“Our story is all about incremental growth. We’re not looking for big leaps; we prefer small jumps”, says Sun Pharmaceuticals CEO Dilip Shanghvi. A modest mantra, the softly-softly approach has served Shanghvi well. Not only has he grown Sun to India’s most valuable pharma outfit, with March 2017 revenues of $4.7 billion, he’s earned himself a top spot on the Indian billionaire’s board in the process with a net worth this year of 12.7 billion USD.
ABorn in in Gujarat, Dilip Shanghvi spent his childhood and college life in Calcutta, where he started helping his father in the family wholesale generic drugs business. Inspired to manufacture his own drugs instead of selling them on, in 1982 he borrowed $200 from his father to found Sun Pharma, specialised in making psychiatric drugs – at that time with just one drug on its roster and one partner, Pradeep Ghosh.
The team worked hard to grow the business a little at a time, and by the early 1990s the company had opened its own research and manufacturing facilities. New product lines in the fields of cardiology and gastroenterology were also added.
However, the breakthrough for Sun came through a series of acquisitions. Shanghvi bought Caraco Pharma in 1997 – a struggling American company that he intended to use to boost his global presence – followed by the likes of Israel’s Taro Pharma in 2007. Investing in loss-making companies became something of a signature, with Dilip Shanghvi able to spin them to his advantage, every time. At a high point he was the fifth richest man in India. The biggest acquisition was the 2014 purchase of scandal-tainted rival Ranbaxy Laboratories for $4 billion.
But since this time, the world’s fifth largest generics pharmaceutical company has been bogged down by a slowdown in emerging markets and bans by US regulators at acquired factories that threaten his record as a turnaround artist. After 15 years where sales grew at a compound annual rate of about 30 percent, in 2016 Sun forecast growth would slow to between 8 and 10 per cent. The shares tumbled more than 10 per cent, with little hope for recovery on the horizon.
Dilip Shanghvi stepped down as chairman and CEO in 2012 and chose Israel Makov, formerly CEO of Teva Pharmaceuticals as his successor. Both his children are employed at Sun; in an interview to Business India in 2011, Shanghvi described son Aalok as being “calm and rational”, both ideal qualities for his role as head of emerging markets. His daughter Vidhi was appointed head of Consumer Healthcare this year, in a move that might prove the catalyst to changing Sun’s fortunes: India’s consumer healthcare business is estimated to expand to $280 billion from about $100 billion currently.