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The History of Ranbaxy

Ranbaxy Laboratories Limited is India’s largest pharmaceutical company, producing a wide range of generic medicines. The company ranks among the top ten global companies in the generic medicine business and has a presence in 23 of the top 25 pharmaceutical markets. Turnover was US$1.607 billion in 2007. It operates in 49 countries, has manufacturing facilities in 11, and employs 12,000 people.
 
 
The History:
 
Ranbaxy was founded in Amritsar in 1937 by Ranjit Singh and Dr Gurbax singh, who distributed vitamins and anti-tuberculosis drugs for a Japanese pharmaceutical company. After the Second World War, Ranbaxy continued as a distributor.
 
Bhai Mohan Singh bought the company from his cousins Ranjit Singh and Gurbax Singh. Ranbaxy's name is a fusion of Ranjit and Gurbax's names.
 
The company started in 1937 as a distributor for Japanese vitamins and anti-tuberculosis drugs. The company’s manufacturing history was triggered by an alliance in 1951 with the Italian company Lapetit under which Ranbaxy distributed Lapetit’s products in India. 
 
In 1961, Lapetit assisted Ranbaxy to set up some limited local manufacture. This was the first example of Ranbaxy’s use of alliances to gain technical expertise. The association with Lapetit ended in 1966, due to Ranbaxy’s determination to formulate more products locally. Faced with an ensuing product shortage, Ranbaxy “reverse-engineered” Lapetit’s products by 1969. At the same time, it also expanded its product range by developing Calmpose, its own version of Valium. At that stage, there was nothing to prevent Ranbaxy copying others’ products, but Ranbaxy was very small compared to the foreign multinationals (MNCs) and Indian public sector firms, such as Hindustan Antibiotics ltd and IDPL, which dominated the local market.
 
The Indian government introduced patent legislation in 1970; however, this only protected processes. Competitors were free to imitate products as long as they used a different process. This created a disadvantage for MNCs compared to local imitators, and they were further discouraged by the introduction of price controls on drugs and later (in 1973) by restrictions on the amount of equity they could hold in local companies. This clearly provided a spur for the development of local pharmaceutical companies such as Ranbaxy, which established its bulk drugs facility at Mohali, Punjab, in 1971 and went public in 1973.
 
Over subsequent years, it has continued to invest in its Indian manufacturing operations, which still form the core of its operations. Initially the company concentrated on the local market;
however, given the low-cost Indian labour, the low capital cost of setting up a pharmaceutical plant in India (onethird the cost of Europe or United States), and the highvalue density of pharmaceuticals, exporting either generic products, which were out of patent, or “copies” of patented drugs to countries which were prepared to accept them was an obvious strategy for Ranbaxy, and indeed this is what it started in 1975.
 
From 1980, the company transformed from a local to an international company. The driving forces were Parvinder Singh’s vision, the extension of price controls in the Indian market, and some encouragement from the government to companies to invest abroad. In 1993, reflecting the growing
importance of its overseas operations, Ranbaxy restructured into four regions – India and Middle East; Europe CIS and Africa; Asia Pacific; and North and South America – setting up regional headquarters in the US and UK in the following year.
 
In 1992, Ranbaxy expanded it operations via a joint venture with Eli Lilly to manufacture Lilly products in India and market them throughout South Asia; in 1994, when it looked as if the US healthcare reforms would trigger an explosion in the generic drug market, Lilly also contracted Ranbaxy to make generics for it.
 
By 1997 the Indian economy was beginning to slow down and drugs exporters, facing competition by the Chinese, began to increase focus on generics, and in the same year Ranbaxy engaged in a spate of alliances and acquisitions to gain scale domestically. Although Parvinder Singh died in 1999, the company continued along the same course, but after 2004 its international activities seem to have accelerated slightly anticipating the acceleration of outward FDI from the country as a whole. It is interesting to note that M&A increasingly appears to have become the dominant expansion mode, perhaps driven by increasing levels of inward FDI, the growth in the Indian economy, and relaxation of the constraints on Indian companies, which wanted to expand overseas.
 
 
Ranbaxy & the Singh Family:
 
Although they did not start the company, the Singh family has been central to its success and owns most of the equity. Bhai Mohan Singh joined the company as a partner in 1951 when it was a distributor and led it through its early growth and subsequently into manufacturing. His son, Parvinder Singh, joined the company in 1967 becoming managing director in 1982 and chairman in 1993. It was his vision to transform Ranbaxy into an international company based on research rather than simply carrying on with local low-cost manufacturing. When he died suddenly the company was lead by non-family members, D.S Brar and then Brian Tempest, a European. Malvinder Singh, one of Parvinder’s two sons, was appointed President (pharma) and an Executive Director at the time of Tempest’s appointment. Tempest then became Chief Mentor & Executive Vice Chairman of the Board and Malvinder the CEO whilst another European, Peter Burema, is President of the Global Pharmaceutical Business.
 
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