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
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
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
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
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
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.