 "Top heads to roll soon at Ranbaxy")
The top management of Ranbaxy Laboratories could soon witness several exits with Sun Pharmaceutical Industries beginning the integration of the two companies, industry sources said.
Mumbai-headquartered Sun Pharma had announced its acquisition of Ranbaxy Laboratories from Japan's Daiichi Sankyo earlier this week. The $4-billion transaction, pending various regulatory approvals, is expected to close by the end of this year.
"The top management of Ranbaxy will certainly be most impacted by the merger. At manufacturing and factory levels, they (Sun Pharma) would need people for operations but there will be major overlapping at the executive level. It will be difficult for Sun to justify these positions," a senior official with another leading Mumbai based pharma company told Business Standard.
Sun Pharma, however, maintained that it has not yet finalised any plan. "This is complete speculation, and will hurt our efforts at a smooth integration. As of now, there is no such plan formulated," a Sun Pharma spokesperson said in response to an email query.
Ranbaxy and Sun Pharma, the two leading domestic drug manufacturing companies, are set to merge to create India's largest pharmaceutical company and the world's fifth largest generic drug maker.
The core executive team of Ranbaxy currently has 10 executives in top positions. This includes the company's CEO and managing director Arun Sawhney, chief financial officer (CFO) Indrajit Banerjee, global quality and compliance head Dale Adkisson and president-global pharmaceutical business Rajiv Gulati. Besides, Ashwani Malhotra, executive vice-president-global pharma manufacturing is also part of the team.
An email sent to Ranbaxy did not elicit any response.
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A top executive, who was earlier associated with Sun Pharma, said the company is known to be lean with its own management and executive team. In fact, the top management of the company underwent a restructuring at various levels in the recent past. This included Sun Pharma founder Dilip Shanghvi's stepping down from the position of chairman to pave the way for Israel Makov, the former chief of Teva Pharma. The restructuring was mainly aimed at creating a global company run by professionals.
According to Sun Pharma spokesperson, both the companies have an employee strength of 14,000 each.
According to industry officials, the other major reason that could trigger exits is hefty remunerations. "Top executives at Ranbaxy were paid huge remuneration packages. Sun is unlikely to absorb such people as that would not fit into their scheme of things," said a senior industry source who is close to Shanghvi.
Sun Pharma has a good track record of compliance with regulators so far with proven ability to remedy problems encountered in the past.
On the other hand, Ranbaxy's management has repeatedly failed to restore compliance at its ailing factories; instead, it was faced with increasing enforcements. Currently, all four factories of Ranbaxy in India - at Poanta Sahib (Himachal Pradesh), Dewas (Madhya Pradesh), Mohali (Punjab) and active pharmaceutical ingredient (API) making unit in Toansa (Punjab) - are all barred from supplying to the US.