The Rise and Fall of Ranbaxy-the Indian Pharmaceutical Giant

Ranbaxy Laboratories Limited was established in 1961 with its headquarters at Gurgaon, Haryana, India. In 2012, over 14,600 people represented by more than 50 nationalities were employed in the Indian pharmaceutical company. It performed well in the developed as well as emerging markets. One of the defining moments for Ranbaxy in 2012 was the launch of Synriam, India’s first new drug for the treatment of malaria. The company claimed in 2013 that over one million patients have been successfully treated in India by the anti-malarial drug since its launch in April 2012. Synriam is one of the few therapies in the world that successfully treats both Plasmodium vivax and Plasmodium falciparum malaria. In 2013, 15,300 people were employed in Ranbaxy. Its Revital brand was ranked the 4th largest brand in Indian pharmaceutical market. Ownership of Ranbaxy changed twice. In 2008, its controlling shares were handed over to Japanese pharmaceutical company Daiichi Sankyo. By 2014, Sun Pharma acquired 100% control of Ranbaxy.

Ranbaxy always boasted of a firm commitment to the defined mission of ‘enriching lives globally, with quality and affordable pharmaceuticals.’ Over a period of five decades, Ranbaxy transformed itself from a small pharmaceutical company from India to a multinational corporation that had its presence in 43 countries and world-class manufacturing facilities in 8 countries. It covered 23 of the top 25 pharma markets of the world providing a wide range of quality, affordable medicines to customers in over 125 countries. Ranbaxy was one of the first multinationals to emerge from India with an aim to make high quality medicines accessible and affordable to people around the world. It had exposure to the operating and regulatory complexities of an intensely competitive and global environment. So, it entered into several such alliances to expand its therapeutic range, and acquired new competencies and to access new markets.

Over the years, Ranbaxy continued to performed well in India, CIS, Romania, South Africa and Brazil; these markets accounted for more than half of its global revenues and were a key growth driver of the business. It had also recorded a strong performance in the markets of UK, Germany and France. Over the last few years the Indian pharma industry has been extensively engaged in honing its skills and competencies; and Ranbaxy had been highly conscious of the emerging trends in the pharmaceuticals industry. Innovation was the life force that drove the company and it pursued this through its New Drug Discovery Research (NDDR) program. In 2006, Ranbaxy was providing to patients in over 50 countries across the world, a wide range of generic ARVs, at one hundredth the cost at which branded medicines were available less than 10 years ago. By 2007, Ranbaxy achieved global sales of US $ 1,619 Mn, showing an overall growth of 21%.

In 2010, the company observed strong growth momentum marked by robust operational performance in its top market-US. Its business in India continued to grow and its project Viraat promised great returns. Biotech and vaccines were two new areas that Ranbaxy invested in vigorously through Zenotech (Biotech) and Ranbaxy Biologics (Vaccines) enterprises. By 2011, project Viraat had Ranbaxy capitalizing on the growing opportunities in rural India and the hospital market. In 2011, Ranbaxy completed 50 years of its successful operation. 2011 was a year of challenge and stellar achievements for the pharma company. In the face of adversity, the company showed resilience and capitalised on opportunities. It received approval from the US Food & Drug Administration (FDA) to launch Atorvastatin in the US, the generic version of the world’s largest selling cholesterol reducing drug. This was a giant leap towards bringing trusted, high quality, affordable medicines, within easy reach of all.

Ranbaxy made significant investments in improving quality systems and processes in R&D and manufacturing operations. It also crossed the landmark figure of US $ 2 Bn, in sales, in 2011, becoming the first pharmaceutical company of Indian origin, to do so. It was the first pharmaceutical company from India to have developed its Anti-Malaria Drug. 2012 was a mixed year for the pharmaceutical giant. Although Ranbaxy took conscious steps to strengthen the company’s business fundamentals and improve its financial health, by focusing on key markets, improving manufacturing and R&D productivity; its challenges did not become less. In USA, the company showed its best ever performance, despite severe challenges and recorded a net growth of 31%. However, the FDA investigations that began in Ranbaxy from 2008, finally led to its doom in 2014. Ranbaxy was accused of falsifying data and test results in approved as well as pending drug applications.

The company had to face some very serious regulatory challenges. The US Food and Drug Administration (US FDA) issued an import alert on some of its supplies. The investigation by the US Department of Justice for data integrity and manufacturing processes at certain facilities in India was closed in 2013. Ranbaxy and its affiliates had to settle the issue by making a total payment of US$ 0.515 billion in aggregate. But, many global regulatory agencies, such as the US FDA; the European Medicines Agency (EMA); the Therapeutic Goods Administration (TGA), Australia; Health Canada; and ANVISA, Brazil, inspected many of its manufacturing plants situated in India and abroad with successful outcomes. During the 2013-14 period, Ranbaxy had higher net debt primarily due to the payment of US$ 0.515 billion to the US DOJ in May 2013 as part of a settlement. The company reported a net loss of Rs.10.7 billion.

The Ranbaxy brand was found guilty to felony charges concerning the manufacturing and distribution of adulterated drugs that had been manufactured at two of its Indian pharmaceutical plants. Ranbaxy’s plants in India, at Mohali and Toansa in the state of Punjab, came under Import Alert by US FDA. Several other violations were reported at its plants which resulted in the company being prohibited from manufacturing FDA-regulated drugs. With growing challenges in the innovator sector, on April 6, 2014, the Board of Directors of Ranbaxy approved the scheme of arrangement for merger of the company with Sun Pharma, a leading international, integrated, speciality pharmaceutical company. The company’s spokesperson claimed that the regulatory environment has become challenging for business. The company needed to consistently raise the standards of its manufacturing processes to be able to meet the evolving demands of regulators. The rise and fall of Ranbaxy show a journey of growth, innovation, and adaptability concerns in a world where one needs to improve services on all fronts, continuously; now there’s a legacy of Ranbaxy to learn from!

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