Description
The Indian Pharmaceutical industry is highly fragmented with about 24,000 players (around 330 in the organised sector).
Company analysis of Ranbaxy
The Indian Pharmaceutical industry is highly fragmented with about 24,000 players (around 330
in the organised sector). The top ten companies make up for more than a third of the market. The
revenues generated by the industry are approximately US$ 7 bn and have grown at an average
rate of 10% over last five years. The Indian pharma industry accounts for about 1% of the
world's pharma industry in value terms and 8% in volume terms.
In the recent past, Indian companies have targeted international markets and have extended their
presence there. While some companies are exporting bulk drugs, others have moved up the value
chain and are exporting formulations and generic products. India also offers excellent exports
opportunities for clinical trials, R&D, custom synthesis and technical services like
Bioinformatics.
The drug price control order (DPCO) continues to be a menace for the industry. There are three
tiers of regulations – on bulk drugs, on formulations and on overall profitability. This has made
the profitability of the sector susceptible to the whims and fancies of the pricing authority. The
new Pharmaceutical Policy 2006, which proposes to bring 354 essential drugs under price
control has not been officially passed as yet and has been stiffly opposed by the pharmaceutical
industry.
While the average R&D spending in India as a whole is a meager 2% of sales, the spend of the
top five companies is about 5% to 10%. Despite growing at a CAGR of over 50% over the last
four years, the ratio is still way below the global average of 15% to 20% of sales. However,
despite the
relatively low R&D spending, Indian companies are stepping up their research activities to make
themselves more self sufficient in terms of product development, now that the product patent
regime has come into force.
Supply:- Higher for traditional therapeutic segments, which is typical of a developing market.
Relatively lower for lifestyle segment.
Demand:- Very high for certain therapeutic segments. Will change as life expectancy, literacy
increases.
Barriers to entry:- Licensing, distribution network, patents, plant approval by regulatory
authority.
Bargaining power of suppliers:- Distributors are increasingly pushing generic products in a bid to
earn higher margins.
Bargaining power of customers:- High, a fragmented industry has ensured that there is
widespread competition in almost all product segments. (Currently also protected by the DPCO).
Competition:- High fragmented industry with the to 300 (of 24000
Manufacturing units)players according for 85% of sales value.Consolidation is like to intensify
Impact of BUDGET -2008:
Budget 2008-09: Pharmaceuticals
The past year has been tumultuous for the pharma industry, which has had to contend with a
steeply rising rupee, severe price erosion and regulatory changes in the global generics markets
and rise in raw material costs. Having said that, some positive developments also ensured that
the overall scenario was not too bad. These developments included announcements by some
major domestic pharma majors of hiving off their R&D units into separate companies, bagging
out-licensing deals with global innovators in return for milestone payments and settling patent
lawsuits with innovators to ensure a more stable and balanced.
Budget Measure
? Increase in allocation to the health sector by 15% over 2007-08.
? Allocation to the National Rural Health Mission (NRHM) increased to Rs 12,050 crore.
? Provision of Rs 993 crore to the National Aids Control Programme and allocation of Rs
1,042 crore for the eradication of polio with focus on high risk districts in Uttar Pradesh
and Bihar.
? Customs duty to be reduced from 10% to 5% on certain specified life saving drugs and on
bulk drugs used for their manufacture. These drugs are also exempted from excise duty or
countervailing duty.
? Excise duty on all goods produced in the pharmaceutical sector reduced from 16% to 8%.
? Anti-AIDS drug, ‘Atazanavir’, as well as bulk drugs for its manufacture to be exempted
from excise duty.
? In order to promote outsourcing of research, weighted deduction of 125% on any
payment made to companies engaged in R&D.
BUDGET IMPACT
? Increase in allocation to the healthcare sector is a positive given the need to ramp up the
healthcare infrastructure in the country and improve the accessibility of quality healthcare
to a larger section of the population.
? Reduction of excise duty from 16% to 8% is a positive for all pharma companies
enabling them to boost profitability going forward given that the excise duty is being paid
on MRP.
? Increased allocation of funds for eradication of HIV/AIDS and polio and reduction in
customs duty on certain life saving drugs from 10% to 5% is a positive for companies
having product pipeline catering to these segments.
? Weighted deduction of 125% on payments made for outsourcing research services is a
positive for the sector as a whole given that the emphasis on R&D has increased.
COMPANY IMPACT:
Reduction of excise duty from 16% to 8% is a positive for all pharma companies namely
domestic companies such as Cipla, Ranbaxy and the likes and MNC pharma companies such as
GSK Pharma, Pfizer and Aventis.
Emphasis on allocating funds for the eradication of HIV/AIDS and polio is a positive for Cipla
(which has a strong presence in the manufacture of anti-AIDS drugs) and Panacea Biotec (which
largely manufactures oral polio vaccines).
Weighted deduction of 125% on payments made for outsourcing research services is a positive
for R&D focused companies such as Ranbaxy and Nicholas Piramal.
Introduction to Ranbaxy:
Ranbaxy Laboratories is quite the rainmaker in India's pharmaceutical business. The company is
India's largest drug developer and manufacturer, with generics topping its list of products. Anti-
infectives CoAmoxyclav, Amoxycillin, Cephalexin, Ciprofloxacin, and Simvastatin are in
Ranbaxy's top selling class of medications; all come in several administration forms. Other
specific developmental focuses include metabolic, inflammatory, and respiratory illnesses.
Ranbaxy addresses gastrointestinal, cardiovascular, and central nervous system disorders, as well
as diabetes, pain, allergies, and HIV/AIDS. The company also has a groundbreaking anti-
malarial candidate in late-phase trials.
History
Ranbaxy Laboratories Ltd. is the largest pharmaceutical company in India, and one of the
world's top 100 pharmaceutical companies. Long a specialist in the preparation of generic drugs,
Ranbaxy is also one of the world's top 10 in that pharmaceutical category as well. Yet, with
India's agreement to apply international patent law at the beginning of 2005, Ranbaxy has begun
converting itself into a full-fledged research-based pharmaceutical company. A major part of this
effort has been the establishment of the company's own research and development center, which
has enabled the company to begin to enter the new chemical entities (NCE) and novel drug
delivery systems (NDDS) markets. In the mid-2000s, the company had a number of NCEs in
progress, and had already launched its first NDDS product, a single daily dosage formulation of
ciprofloxacin. Ranbaxy is a truly global operation, producing its pharmaceutical preparations in
manufacturing facilities in seven countries, supported by sales and marketing subsidiaries in 44
countries, reaching more than 100 countries throughout the world. The United States, which
alone accounts for nearly half of all pharmaceutical sales in the world, is the company's largest
international market, representing more than 40 percent of group sales. In Europe, the company's
purchase of RPG (Aventis) S.A. makes it the largest generics producer in that market. The
company is also a leading generics producer in the United Kingdom and Germany and elsewhere
in Europe. European sales added 16 percent to the company's sales in 2004. Ranbaxy's other
major markets include Brazil, Russia, and China, as well as India, which together added 26
percent to the group's sales. Ranbaxy posted revenues of $1.18 billion in 2004. The company,
which remains controlled and led by the founding Singh family, is listed on the National Stock
Exchange of India in Mumbai.
Ranbaxy Laboratories had its origins in the early 1960s when Ranjit Singh and Gurbux Singh,
two employees of a Japanese pharmaceutical company operating in India, formed their own
pharmaceutical preparations company in Amritsar, in Punjab state. The two merged their names
to form the name for their company, Ranbaxy.
Through the 1960s, India's pharmaceutical market remained dominated by foreign drug makers.
The domestic pharmaceutical manufacturing industry was limited in large part to the dosage
preparation, packaging, and distribution of existing formulations. Like many Indian drug
companies of this period, Ranbaxy linked up with a European pharmaceutical company, and
began production in 1962.
Ranbaxy's owners sought additional financing and turned to a local moneylender, Bhai Mohan
Singh. By 1966, the pair had built up debts to Singh of more than the equivalent of $100,000.
When Singh, a native of Pakistan who had arrived in India at the beginning of that decade, came
to collect, the Ranbaxy partners offered to turn over their company to him instead.
Singh agreed to the deal and launched the Ranbaxy family on the path toward building one of
India's largest business empires. Under Bhai Mohan Singh, Ranbaxy initially maintained its
course of preparing and packing existing branded pharmaceutical products for the Indian market.
The entry of Singh's eldest son, Parvinder, into the company in 1967, however, set the company
on a new course to become a fully independent pharmaceutical company.
Parvinder Singh had just graduated with a PhD in chemistry from the University of Michigan.
The younger Singh's background in chemistry complemented his father's business flair. Yet
Parvinder Singh himself quickly displayed a talent for business and was credited, in large part,
with guiding the company into the ranks of the global pharmaceutical leaders.
Ranbaxy's good fortune came in 1970, when the Indian government passed legislation that
effectively ended patent protection in the pharmaceutical industry. Indian pharmaceutical
manufacturers were now able to produce low-cost, generic versions of popular, yet expensive
drugs, revolutionizing the drug industry in India and in much of the world. The Singhs quickly
took advantage of India's large, highly trained, yet inexpensive workforce, building up a strong
staff of chemists and chemical engineers.
The company struck pay dirt early on, when it launched Calmpose, a generic formulation of the
hugely popular Roche discovery, Valium. Released in 1969, Calmpose immediately placed
Ranbaxy on India's pharmaceutical map. The company expanded quickly, and by 1973, Ranbaxy
opened a new factory, in Mohali, for the production of active principal ingredients (APIs). This
facility enabled the company to expand its range of generic medications and ingredients. To
finance its growth, the company listed on the Indian Stock Exchange that year.
Ranbaxy's ability to produce generic medications at far lower cost than its branded competitors
placed the company in a strong position for international expansion, especially in less developed
markets. The company began its internationalization early on, launching a joint venture in
Nigeria. That operation opened a production facility in Lagos in 1977.
Ranbaxy expanded its production at home as well, opening a new state-of-the-art dosage plant in
Dewas in 1983. In 1987, the company became India's leading antibiotic and antibacterial
producer when it completed a new API plant in Toansa, in Punjab, that year. The Toansa facility
backed up Ranbaxy's plans to enter the U.S. market, and in 1988, the Toansa plant received Food
and Drug Administration (FDA) approval.
Ranbaxy formulated a new strategy, that of becoming a full-fledged pharmaceutical company.
The driving force behind the company's new direction was Parvinder Singh, who was named the
company's managing director in 1982. Nonetheless, Bhai Mohan Singh remained in control of
the company.
As part of its new strategy, Ranbaxy launched its own research and development center in 1985.
The company also stepped up its marketing efforts, launching a new dedicated marketing
subsidiary, Stancare, that year. By 1990, the company had a new product to sell, when Ranbaxy
was granted a U.S. patent for its doxycycline antibiotic preparation. The following year, the
company was granted a U.S. patent for its cephalosporin preparations, and the company built a
new state-of-the-art facility for their production in Mohali.
A major milestone for the company came in 1992, when it reached a marketing agreement with
Eli Lilly & Co. The companies set up a joint venture in India to produce and market Lilly's
branded pharmaceuticals for the domestic market. At the same time, Lilly agreed to begin
marketing Ranbaxy's generic medications in the United States. In this way, Ranbaxy gained
widescale access, backed by the highly respected Lilly, into the world's single largest drugs
market.
Parvinder Singh took over as head of the company--ousting his father in what was described as a
family feud--in 1992. By then, Ranbaxy had grown into one of India's largest pharmaceutical
companies on the basis of its generics production. Yet as pressure grew on India to begin
enforcing international drug patents, the company itself appeared to have reached a crossroads--
whether to remain focused on copying generic molecules, or to begin developing new drugs in-
house. The company chose the latter, and in 1993 adopted a new corporate mission to announce
its reformulated ambitions: "To become a research-based international company."
Ranbaxy made good on its mission--by the middle of the next decade, nearly 80 percent of its
sales came from outside of India. As a first step, the company launched a new joint venture, in
China, backing its entry into that market with a production facility in Guangzhou. The following
year, the company established subsidiaries in London, England, and in Raleigh, North Carolina.
In 1995, the company stepped up its U.S. presence with the purchase of Ohm Laboratories Inc.,
which gave the company its first manufacturing plant in that market. Ranbaxy then launched
construction of a new and state-of-the-art manufacturing wing, which, completed that year,
gained FDA approval.
This new facility enabled Ranbaxy to step up its presence in the United States, and in 1998 the
company began marketing its generic products under its own brand name. That year, in addition,
the company filed an application to begin Phase I clinical testing on its first in-house developed
NCE. The following year, the company's NDDS efforts paid off as well, when Bayer acquired
the rights to market Ranbaxy's single daily-dosage ciprofloxacin formulation.
Ranbaxy's international expansion continued as well, with the launch of marketing operations in
Brazil. As the largest pharmaceuticals market in Latin America, that country was the cornerstone
of the company's plans to expand throughout the region. Ranbaxy also expanded in Europe, with
the agreement in 2000 to acquire Bayer's Germany-based generics business, Basics. The
company also added production plants in Malaysia and Thailand.
Parvinder Singh died in 1999 and longtime righthand man D.S. Brar took over as company
leader, naming family outsider Brian Tempest as company president. The new management team
continued Singh's expansion strategy, opening a new manufacturing plant in Vietnam in 2001.
Ranbaxy also sought new alliances, and in 2003 the company reached a global drug discovery
and development partnership with GlaxoSmithKline. That agreement called for Glaxo to handle
the later-stage development process for Ranbaxy created molecules. The company's international
expansion also took a major step forward at the end of 2002, when it agreed to acquire RPG
(Aventis) in France, that country's leading generic drugs producer.
Ranbaxy's sales had by then topped the $1 billion mark, placing the company not only as the
leader in India's pharmaceuticals industry, but also among the ranks of the world's top 100
pharmaceuticals companies. Ranbaxy also boasted a place among the world's top ten generic
drugs producers. In addition, the company had advanced a growing number of its own NCE and
NDDS molecules into clinical testing. The company's transition into research-based product
development was seen as crucial as India announced its intention to enforce international drug
patents at the beginning of 2005.
Ranbaxy appeared prepared to meet this challenge, however, and confidently set its sights on
boosting its annual sales past $2 billion by 2007 and to more than $5 billion by the beginning of
the next decade. International growth remained an essential part of that strategy. The company
began negotiations for a major acquisition in Germany at the end of 2004, which was expected to
be completed in 2005. The company also launched construction of a new $100 million
production facility in Brazil. Meanwhile, Ranbaxy continued to increase its research and
development budget, with the goal of generating as much as 40 percent of its revenues from its
in-house innovations by the 2010s. Ranbaxy expected to remain India's drug leader into the new
century.
Principal Subsidiaries
Basics GmbH (Germany); Gufic Pharma Ltd. (98%); Ohm Laboratories Inc. (United States);
Ranbaxy (Hong Kong) Ltd.; Ranbaxy (Malaysia) Sdn. Bhd. (56.25%); Ranbaxy (Netherlands)
B.V.; Ranbaxy (S.A.) Proprietary Ltd.; Ranbaxy (UK) Ltd.; Ranbaxy Do Brasil Ltda.; Ranbaxy
Drugs and Chemicals Company; Ranbaxy Drugs Ltd.; Ranbaxy Egypt Ltd.; Ranbaxy Europe
Ltd. (United Kingdom); Ranbaxy Farmaceutica Ltda. (Brazil; 70%); Ranbaxy Fine Chemicals
Ltd.; Ranbaxy France SAS; Ranbaxy Ireland Ltd.; Ranbaxy Nigeria Ltd. (84.89%); Ranbaxy
Panama, S.A.; Ranbaxy Pharmaceuticals Inc. (United States); Ranbaxy Poland Sp. z.o.o.;
Ranbaxy PRP (Peru) S.A.C.; Ranbaxy Unichem Company Ltd. (Thailand; 88.56%); Ranbaxy
USA, Inc.; Ranbaxy Vietnam Company Ltd.; Ranbaxy (Guangzhou China; 83%); Ranbaxy, Inc.
(United States); Ranchem Inc. (United States); Ranlab Inc. (United States); RanPharm Inc.
(United States); Rexcel Pharmaceuticals Ltd.; Solus Pharmaceuticals Ltd.; Unichem Distributors
(Thailand; 99.96%); Vidyut Investments Ltd.; Vidyut Travel Services Ltd.
Principal Competitors
RPG Enterprises; GlaxoSmithKline Consumer Healthcare Ltd.; East India Pharmaceutical Works
Ltd.; Dr. Reddy's Laboratories Ltd.; Cipla Ltd.; Concept Pharmaceuticals Ltd.; Khandelwal
Laboratories Ltd.; Dabur India Ltd.
doc_562884970.docx
The Indian Pharmaceutical industry is highly fragmented with about 24,000 players (around 330 in the organised sector).
Company analysis of Ranbaxy
The Indian Pharmaceutical industry is highly fragmented with about 24,000 players (around 330
in the organised sector). The top ten companies make up for more than a third of the market. The
revenues generated by the industry are approximately US$ 7 bn and have grown at an average
rate of 10% over last five years. The Indian pharma industry accounts for about 1% of the
world's pharma industry in value terms and 8% in volume terms.
In the recent past, Indian companies have targeted international markets and have extended their
presence there. While some companies are exporting bulk drugs, others have moved up the value
chain and are exporting formulations and generic products. India also offers excellent exports
opportunities for clinical trials, R&D, custom synthesis and technical services like
Bioinformatics.
The drug price control order (DPCO) continues to be a menace for the industry. There are three
tiers of regulations – on bulk drugs, on formulations and on overall profitability. This has made
the profitability of the sector susceptible to the whims and fancies of the pricing authority. The
new Pharmaceutical Policy 2006, which proposes to bring 354 essential drugs under price
control has not been officially passed as yet and has been stiffly opposed by the pharmaceutical
industry.
While the average R&D spending in India as a whole is a meager 2% of sales, the spend of the
top five companies is about 5% to 10%. Despite growing at a CAGR of over 50% over the last
four years, the ratio is still way below the global average of 15% to 20% of sales. However,
despite the
relatively low R&D spending, Indian companies are stepping up their research activities to make
themselves more self sufficient in terms of product development, now that the product patent
regime has come into force.
Supply:- Higher for traditional therapeutic segments, which is typical of a developing market.
Relatively lower for lifestyle segment.
Demand:- Very high for certain therapeutic segments. Will change as life expectancy, literacy
increases.
Barriers to entry:- Licensing, distribution network, patents, plant approval by regulatory
authority.
Bargaining power of suppliers:- Distributors are increasingly pushing generic products in a bid to
earn higher margins.
Bargaining power of customers:- High, a fragmented industry has ensured that there is
widespread competition in almost all product segments. (Currently also protected by the DPCO).
Competition:- High fragmented industry with the to 300 (of 24000
Manufacturing units)players according for 85% of sales value.Consolidation is like to intensify
Impact of BUDGET -2008:
Budget 2008-09: Pharmaceuticals
The past year has been tumultuous for the pharma industry, which has had to contend with a
steeply rising rupee, severe price erosion and regulatory changes in the global generics markets
and rise in raw material costs. Having said that, some positive developments also ensured that
the overall scenario was not too bad. These developments included announcements by some
major domestic pharma majors of hiving off their R&D units into separate companies, bagging
out-licensing deals with global innovators in return for milestone payments and settling patent
lawsuits with innovators to ensure a more stable and balanced.
Budget Measure
? Increase in allocation to the health sector by 15% over 2007-08.
? Allocation to the National Rural Health Mission (NRHM) increased to Rs 12,050 crore.
? Provision of Rs 993 crore to the National Aids Control Programme and allocation of Rs
1,042 crore for the eradication of polio with focus on high risk districts in Uttar Pradesh
and Bihar.
? Customs duty to be reduced from 10% to 5% on certain specified life saving drugs and on
bulk drugs used for their manufacture. These drugs are also exempted from excise duty or
countervailing duty.
? Excise duty on all goods produced in the pharmaceutical sector reduced from 16% to 8%.
? Anti-AIDS drug, ‘Atazanavir’, as well as bulk drugs for its manufacture to be exempted
from excise duty.
? In order to promote outsourcing of research, weighted deduction of 125% on any
payment made to companies engaged in R&D.
BUDGET IMPACT
? Increase in allocation to the healthcare sector is a positive given the need to ramp up the
healthcare infrastructure in the country and improve the accessibility of quality healthcare
to a larger section of the population.
? Reduction of excise duty from 16% to 8% is a positive for all pharma companies
enabling them to boost profitability going forward given that the excise duty is being paid
on MRP.
? Increased allocation of funds for eradication of HIV/AIDS and polio and reduction in
customs duty on certain life saving drugs from 10% to 5% is a positive for companies
having product pipeline catering to these segments.
? Weighted deduction of 125% on payments made for outsourcing research services is a
positive for the sector as a whole given that the emphasis on R&D has increased.
COMPANY IMPACT:
Reduction of excise duty from 16% to 8% is a positive for all pharma companies namely
domestic companies such as Cipla, Ranbaxy and the likes and MNC pharma companies such as
GSK Pharma, Pfizer and Aventis.
Emphasis on allocating funds for the eradication of HIV/AIDS and polio is a positive for Cipla
(which has a strong presence in the manufacture of anti-AIDS drugs) and Panacea Biotec (which
largely manufactures oral polio vaccines).
Weighted deduction of 125% on payments made for outsourcing research services is a positive
for R&D focused companies such as Ranbaxy and Nicholas Piramal.
Introduction to Ranbaxy:
Ranbaxy Laboratories is quite the rainmaker in India's pharmaceutical business. The company is
India's largest drug developer and manufacturer, with generics topping its list of products. Anti-
infectives CoAmoxyclav, Amoxycillin, Cephalexin, Ciprofloxacin, and Simvastatin are in
Ranbaxy's top selling class of medications; all come in several administration forms. Other
specific developmental focuses include metabolic, inflammatory, and respiratory illnesses.
Ranbaxy addresses gastrointestinal, cardiovascular, and central nervous system disorders, as well
as diabetes, pain, allergies, and HIV/AIDS. The company also has a groundbreaking anti-
malarial candidate in late-phase trials.
History
Ranbaxy Laboratories Ltd. is the largest pharmaceutical company in India, and one of the
world's top 100 pharmaceutical companies. Long a specialist in the preparation of generic drugs,
Ranbaxy is also one of the world's top 10 in that pharmaceutical category as well. Yet, with
India's agreement to apply international patent law at the beginning of 2005, Ranbaxy has begun
converting itself into a full-fledged research-based pharmaceutical company. A major part of this
effort has been the establishment of the company's own research and development center, which
has enabled the company to begin to enter the new chemical entities (NCE) and novel drug
delivery systems (NDDS) markets. In the mid-2000s, the company had a number of NCEs in
progress, and had already launched its first NDDS product, a single daily dosage formulation of
ciprofloxacin. Ranbaxy is a truly global operation, producing its pharmaceutical preparations in
manufacturing facilities in seven countries, supported by sales and marketing subsidiaries in 44
countries, reaching more than 100 countries throughout the world. The United States, which
alone accounts for nearly half of all pharmaceutical sales in the world, is the company's largest
international market, representing more than 40 percent of group sales. In Europe, the company's
purchase of RPG (Aventis) S.A. makes it the largest generics producer in that market. The
company is also a leading generics producer in the United Kingdom and Germany and elsewhere
in Europe. European sales added 16 percent to the company's sales in 2004. Ranbaxy's other
major markets include Brazil, Russia, and China, as well as India, which together added 26
percent to the group's sales. Ranbaxy posted revenues of $1.18 billion in 2004. The company,
which remains controlled and led by the founding Singh family, is listed on the National Stock
Exchange of India in Mumbai.
Ranbaxy Laboratories had its origins in the early 1960s when Ranjit Singh and Gurbux Singh,
two employees of a Japanese pharmaceutical company operating in India, formed their own
pharmaceutical preparations company in Amritsar, in Punjab state. The two merged their names
to form the name for their company, Ranbaxy.
Through the 1960s, India's pharmaceutical market remained dominated by foreign drug makers.
The domestic pharmaceutical manufacturing industry was limited in large part to the dosage
preparation, packaging, and distribution of existing formulations. Like many Indian drug
companies of this period, Ranbaxy linked up with a European pharmaceutical company, and
began production in 1962.
Ranbaxy's owners sought additional financing and turned to a local moneylender, Bhai Mohan
Singh. By 1966, the pair had built up debts to Singh of more than the equivalent of $100,000.
When Singh, a native of Pakistan who had arrived in India at the beginning of that decade, came
to collect, the Ranbaxy partners offered to turn over their company to him instead.
Singh agreed to the deal and launched the Ranbaxy family on the path toward building one of
India's largest business empires. Under Bhai Mohan Singh, Ranbaxy initially maintained its
course of preparing and packing existing branded pharmaceutical products for the Indian market.
The entry of Singh's eldest son, Parvinder, into the company in 1967, however, set the company
on a new course to become a fully independent pharmaceutical company.
Parvinder Singh had just graduated with a PhD in chemistry from the University of Michigan.
The younger Singh's background in chemistry complemented his father's business flair. Yet
Parvinder Singh himself quickly displayed a talent for business and was credited, in large part,
with guiding the company into the ranks of the global pharmaceutical leaders.
Ranbaxy's good fortune came in 1970, when the Indian government passed legislation that
effectively ended patent protection in the pharmaceutical industry. Indian pharmaceutical
manufacturers were now able to produce low-cost, generic versions of popular, yet expensive
drugs, revolutionizing the drug industry in India and in much of the world. The Singhs quickly
took advantage of India's large, highly trained, yet inexpensive workforce, building up a strong
staff of chemists and chemical engineers.
The company struck pay dirt early on, when it launched Calmpose, a generic formulation of the
hugely popular Roche discovery, Valium. Released in 1969, Calmpose immediately placed
Ranbaxy on India's pharmaceutical map. The company expanded quickly, and by 1973, Ranbaxy
opened a new factory, in Mohali, for the production of active principal ingredients (APIs). This
facility enabled the company to expand its range of generic medications and ingredients. To
finance its growth, the company listed on the Indian Stock Exchange that year.
Ranbaxy's ability to produce generic medications at far lower cost than its branded competitors
placed the company in a strong position for international expansion, especially in less developed
markets. The company began its internationalization early on, launching a joint venture in
Nigeria. That operation opened a production facility in Lagos in 1977.
Ranbaxy expanded its production at home as well, opening a new state-of-the-art dosage plant in
Dewas in 1983. In 1987, the company became India's leading antibiotic and antibacterial
producer when it completed a new API plant in Toansa, in Punjab, that year. The Toansa facility
backed up Ranbaxy's plans to enter the U.S. market, and in 1988, the Toansa plant received Food
and Drug Administration (FDA) approval.
Ranbaxy formulated a new strategy, that of becoming a full-fledged pharmaceutical company.
The driving force behind the company's new direction was Parvinder Singh, who was named the
company's managing director in 1982. Nonetheless, Bhai Mohan Singh remained in control of
the company.
As part of its new strategy, Ranbaxy launched its own research and development center in 1985.
The company also stepped up its marketing efforts, launching a new dedicated marketing
subsidiary, Stancare, that year. By 1990, the company had a new product to sell, when Ranbaxy
was granted a U.S. patent for its doxycycline antibiotic preparation. The following year, the
company was granted a U.S. patent for its cephalosporin preparations, and the company built a
new state-of-the-art facility for their production in Mohali.
A major milestone for the company came in 1992, when it reached a marketing agreement with
Eli Lilly & Co. The companies set up a joint venture in India to produce and market Lilly's
branded pharmaceuticals for the domestic market. At the same time, Lilly agreed to begin
marketing Ranbaxy's generic medications in the United States. In this way, Ranbaxy gained
widescale access, backed by the highly respected Lilly, into the world's single largest drugs
market.
Parvinder Singh took over as head of the company--ousting his father in what was described as a
family feud--in 1992. By then, Ranbaxy had grown into one of India's largest pharmaceutical
companies on the basis of its generics production. Yet as pressure grew on India to begin
enforcing international drug patents, the company itself appeared to have reached a crossroads--
whether to remain focused on copying generic molecules, or to begin developing new drugs in-
house. The company chose the latter, and in 1993 adopted a new corporate mission to announce
its reformulated ambitions: "To become a research-based international company."
Ranbaxy made good on its mission--by the middle of the next decade, nearly 80 percent of its
sales came from outside of India. As a first step, the company launched a new joint venture, in
China, backing its entry into that market with a production facility in Guangzhou. The following
year, the company established subsidiaries in London, England, and in Raleigh, North Carolina.
In 1995, the company stepped up its U.S. presence with the purchase of Ohm Laboratories Inc.,
which gave the company its first manufacturing plant in that market. Ranbaxy then launched
construction of a new and state-of-the-art manufacturing wing, which, completed that year,
gained FDA approval.
This new facility enabled Ranbaxy to step up its presence in the United States, and in 1998 the
company began marketing its generic products under its own brand name. That year, in addition,
the company filed an application to begin Phase I clinical testing on its first in-house developed
NCE. The following year, the company's NDDS efforts paid off as well, when Bayer acquired
the rights to market Ranbaxy's single daily-dosage ciprofloxacin formulation.
Ranbaxy's international expansion continued as well, with the launch of marketing operations in
Brazil. As the largest pharmaceuticals market in Latin America, that country was the cornerstone
of the company's plans to expand throughout the region. Ranbaxy also expanded in Europe, with
the agreement in 2000 to acquire Bayer's Germany-based generics business, Basics. The
company also added production plants in Malaysia and Thailand.
Parvinder Singh died in 1999 and longtime righthand man D.S. Brar took over as company
leader, naming family outsider Brian Tempest as company president. The new management team
continued Singh's expansion strategy, opening a new manufacturing plant in Vietnam in 2001.
Ranbaxy also sought new alliances, and in 2003 the company reached a global drug discovery
and development partnership with GlaxoSmithKline. That agreement called for Glaxo to handle
the later-stage development process for Ranbaxy created molecules. The company's international
expansion also took a major step forward at the end of 2002, when it agreed to acquire RPG
(Aventis) in France, that country's leading generic drugs producer.
Ranbaxy's sales had by then topped the $1 billion mark, placing the company not only as the
leader in India's pharmaceuticals industry, but also among the ranks of the world's top 100
pharmaceuticals companies. Ranbaxy also boasted a place among the world's top ten generic
drugs producers. In addition, the company had advanced a growing number of its own NCE and
NDDS molecules into clinical testing. The company's transition into research-based product
development was seen as crucial as India announced its intention to enforce international drug
patents at the beginning of 2005.
Ranbaxy appeared prepared to meet this challenge, however, and confidently set its sights on
boosting its annual sales past $2 billion by 2007 and to more than $5 billion by the beginning of
the next decade. International growth remained an essential part of that strategy. The company
began negotiations for a major acquisition in Germany at the end of 2004, which was expected to
be completed in 2005. The company also launched construction of a new $100 million
production facility in Brazil. Meanwhile, Ranbaxy continued to increase its research and
development budget, with the goal of generating as much as 40 percent of its revenues from its
in-house innovations by the 2010s. Ranbaxy expected to remain India's drug leader into the new
century.
Principal Subsidiaries
Basics GmbH (Germany); Gufic Pharma Ltd. (98%); Ohm Laboratories Inc. (United States);
Ranbaxy (Hong Kong) Ltd.; Ranbaxy (Malaysia) Sdn. Bhd. (56.25%); Ranbaxy (Netherlands)
B.V.; Ranbaxy (S.A.) Proprietary Ltd.; Ranbaxy (UK) Ltd.; Ranbaxy Do Brasil Ltda.; Ranbaxy
Drugs and Chemicals Company; Ranbaxy Drugs Ltd.; Ranbaxy Egypt Ltd.; Ranbaxy Europe
Ltd. (United Kingdom); Ranbaxy Farmaceutica Ltda. (Brazil; 70%); Ranbaxy Fine Chemicals
Ltd.; Ranbaxy France SAS; Ranbaxy Ireland Ltd.; Ranbaxy Nigeria Ltd. (84.89%); Ranbaxy
Panama, S.A.; Ranbaxy Pharmaceuticals Inc. (United States); Ranbaxy Poland Sp. z.o.o.;
Ranbaxy PRP (Peru) S.A.C.; Ranbaxy Unichem Company Ltd. (Thailand; 88.56%); Ranbaxy
USA, Inc.; Ranbaxy Vietnam Company Ltd.; Ranbaxy (Guangzhou China; 83%); Ranbaxy, Inc.
(United States); Ranchem Inc. (United States); Ranlab Inc. (United States); RanPharm Inc.
(United States); Rexcel Pharmaceuticals Ltd.; Solus Pharmaceuticals Ltd.; Unichem Distributors
(Thailand; 99.96%); Vidyut Investments Ltd.; Vidyut Travel Services Ltd.
Principal Competitors
RPG Enterprises; GlaxoSmithKline Consumer Healthcare Ltd.; East India Pharmaceutical Works
Ltd.; Dr. Reddy's Laboratories Ltd.; Cipla Ltd.; Concept Pharmaceuticals Ltd.; Khandelwal
Laboratories Ltd.; Dabur India Ltd.
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