Ranbaxy : Family Feud, Scams and More

26 Dec 2021  Read 1403 Views

Everyone has a role in their family, mine is Dawai ka Ramu Kaka(I am responsible for fetching medicines in my household, sometimes mine too).

This “position” that I have earned in my family led me to a realisation one day. When I tried to purchase the pain relief spray Volini, the shopkeeper couldn’t find it. Because Volini(vo-lee-nee) didn’t exist in his shop. I clarified “Bhaiya, Ranbaxy ka pain relief spray hai. De do.”

Well, I was in for being educated on two fronts, first and more importantly, Ranbaxy didn’t exist as Volini’s producer anymore. Volini is produced by Sun Pharma now. And secondly, I was informed, “Bhaiya, Volini(vo-lee-nee) nahi Volini(Vo-lie-nee) hota hai.”

In retrospect, I could have saved myself from the sub-par pronunciation by just pointing at the can of spray in front of me. But I’m glad this fiasco happened, because it got me wondering, what in the world happened to Ranbaxy? Here’s what I learned.

Beginning in Bad Blood

In the beginning, there were brothers Ranbir Singh and Gurbax Singh, their names combined created the company’s name, Ranbaxy. This Ranbaxy was later acquired by one Bhai Mohan Singh, who turned Ranbaxy into a successful business.

Allegedly, this success was achieved by reverse engineering existing popular drugs and selling them as Ranbaxy products. Irrespective of the ways, the end result was Ranbaxy becoming a well-renowned pharma company of India under Bhai Mohan Singh’s vision.

With his Twilight years rolling around, Bhai Mohan decided to hand over the reins of his business to his sons, Parvinder, Manjit​​​​​​, and Analjit Singh. Parvinder Singh was handed Ranbaxy, which apparently didn’t sit well with the other brothers. Parvinder was reportedly the more favored son and apparently, that had something to do with his succession to Ranbaxy.

But the brotherly dispute wasn’t the only issue with Parvinder’s succession. As Parvinder’s time in Ranbaxy grew, his father wasn’t quite satisfied with the way he ran the business. You see, Parvinder believed that a business performs better when it is led by professionals while his father held the position that Ranbaxy was a family business and should be managed and run by members of the family.

This difference of opinion often led to arguments during board meetings. So much so, that in one such particularly unruly meeting, the chief minister of Punjab and then board member of Ranbaxy, Captain Amarinder Singh threatened to lift and throw Bhai Mohan out of the boardroom.

Although the personal relationship between father and son might have suffered due to Parvinder’s management style or Bhai Mohan’s inability to agree with it, the business did benefit from it. A significant feather in Parvinder’s hat during his time leading the company includes entering into a marketing agreement with a US based pharmaceutical company Eli Lilly in 1992.

This bitter business went to the point, where due to their inability to be like-minded, Mohan Singh resigned from his position on the board in the year 1993.

But neither the disagreements nor success could be experienced for long when unfortunately in 1999, Parvinder met his demise due to cancer. In March 2006 Bhai Mohan departed as well. With their passing, India had lost two of their most prolific, albeit disagreeing businessmen.

But all hope was not lost, the next generation of the Singh family, Malvinder and Shivinder Singh inherited the Ranbaxy business when their father expired in 1999.

The Singh Brothers

Meet Malvinder and Shivinder Singh, the next in line to lead the Ranbaxy business.

Both brothers went to The Doon School, Dehradun. Malvinder and Shivinder both graduated from St. Stephen’s College, Delhi with degrees in Economics and Mathematics respectively. For their post-graduate studies, they attended and graduated from the Duke University’s Fuqua School of Business in the United States.

So as far as education goes, the brothers definitely had a strong background and it showed when it came to numbers. At one point in time, the Singh brothers were one of the twenty richest people in India.

The brothers went on to create the Fortis chain of hospitals in the year 2001. The Fortis name grew to be not just a major medical name in India but became widespread in 11 countries through international acquisitions.

The Singh brothers had also created Religare, a financial service or “finserv” business, and had the aspiration to turn it into a bank. Religare had acquired over half a dozen businesses itself.

Looking at the Singh brothers’ history and the numerous business activities that Religare and Fortis undertook suggested that the sons had inherited their father’s and grandfather’s affinity for business.

With the sale of the Singh family’s precious Ranbaxy to Japanese company Daiichi Sankyo in 2008, this perception was brutally shattered.

Ranbaxy, a Hard to Swallow Pill

The year was 2008 and Daiichi Sankyo, a global pharmaceutical company had set its sights on Ranbaxy. Owing to its rise in popularity, the Indian company looked like a lucrative expansion opportunity to its Japanese peer.

Boy were the Japanese wrong…

Just a few months after the purchase of Ranbaxy by Daiichi, the US Food and Drug Administration had banned the import of drugs from two of Ranbaxy’s production plants. And in the same year, an investigation was launched by the US department of justice against Ranbaxy on grounds of adulteration of drugs.

Ranbaxy pleaded guilty to the allegations levelled against it and a $500 million settlement was charged against the Indian pharma producer.

While Daiichi had initially acquired only 34% of stakes in the company in March 2008, by November of the same year they had completed the takeover by increasing its stake in the company to 63%.

Daiichi was now stuck with a company that was wrapped in litigatory troubles and it had to make the best of it. To Daiichi’s credit, they did try to improve the business, the acquisition of Ranbaxy laboratories did strengthen the Japanese company making it worth $30 billion.

But even Daiichi had its limit. Trying to keep this sinking ship afloat was no longer feasible and the total 63% that Daiichi had reportedly acquired for $4.6 billion was sold to Sun Pharma, an Indian pharmaceutical company for $4 billion.

The Blunderous Sale

Many believe the sale of Ranbaxy to Daiichi was an attempt by the Singh brothers to shake off incoming legal troubles due to subpar production practices. There are others who believe that it was the sale that opened a can of worms, exposing these wrongdoings by Ranbaxy.

To top it all off, the “real truth” gets even muddier when one looks at how the funds from the sale allegedly “disappeared”.

Apparently, large amounts of the sale proceeds were redirected to the two businesses the brothers formed, Fortis and Religare. And the money was also then funneled away from the businesses to unknown sources.

While one would expect these allegations and claims to arise from external sources, these actually came from among the brothers as the probes launched against Ranbaxy put a strain on their relationship that devolved into alleged physical assaults and legal battles among the siblings.

Talk about sibling rivalry…

The Unhealthy Pharma

Ranbaxy’s production was compromised and a lot of accusations were pointed at the company in regards to the quality of the medicines provided by them. Some of the accusations against Ranbaxy included, but were not limited to:

  • Glass particles found in medicines

  • Impurities as hair found in medicines

  • Medicines sold in packs with wrong doses that were not the same as the one mentioned on the packs

Now you might be wondering, how did a company engaged in such a sensitive business manage to get away with such obvious mistakes that could very easily be caught and/or reported? Allegedly, Ranbaxy, under the Singh brothers’ management would often falsify drug test reports and somehow managed to pass under the noses of various authorities of multiple countries.

And remember the 2008 investigation by the US department of justice, reportedly two employees of Ranbaxy named Dinesh Thakur and Rajinder Kumar had tried to uncover the aforementioned falsification of drug test reports as early as 2004. The whistleblowers were silenced as the office computer of Dinesh Thakur was soon found to be lost and soon after Ranbaxy accused him of visiting some “not so office-friendly” websites that forced him to resign.

Due to his own employers’ non-cooperation and inclination towards unethical behaviour, Thakur had to seek help elsewhere. The Singh brothers had a strong influence inside the country, so Thakur’s pleas would need different ears.

As a last-ditch effort to bring this offense under light, Thakur moved his attention to the US where he sought out the Food and Drug Administration. This approach by Thakur is what tipped the drug authority off to launch an investigation into Ranbaxy.

The End of Ranbaxy

Ranbaxy, under Bhai Mohan and Parvinder Singh, had become one of India’s most successful businesses. Unfortunately, the upcoming generations couldn’t keep the family businesses running with the same gusto, and not only was the business lost to the family, but the brothers were also imprisoned and fined for various criminal activities during their time as leaders of the company.

As for the Daiichi sale, whether it was to get rid of their upcoming reveal of criminality or the sale was something that exposed the unscrupulous activities of the companies and the brothers. Well, who knows?

About the Author: Deb Preetendu Samaddar | 18 Post(s)

Deb is a keen learner and eager to learn about the finance world. With an increased proclivity towards tech and language, he aims to capitalise on his interests as a content writer at Finology.

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