Dilip S Shanghvi, the 57-year-old founder of Sun Pharmaceutical, studied commerce. But he can stand his ground against research scientists in his industry on therapeutic areas or even different pathways to get to the same molecule.
He is a voracious reader of pharma research papers. His reading list also includes not-so-serious stuff.
A few years ago, a peer from caught him in flight reading Harry Potter. Surprised, the Lupin executive quizzed him to find out that Shanghvi has read all the seven fantasy novels written by the British author, JK Rowling. He later reasoned to this correspondent that Shanghvi's preference for Rowling's works could be because he's an imaginative and creative person.
Shanghvi joined his father's pharma distribution business in Kolkata even before he graduated. He is a stickler for value. The company that he founded in 1983 by borrowing Rs 10,000 from his father was worth Rs 1.21 lakh crore on based on its closing stock price on Monday.
Stock price: 524715 (BSE)Rs. 587.25 +15.35 (+2.68%)
About 63% of this belongs to its promoters, but Shanghvi, low profile to a fault, rarely boasts of his wealth. His wife, Vibha, occasionally travels to the local market in an auto rickshaw.
The man who loves South Indian food - Matunga's Mysore Cafe and Madras Cafe are among his favourite foods joints in Mumbai - hates to travel. His typical day involves travelling from his Juhu home to a non-descript narrow and dusty lane that leads to the company's headquarters in suburban Andheri.
Folklore has it that Shanghvi's driver once decided to move on, and joined Ranjit Shahani, vice-chairman and chief executive of Novartis India. The driver, used to the daily trudge from home to office, found that the MNC executive's daily itinerary was much busier and strenuous.
Except for a watch or a spectacle frame, Shanghvi believes in beating down every acquisition to its bare-bone costs. On Monday, he pulled off one of the largest acquisitions by an Indian company. The $4 billion that Sun Pharma agreed to pay in stock for Ranbaxy Laboratories is less than half the $10 billion that Japan's Diiachi Sankyo spent for acquiring the Indian company in 2008.
Shanghvi seldom displays his emotions. So it was a rare event when he laughed uncontrollably when analysts on Monday asked him leading questions on a forecast of three-five years on Sun Pharma-Ranbaxy. Shanghvi often uses the phrase "let me gather my thoughts" when reporters ask him questions that are too profound. But he rarely meets the media, and never gives away too much information.
He is rarely seen as a networker. But at his son Aalok's wedding a few years ago, the who's who of India's pharmaceutical industry was present. Anji Reddy of Dr Reddy's Laboratories came all the way from Hyderabad. And, there was Narendra Modi. The Gujarat chief minister, now BJP's prime ministerial candidate, spent a couple of hours at the Race Course venue of the wedding.
His son is now being groomed for a larger role at Sun Pharma. A co-founder of solar panel maker PV Powertech, Aalok Shanghvi also heads international marketing at Sun Pharma. His daughter Vidhi, a Wharton graduate, is slowly learning the ropes of the trade.
But as the stakes get bigger, Shanghvi might still lean in favour of professionals. Recently, he hired Israel Makov, former CEO of Teva, as chairman of Sun Pharma and Kal Sundaram, former managing director of GlaxoSmithKline India, as a director. Clearly, while he laughs at questions about the distant future, Shanghvi is preparing a blueprint for the decade ahead.
An interesting association of Shanghvi is the one he has with brother-in-law Sudhir Valia, who has acquired stakes in stock broking firms Antique and Fortune Financials. Valia, through intermediaries, had also been buying Ranbaxy shares on the open market for a few months now.
Shanghvi's employees call him India's most aggressive promoter whose calm demeanour shadows his killer instincts when it comes to splurging on some of the riskiest assets in the market. So, on Monday when Sun Pharma announced the multibillion-dollar deal, he took some by surprise. His decision will take Sun Pharma into the top five generic drug makers in the world and the largest pharma company at home in India.
"This is our first important step in becoming a global company and an important part of a global company will be to manage cultures," Shanghvi said on Monday. "Some traits will impact performances. It is common. But everyone can be successful if the management gives clear guidance," he added.
"I think they sold it to the right guy who knows how to handle it," said the chief executive of a midsize drugmaker. "The deal enables Sun Pharma to save enormous amounts on R&D at the combined entity level, given a lot of duplication in R&D spend by the two companies." According to this person, Shanghvi does not do deals simply because he wants them. "He does them only when he is doubly sure that he is going to get the returns he wants."
Shanghvi's Midas touch is probably what would make this deal work, despite all the regulatory mess that Ranbaxy is in and that Sun Pharma would have to clear. All the assets that Sun Pharma has bought so far have been distressed - Caraco, Taro and Dusa, for instance. Within a few years of the acquisitions, all these turned profitable.
At the conference call after the announcement of the Ranbaxy acquisition, Shanghvi was asked if this is the most difficult acquisition to manage, he candidly explained it is probably the biggest acquisition that the company has done, but not the most difficult. "This acquisition is the validation of my basic principles," Shanghvi calmly responded. Dilip bhai, as his employees call him, has wrestled with the most difficult management issues while acquiring his assets.
A classic example of this would be when he held on with the past promoter of Taro, the Israeli company that Sun Pharma bought in 2007. Within a year, Barrie Levit of Taro wanted to terminate the deal citing valuation issues. However, Shanghvi stood his ground, without bulging on his position, and after a three-year legal battle he managed to gain full control of the company. Today Taro contributes a significant part of Sun Pharma's total revenue. So, in that context, Shanghvi is right when he says the Ranbaxy deal will not be the most difficult one for him.
When ET asked him about his future plans during an interview in December, Shanghvi displayed his classic style of playing the cards close to his chest. "My limitation is that I don't have a clear vision beyond this year. I try to stay focused on what I need to deliver this year. As for the next year, we try and see that we remain consistent. So, our focus is to see that we are growing faster than the industry," he had said. "And whichever product we launch, we do better than competition.We try and manage our operations better than competition. Essentially, we try to be better than what we were the previous year."
But little did he reveal that he was quietly planning his biggest acquisition. But, when asked what his take away from the Ranbaxy mess was, he responded that companies that learn from others' mistakes are more successful. So, with Shanghvi's eye for details and experience in dealing with the US Food and Drug Administration - Caraco, for instance, had faced deep regulatory problems - chances are high that he would do what Daiichi couldn't do with Ranbaxy: bringing it back on track. In the course, we might also see an Indian company take the top spot among the world's largest drug companies.
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