Sun Pharma redoing Ranbaxy contract mfg unit, to halve size

As Sun Pharma progresses on its integration with Ranbaxy, CNBC TV18 learns that Sun has already begun revamping, at as very fast pace, the latter's contract manufacturing division. Sources say the overhaul may see the division size being cut to almost half.

It is understood that head of contract manufacturing Govind Jaju, manager of formulations and a few mid level executives at this unit have already been served a severance package. Multiple other exits are on the cards. Sources say this to be a natural fallout of Sun’s stated intent to bring back all outsourced products to in-house facilities, and in turn leaving that division redundant.  

Mr Dilip Shanghvi in his March address had said almost 40 percent of Ranbaxy products come out of outsourced facility and that will be brought back to its own stable. Sources say the ground work to shift these outsourced products back to in-house facilities has already begun. The company is assessing capacity rationalization at all its available plants – both Sun and Ranbaxy.

Sources indicate that API, or raw materials, for four of Sun’s products have already been moved to Ranbaxy’s Toansa unit. These APIs are for products sold in markets outside of US.