Indian Business Family Awards 2022: Dilip Shanghvi, Sun Pharmaceutical’s ray of excellence

Sun Pharma's Dilip Sanghvi accepting his Lifetime Achievement Award from Union Minister Piyush Goyal at IFBA 2022. Photo: Moneycontrol

When we tell stories of businesses, some have a seamless blend between the company’s identity and the owner’s or founder’s persona. A common man finds it hard to tell the difference between the story of Facebook and Mark Zuckerberg or Microsoft and Bill Gates. Similarly, the story of Dilip Shanghvi and Sun Pharmaceuticals are so intertwined that it is hard to identify the difference between the two.

With that said, Sun Pharma's founder and managing director Dilip Sanghvi was felicitated with 'Lifetime Achievement' award in the second edition of Moneycontrol’s Indian Family Business Awards (IFBA), 2022. Union minister Piyush Goyal presented him the award at New Delhi, on August 19.

IFBA 2022 in association with Waterfield Advisors and Grant Thornton aims to celebrate the role of family-owned enterprises in shaping and transforming the Indian economy and society.

Accepting the award, Shanghvi discussed how Sun Pharma, which was started nearly four decades back on a small scale, has evolved over the years, with anticipations of further expanding its presence overseas.

From humble beginnings in his father’s pharma shop, Shanghvi and Sun Pharma have touched many milestones. He once replaced Mukesh Ambani as India’s richest man according to Bloomberg Billionaires Index in 2015 as Sun Pharma became one of the largest generics manufacturers in the world.

Shanghvi, who keeps a very low profile, is said to be the least documented and least studied capitalists, according to his biographer Soma Das.

The biography, tilted The Reluctant Billionaire aptly conveys the unassuming but potent aura of the man behind the billion-dollar company.

Sun Pharma is currently India’s largest pharmaceutical company, with a market capitalisation of over Rs 2,74,000 crore.

The company reached this position on the shoulders of the young Gujarati entrepreneur who started his business with just Rs 10,000 in 1983. Shanghvi chose the perennial source of all energies –Sun – as the inspiration for the name of his company.

He started the company, manufacturing five psychiatric drugs. Today, the company is among the top five generic drug makers in the world, in terms of revenue. In FY23, Sun Pharma had its highest-ever consolidated revenue of Rs 43,279 crore and a net profit of Rs 8,474 crore.

Born into a pharmaceutical distributor's family in Kolkata, Shanghvi's formative years were spent with his parents in Dawa Bazar. From the age of seven or eight, he diligently occupied his father's shop, memorising the names and the uses of the medicines in the shop. His nights were dedicated to reading books with a torch light, cultivating a thirst for knowledge. From these experiences emerged the dream to produce medicines that were identified because of their quality more than anything else.

“It is easy to miss the intensity of someone who is more presence than personality,” Das writes in the biography.

The day Shanghvi’s higher secondary exams got over, his friends remember him taking over his father’s duties at the shop, “without a day’s break, without waiting for the result, without waiting for life to begin,” Das writes.

The commerce graduate chose the path of entrepreneurship and established Sun Pharma’s first manufacturing unit in Vapi in his native state of Gujarat. Today, the company has more than 40 manufacturing facilities. They span from India to Bangladesh, South Africa, Malaysia, Romania, Egypt, Nigeria and Russia.

Sun Pharma decided to carve a niche and manufacture low-volume, high-margin, long-term prescription products- essentially drugs for chronic diseases with lifetime prescriptions made by specialist doctors. The company which earned Rs 10 lakh in 1982–83, the year of its registration, reported sales of Rs 50 crore in 1990.

With the swift urbanisation of India, lifestyle diseases surged, prompting an uptick in the allocation towards chronic therapies- medications that need long-term prescriptions from psychiatrists, cardiologists, neurologists and gastroenterologists.

At present, the chronic medication market constitutes an impressive quarter of India's overall pharmaceutical sales. Notably, Sun Pharma has strategically positioned itself with a pioneering edge over its competitors, which entered the sector later.

When Sun Pharmaceuticals went public in 1994, the company had already launched 100 products in its brief history of a decade, of which eight had been introduced in India for the first time.

During the listing, then pharma giant Ranbaxy tried to corner a significant chunk—10-12 percent of Sun shares. Ranbaxy, however, aborted the plan soon. In 2015, Shanghvi made a sweet payback by acquiring Ranbaxy from Japan-based pharmaceutical giant Daiichi Sankyo Co for $4 billion.

Throughout Sun Pharma’s journey, Shanghvi’s concept of warm efficiency was important in carving a niche for the brand. This came with an ideal blend of professional and personal touch with the doctors. Having the doctor’s back has made the company a darling of specialist doctors till date.

The coming decades saw Shanghvi leading the company to provide products across therapies and countries. This includes the acquisition of loss-making US-based Caraco Pharma, the stake in Israel-based Taro Pharma and the decision to acquire Indian rival Ranbaxy.

These choices were by no means smooth sailing. The challenges didn’t stop at integrating the acquired entities. Price erosion in its major market like the US, adhering to regulatory norms of the likes of United States Food and Drug Administration (US FDA), pricing restrictions in India through National List of Essential Medicines (NLEM), etc., were various roadblocks that the company faced over the years.

However, Shanghvi’s strategic foresight and ability to adapt to the changing landscapes paved the way for the company's stature today. With a steadfast commitment to excellence, the business not only weathered storms but harnessed adversity to fuel its growth.

In 2012, he stepped down from the CEO’s position and is currently the Managing Director of the company. In 2016, he was awarded Padma Shri -- India’s fourth-highest civilian award -- for his contributions to trade and industry.

From having to convince psychiatrists in Kolkata and Mumbai to prescribe his drugs, Dilip Shanghvi’s Sun Pharma has played a pivotal role in establishing India as the pharmacy of the world.