New Delhi-based Ranbaxy, once India's largest drugmaker by sales, has been under the scrutiny of US regulators since 2007 when a whistleblower raised concerns on ethical standards, manufacturing practices and quality control. Reuters Dilip Shanghvi, the Indian pharmaceuticals tycoon, has vowed to do "whatever it takes" to restore US regulators' confidence in Ranbaxy after Sun Pharmaceutical received the go-ahead to complete its $US3.2 billion takeover of the group.
Sun, India's largest pharmaceuticals company, announced last year that it would buy Ranbaxy from Japan's Daiichi-Sankyo, which paid $US4.7 billion for the Indian drugmaker in 2008 only to take a $US3.7 billion writedown on the acquisition six months later.
New Delhi-based Ranbaxy, once India's largest drugmaker by sales, has been under the scrutiny of US regulators since 2007 when a whistleblower raised concerns on ethical standards, manufacturing practices and quality control.
In 2013 Ranbaxy, under Daiichi's ownership, agreed to pay $US500 million in criminal and civil penalties for selling adulterated medicines from 2004 until 2007, when it was under the ownership of its founding family.
US regulators banned imports from all of the drugmaker's Indian manufacturing facilities for violating strict US quality standards.
"We will do whatever it takes to win back the confidence of the regulators so they trust what we do and they trust what we say," Mr Shanghvi said yesterday as Sun announced the launch of the formal integration process. "The idea would be to find a way to bring these facilities back into compliance."
Ranbaxy drugs exported to the US - about 40 per cent of the group's turnover - are manufactured by third parties, which Mr Shanghvi believes can be reversed by an overhaul of Ranbaxy's own facilities, and their operations.
"We are focused on fixing problems, not only superficially but trying to understand the underlying reason why problems originated," Mr Shanghvi said.
Mr Shanghvi, who has surpassed Mukesh Ambani as India's richest man, surprised many last year when he announced Sun's acquisition of Ranbaxy, with its chequered history and battered reputation.
But Mr Shanghvi said yesterday that Ranbaxy's woes were priced in to its share price at the time of the purchase, leaving plenty of room for upside from improvements.
"In our own assessment, the impact of the regulatory challenges which the company had been facing over the last few years had already been fully . . . assessed in the company's performance," he said. "Anything we can do to solve this will only add value."
He also said the two companies had potentially strong synergies in R&D.
Sun has grown rapidly over the last few years through acquisitions, including of companies in some distress. But turning around Ranbaxy is Sun's toughest task. "This is the largest, most complex integration Sun has undertaken so far," said Israel Makov, chairman.
Ranbaxy is to be delisted from the stock exchange. Each shareholder will receive 0.8 of a Sun share for each Ranbaxy share.
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