India Inc legend and reticent pharma baron Dilip Shanghvi expects transactions to continue in the Indian pharmaceuticals sector with private equity funds playing an important role even as he bets big on the specialty business to drive growth for Sun Pharma.
Speaking exclusively to Moneycontrol, Shanghvi, the managing director of Sun Pharma who was awarded the Lifetime Achievement award at the second edition of Moneycontrol's Indian Family Business Awards, talked about the spectacular rise of his company, which was founded with Rs 10,000 in 1983 and now commands a market cap of around Rs 2 ,72,000 crore.
Talking about the role of Gen Next at Sun Pharma, Shanghvi said it was for his children, Aalok and Vidhi, to decide whether they would be owner-managers, working managers or adopt a hands-off approach. Edited excerpts of the interview:
What a spectacular journey it has been for you. You started off several decades back with a capital of Rs 10,000 and today look at the market cap of Sun Pharma — Rs 2,72,000 crores. Your take on the Sun Pharma story and why it has emerged as a behemoth in the Indian pharma industry?
I think clearly the team has built the business. We have been very fortunate that we have very good people and they commit more than 100 percent of themselves to the success of the company. They work effectively as a team and also try and help each other and take happiness from each other's success. I think that drives us forward.
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You have been an inspiration to many others in the industry. What would you say were the key turning points in the Sun Pharma journey which changed the course for the company and made it a top drugmaker?
I think the first major turning point was our public issue because till that time we were growing only based on internal accruals. Public issue gave us a significant new injection of cash flow and we used that to accelerate our growth. Subsequently, I think the success of our investment in specialty business that will hopefully catalyse our future growth.
The next generation, as far as Sun Pharma is concerned, has also come on board. Your son Aalok was recently appointed as a whole-time director. What's the plan regarding the next generation and what role could we see junior Sanghvi play in the days to come?
Both, my son as well as my daughter, are actively involved in the business but philosophically, I think that's a business decision that they need to take — that they would like to be owner managers or working managers or would like to take a hands-off position. We have a very good, professional management team. So, I am comfortable that the company will continue to do well and grow.
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A lot of big bang M&As have happened in the recent past in both pharma as well as healthcare. You're no stranger to big bang M&A, you did the Sun Pharma-Ranbaxy deal. A lot of private equity funds are making a beeline for pharma targets. Do you expect further consolidation in the Indian pharma industry and what's your take on the deal environment?
I think our size in India business prevents us from pursuing any large transaction because we will have significant product overlap with most of the companies. But I expect that there will continue to be transactions because the viability of future businesses will require some minimum size.
And do you expect private equity to lead the way?
They will also be an important player.
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