Bhai Mohan Singh, who crossed the border from Pakistan with his wife and two sons in 1947, was an adept financier.
The Ranbaxy story has always been one of opportunism, lawsuits and true grit
MUMBAI: When Malvinder Mohan Singh, on behalf of his family, gets the Rs 9576.29 crore booty from Japanese pharma giant Daiichi Sankyo, he’ll remember feisty grandfather Bhai Mohan Singh’s opportunistic act 56 years ago of buying a controlling stake in Ranbaxy for a princely sum of Rs 2.5 lakh.
Bhai Mohan Singh, who crossed the border from Pakistan with his wife and two sons in 1947, was an adept financier.
At the turn of the 1950s, he funded Gurbax Singh, a wily promoter of an entity called Ranbaxy & Co, which owned a chemist’s shop in Delhi and an agency for A Shiniogi, another Japanese pharmaceutical company.
Gurbax owed Bhai Mohan Rs 2.5 lakh, which, instead of repaying, he chose to give away the promoter’s stake to the financier in the 1950s.
Only to profoundly regret the act. To regain control, Gurbax filed several cases against Bhai Mohan, only to be outwitted by the financier at every turn.
That’s been one of the hallmarks of the company ever since: dealing in lawsuits.
On Wednesday, when Malvinder & Co sold their stake to Daiichi, the circle was complete, as it were: a foray into the pharma world, in the middle of the twentieth century, was enabled by a Japanese firm that made vitamins and anti-tuberculosis drugs.
It has ended with another one from the Land of the Rising Sun.
The Japanese connect came about because Gurbax knew Shiniogi.
But Japan in the 1940s was known to make cheap products and did not have the reputation of the European pharma giants.
Eventually, Ranbaxy began flirting with an Italian pharma company called Lepetit. During this time, the Indian government changed laws, specifying that the packaging of medicines should be done in India to help reduce costs and for the cause of employment.
Ranbaxy was forced to open its first plant in Okhla near Delhi.
Sometime later, the two firms drifted apart with Bhai Mohan writing yet another cheque —- for Rs 25 lakh to buy out Lepitit’s stake.
During the dalliance, Ranbaxy learnt to stand on its own.
Bhai Mohan’s son Parvinder entered the scene and with his close associate Sorab Desai developed the company’s first blockbuster: the sleep-inducing drug Calmpose, a derivative of diazepam.
Calmpose helped Ranbaxy cross a major milestone then —- Rs 1 crore annual sales by 1968.
But by the nineties, it was almost as if Gurbax’s curse was visiting Bhai Mohan: fissures started between him and Parvinder, who outnumbered and outguessed the father on the board, took control and took Ranbaxy to new heights.
For Malvinder, who took the reins a couple of years ago as part of a succession plan drafted by his late father Parvinder —- who was stricken by cancer and planned every eventuality for Ranbaxy after his death —- Tuesday’s sellout must have been something out of the script.
Global headwinds had forced him to sleep with the enemy.
Yet, the gameplan makes sense. As he said at the press conference on Tuesday: “Ranbaxy is my life, my blood. We explored a series of options, and at the end of it, we believed this was in the best interests of the company, the shareholders and the employees.”
The facts for this piece have been excerpted from the book The Ranbaxy Story by Bhupesh Bhandari.
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