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Ranbaxy Laboratories
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« Dec 12
Chairman's Speech (Ranbaxy Laboratories) Year : Mar '14
Dear Valued Shareholders,
 
 I am happy to communicate with you once again on your company. Despite
 the current economic slowdown, the global demand for generic
 pharmaceutcals has contnued to grow and it is expected to reach 36% of
 the total global pharmaceutcal spending by 2017. At a tme when the
 pharma industry for patented products is growing by only 1-2%, the
 generics industry is upbeat with double digit growth. This underscores
 the enormous potental for the generics sector. Ranbaxy, being an
 established global enterprise in generics, will beneft substantally
 from this positve trend.
 
 This tme, we are reportng your company''s performance for a 15-month
 period from January 2013 to March 2014. This is due to the fact that
 the company is transitoning its reportng period from calendar year to
 fnancial year.
 
 During the period under review, the company recorded consolidated
 global sales of Rs.130.4 billion. The North America region performed
 well despite challenges, refectng a strong growth in the base business.
 Emerging markets contnued their healthy performance. The period also
 marked the successful completon of 20 years of operatons in two of our
 key markets, Russia and Ukraine.
 
 The domestc market, i.e., India, recorded creditable performance
 despite the challenges posed by a new pricing system. We received
 approval from the Indian drug regulator, Central Drugs Standard Control
 Organisaton (CDSCO), to manufacture and market Synriam™ (arterolane
 maleate and piperaquine phosphate tablet 150 750mg) for the treatment
 of uncomplicated malaria in adults caused by the Plasmodium vivax
 parasite. This makes Synriam™ one of the few therapies in the world
 that successfully treats both Plasmodium vivax and Plasmodium
 falciparum malaria.
 
 A signifcant development during the period was the closure of
 investgaton by the US Department of Justce for data integrity and
 manufacturing processes at certain facilites in India. Under the terms
 of the fnal agreement, Ranbaxy and its afliates agreed to setle by
 making a total payment of US$ 0.515 billion in aggregate. However,
 despite this we contnued to face some serious regulatory challenges.
 The US Food and Drug Administraton (US FDA) issued an Import Alert on
 our Mohali plant in September 2013 and, later, subjected the facility
 to certain terms of the Consent Decree that Ranbaxy had signed in
 January 2012. In January 2014, our Actve Pharmaceutcal Ingredient (API)
 facility at Toansa, Punjab, was also included under the Consent Decree.
 
 The Board and management have taken these developments very seriously
 and have since made several signifcant changes. A ''Quality & Integrity
 Commitee'' has been consttuted at the Board level. Its primary role is
 to provide oversight over the company''s manufacturing and quality
 operatons and systems, their organisaton and integrity. The company is
 also receiving guidance and technical support from Daiichi Sankyo in
 overcoming these issues.
 
 In my message last year, I had stated that we would always stand by our
 philosophy of ''Quality and Patents First''. Strengthening quality and
 compliance remains our top priority and it is our global commitment to
 provide quality and afordable pharmaceutcals to our customers.
 
 While we maintain confdence in the quality of all our products, we will
 do everything we can to ensure that Ranbaxy remains a company that is
 trusted, respected and highly regarded.  We have remained steadfast in
 our commitment to our philosophy and will emerge stronger from our
 recent travails.
 
 In this context, it is heartening that many global regulatory agencies,
 including the US FDA; the European Medicines Agency (EMA); the
 Therapeutc Goods Administraton (TGA), Australia; Health Canada; and
 ANVISA, Brazil, have inspected many of our manufacturing plants
 situated in India and abroad with successful outcomes. We contnue to
 closely work with all the agencies to enhance our policies and
 processes in a compliant manner. In the USA, our Ohm manufacturing
 plant successfully cleared regulatory inspectons by the US FDA and
 contnues to supply high quality, afordable products to the US
 healthcare system. These developments bear testmony to the improvements
 we have been making and demonstrate that we are capable of successfully
 overcoming such hurdles as may come in our way.
 
 To further strengthen Ranbaxy''s corporate governance standards, new
 commitees have been formed at the Board level.  A ''Corporate Social
 Responsibility (CSR) Committee'' has been set up to formulate the
 company''s CSR Policy and monitor its implementaton, besides
 recommending the budget for social actvites to the Board. The erstwhile
 Nomination Committee and Compensaton Commitee were dissolved and a new
 commitee has been consttuted as the ''Nominaton and Remuneraton
 Commitee''. Its role will be to, inter-alia, identfy persons who are
 qualifed to become Directors and who may be appointed in the senior
 management; recommend to the Board their appointment and removal;
 evaluate the performance of the Board and senior management; and
 formulate the Remuneraton Policy of the company.
 
 Partcipatng in and promotng the development and welfare of local and
 under-served communites is a vital part of our social commitment. As a
 responsible corporate citzen, in the period under review, Ranbaxy
 contnued with its eforts to deliver primary healthcare services to
 improve the lives of the needy. We are focussing on key issues such as
 mother & child care, AIDS awareness and management, and adolescent
 health.  Under our ''Maatra Shishu Swasthya Sewa'' (Mother & Child Health
 Service), a joint initatve of Ranbaxy and Daiichi Sankyo, we are today
 serving over 100,000 people spread across 100 villages in District
 Dewas, Madhya Pradesh, India. The Public Private Partnership (PPP)
 project between Ranbaxy and the state government in Punjab, India is
 advancing well. Ranbaxy operates 10 well equipped mobile healthcare
 vans, which go deep into the interior rural areas, covering a populaton
 of over 330,000 spread across 98 villages in the state. Additonally, we
 provide mobile healthcare services around various Ranbaxy plant
 locatons at Mohali, Toansa, Paonta Sahib and Dewas.
 
 To promote scientfc endeavours in India, Ranbaxy Science Foundaton
 (RSF) contnued with its eforts by rewarding excellence in medical and
 pharmaceutcal research and channeling natonal and internatonal
 knowledge and expertse. RSF presented research awards to Indian
 scientsts and scholars for outstanding research and held scientfc
 symposia and round table conferences in the country during the period
 under review.
 
 In the recent past, the global pharmaceutcal industry has been
 witnessing a wave of consolidaton with some large strategic mergers and
 acquisitons among the leading innovator companies. With growing
 challenges in the innovator sector and huge opportunites in the
 generics space, the consolidaton trend is expected to gain momentum.
 This can throw up signifcant opportunites to companies to expand and
 strengthen footprint across atractve markets and therapeutc segments.
 
 In keeping with this trend, 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 internatonal, integrated, speciality
 pharmaceutcal company. As part of the agreement, Ranbaxy shareholders
 will receive 0.8 share of Sun Pharma for each share of Ranbaxy. It is
 antcipated that the transacton will close by the end of 2014 calendar
 year and, upon closing, Daiichi Sankyo will become the second largest
 shareholder in Sun Pharma.
 
 The Ranbaxy and Sun Pharma combined entty is expected to result in a
 quantum leap in ranking, creatng the ffh-largest speciality generics
 company in the world with operatons extending to 65 countries with 47
 manufacturing facilites across 5 contnents. It will be the largest
 generic pharmaceutcal company in India. The merged entty will be a
 global powerhouse that will ofer a diverse, highly complementary
 portolio of speciality and generic products, covering a spectrum of
 chronic and acute treatments.
 
 We believe this transacton will shape an even beter future for Ranbaxy
 and will maximise value for all stakeholders by unleashing immense
 opportunites for long term sustainable and high quality growth.
 
 The merger of Ranbaxy with Sun Pharma was a signifcant decision made by
 the Boards of Ranbaxy and Daiichi Sankyo. In executng this transacton,
 the Ranbaxy Board, the CEO, the CFO and the legal team played a key
 role. It is our unanimous belief that the independent assets of Ranbaxy
 and Sun Pharma, be it global footprint, product portolio or human
 capital, will complement each other to create a formidable entty that
 will ultmately build enduring value for all stakeholders.
 
 The Ranbaxy brand, with its strong legacy, will remain the pride of
 India and a prestgious asset that will contnue to deliver its worth in
 the future.
 
 I would like to thank all my colleagues in Ranbaxy all over the world
 for their hard work and valued contributon. I am confdent the road
 ahead is bright and promising.
 
 I am grateful to the Board of Directors for their unwavering support
 and guidance. I take this opportunity to express my grattude to all our
 shareholders and partners for their trust and unceasing support.
 
 Sincerely,
 
 Tsutomu Une 
 
 Chairman
Source : Dion Global Solutions Limited
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