy and the blazing growth in business provides ample opportunities for their employees to build careers in various fields. Opportunities have never been a constraint for the deserving. In Ranbaxy , employee growth that goes beyond vertical movements and change in designations is encouraged . Potential and performance are the pillars of career progression at Ranbaxy. A robust development process supports this. The managers given the opportunity to live and work in different countries; such international experience will help them better understand the complex business and grow both personally and professionally.

The Management Trainee Programme The Management Trainee Programme is a perfect example of Ranbaxys commitment towards developing and nurturing young talent. Ranbaxy recruits the best minds from Business Schools and prepares them for the challenges of business. Each of the Management Trainee, irrespective of their discipline, gets an opportunity to work and get exposed in Sales, R&D and Manufacturing. They also work on live business projects in their own area of specialization. Projects are also undertaken in cross-functional area to build a holistic understanding of business. To prepare the trainees for global challenges each person has to undertake an extensive ten-week assignment away from their home country. This helps in developing a global mindset in the trainees.

A committee specially constituted for their development evaluates the work of the management trainees. The committee members coach and mentor them during the training period and prepare them for the challenges of a regular job.

Succession planning at Ranbaxy:

Ranbaxy, is one example of successful succession planning implemented by a family run business. Its founder Chairman, Bhai Mohan Singh groomed his son Dr. Parvinder Singh (a doctorate in pharmacy from the University of Michigan) to become his successor. However, Dr. Parvinder Singh instead of handing over the reins to his sons decided in favor of D.S. Brar who joined Ranbaxy as a Business Development Manager. In 1993, D.S. Brar became the President (Pharmaceuticals) and a whole time Director of Ranbaxy. In 1997, Brar revealed his plans to retire in 2002. In 2003, Dr. Brian Tempest (President, Pharmaceutical Division, Ranbaxy) took over the reins of Ranbaxy from Brar as the CEO and MD. Though the current CEO & MD, Malvinder Singh, is part of the family yet the company made sure that he is groomed well before taking on the responsibilities for the position. Udai Upendra, the current Vice President, Global Human Resources, says that, "Rigorous career and succession planning coupled with detailed talent reviews that focus on merit and potential across geographies has led to a robust top notch team."

The leadership and management in the back end functions was further strengthened with the joining of senior and highly experienced industry persons. The Company has held various employee engagement programs in order to bolster employee morale, inculcate a feeling of team work & camaraderie and create a mechanism to recognize individual and team contributions to the organization. Programs such as "Appreciate Awards" and "Fun@Work" encompassed employees across locations and departments and were well received by all. Human Resource management incorporates a process driven approach that invests regularly in the training and development needs of its employees through succession planning, job rotation, on the job training and extensive training workshops & programs.

The Daiichi-Sankyo Deal On 11th June 2008, Daiichi Sankyo Company Limited, one of the largest pharmaceutical companies in Japan and Ranbaxy Laboratories Limited , among the top 10 generic companies in the world and Indias largest pharmaceutical company, announced that a binding Share Purchase and Share Subscription Agreement (the SPSSA) was entered into between Daiichi Sankyo, Ranbaxy and the Singh family, the largest and controlling shareholders of Ranbaxy (the Sellers), pursuant to which Daiichi Sankyo will acquire the entire shareholding of the Sellers in Ranbaxy and further seek to acquire the majority of the voting capital of Ranbaxy at a price of Rs737 per share with the total transaction value expected to be between US$3.4 to US$4.6 billion (currency exchange rate: US$1=Rs43), in Indian currency, approximately Rs.20, 000 crores. The SPSSA has been approved by the Boards of Directors of both companies. Daiichi Sankyo is expected to acquire the majority equity stake in Ranbaxy by a combination of; Purchase of shares held by the Sellers (54.30%-Singh & his family), Preferential allotment of equity shares (9.12% to buyer), An open offer to the public shareholders for 20% of Ranbaxys shares, as per Indian Regulation Act, and Daiichi Sankyos exercise of a portion or the entire share warrants to be issued on a preferential basis. All shares will be acquired/ issued at a price of rs.737 per share.

This purchase price represents a premium of 53.5% to Ranbaxys average daily closing price on the National Stock Exchange for the three months ending on June 10, 2008 and 31.4% to such closing price on June 10, 2008. The deal was financed through a mix of bank debt facilities and existing cash resources of Daiichi Sankyo. Nomura Securities Co., Ltd., the Japan headquartered investment bank, acted as the exclusive financial advisor, Jones Day as the legal advisor outside India, P&A Law Offices as the legal advisor in India, Mehta Partners LLC as the strategic business advisor and Ernst & Young as the accounting and tax advisor to Daiichi Sankyo. Religare Capital Markets Limited, a wholly owned subsidiary of Religare Enterprises Limited, is the exclusive financial advisor to Ranbaxy and the Singh family. Vaish Associates are the legal advisors to Ranbaxy and the Singh family.

Shareholding Pattern (Before Acquisition)

Shareholding Pattern (After Acquisition)

Advantages from the deal:

A complementary business combination that provides sustainable growth by diversification that spans the full spectrum of the pharmaceutical business.

An expanded global reach that enables leading market positions in both mature and emerging markets with proprietary and non-proprietary products.

Strong growth potential by effectively managing opportunities across the full pharmaceutical life-cycle.

Cost competitiveness by optimizing usage of R&D and manufacturing facilities of both companies, especially in India."

Ranbaxy will gain easier access to the much-coveted Japanese market by operating from within the Daiichi Sankyo fold

Future Plan of Action

Ranbaxys future plan of action clearly predicts its growth culture. It has the following plans in hand:

Acquiring Biovel Lifesciences

Ranbaxy Laboratories said it will acquire Bangalore-based Biovel Lifesciences for an undisclosed amount. "The proposed transaction will give Ranbaxy access to all of Biovels products, pipeline, intellectual property know-how and manufacturing facility," Ranbaxys CEO said in a statement. "This transaction with Biovel provides us an entry platform to manufacture vaccines as well as biotherapeutics," Ranbaxy CEO and Managing Director Atul Sobti said. The vaccine and biotherapeutics business will be an important part of our growth strategy, Sobti said. According to the industry experts, the proposed acquisition would give a strong product pipeline to Ranbaxy in the Rs 3,600 crore (Rs 36 billion) domestic vaccine market, which is growing at the rate of 10 per cent. The global market for vaccines in around $21 billion and estimated to grow at a rate of 9 per cent per annum to reach $34 billion by 2014.

R & D Initiatives
Continue augmenting R&D capabilities & productivity through technological innovations, use of modern scientific and technological techniques, training and development, benchmarking and global networking Greater thrust in the areas of Novel Drug Delivery Systems Continue developing innovative, commercially viable process know-how for both Active Pharmaceutical Ingredients (APIs) and dosage forms Continue strengthening the Clinical Research infrastructure and capabilities complying international GLP/ cGCP norms Continue improvements in packaging for pharmaceuticals to ensure shelflife/stability, quality and better Patent convenience and compliance Enhance national and international research networking and strategic alliances

References :
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