The Lupin that Desh Bandhu Gupta nurtured

Vikas Dandekar
CNBC-TV18

I first met Desh Bandhu Gupta, the founder of Lupin back in 1998, as he proudly announced a joint venture with Mova, a Puerto Rico-based drug firm for the manufacture and supplies of oral cephalosporins, a class of antibiotics. The JV was short-lived but that to me signalled DBG’s (as he was widely known) bold ambitions to grow Lupin through expansion in the international market. As Lupin matured and scaled up from that time to now reach a size of USD 2.5 billion and closes in on its 50^th year in 2018, the demise of the group patriarch coincides with a handful of challenges, quite reminiscent of the nineties. At that time relentless dumping of bulk drugs by the Chinese drug makers had left Indian drug makers gasping as most smaller units were shunted out of business.

Two decades on, opportunities through the launch of generic drugs in the US has narrowed and no easy path is visible. The big generic drug makers are toying with the idea of developing speciality drugs but that is easier said as approvals take a long time, need expensive clinical trials and most critically the risk of failures or delayed approvals is an ever-hanging sword. Large M&As typically show no signs of reaching the desired benefits and only fuel hype. With no quick solutions, leaders in the league of DBG perhaps had answers to take the industry in a new direction.

For old-timers, DBG was a deft businessman and most of his vision revolved around the ability of his leadership team to deliver tough targets. DBG often used his charm and a disarming smile to keep the approach positive. He brimmed with new, hitherto unexplored ideas.

While much of the industry abandoned making anti-TB drugs given the low margins and the government's price controls, Lupin maintained its track record as the world’s largest supplier of anti-TB drugs. He worked extensively to forge global alliances to develop new TB medicines. The R&D centre that was built by Lupin in Pune may not have resulted in significant tangible gains in novel drugs but its strong grip on complex chemistry helped Lupin launch a spate of patent challenges against multinational companies, gaining quick traction. Lupin’s late entry into the US market, as with a few other international markets, was held out as an advantage to learn from the mistakes of others. Suprax, the antibiotic drug that virtually crafted Lupin's story in the US, had flopped in the initial months of its introduction but DBG’s resolve to promote and re-position it turned it into a springboard for further growth.

For the execution of his pet projects, deploying top-notch professionals was DBG’s priority as he made Ranbaxy his hunting ground. Ironically, at that time Ranbaxy (now part of Sun Pharma) was the poster boy, in contrast to its sullied image, and was often regarded as a guiding light for Indian drug makers.

Veterans fondly remember how DBG approached them with job offers. Although Lupin ranks among the best paying in the industry currently, DBG’s strategy was to not lure personnel with a heavy remuneration. It was more by instilling a feeling of ownership in realising Lupin’s greater ambitions. He would reach out to people at their homes, bond with families over meals and take up issues that acted against the cordiality and productivity within the organisation.

After Lupin faced one of its toughest crisis, having digressed into real estate in 2003 and piling up a heavy debt, DBG pushed the peddle on raising the professional standards in the company. He hired Kamal Sharma from RPG Life Sciences, as a prerequisite from Citigroup Venture Capital (a part of Citi Group), which agreed to pick up a stake in the company for a higher professional bar.

That was an important lesson and a turning point for Lupin. DBG slowly moved out from an active involvement in the company’s routine operations and limited himself to a mentoring role. He first placed his younger daughter Kavita Gupta to steer the operations while Nilesh, his son, was getting multidisciplinary training – from understanding the nuances of R&D to finance to knowing the shop floor level issues. Vinita Gupta, the eldest of the five siblings, emerged as a powerful force that practically changed Lupin and made it into an agile fast-moving machine.

Lupin’s trajectory over the last decade has been enviable but as with any business cycle prospects of growth is dimming. DBG was among the first of his generation of entrepreneurs to have carved out a steady succession plan that balanced professional standards with family values. To those who visited him, DBG fondly explained how Lupin, the native North American purple flower, nurtures the soil in which it grows. Lupin without Desh Bandhu Gupta needs an able leadership to be nurtured and grown further into a bigger and a solid global pharmaceutical company.