Malvinder bows out of Ranbaxy

New Delhi, May 24: Malvinder Singh today stepped down as the chairman and CEO of Ranbaxy Laboratories, ending his family’s long association with the country’s largest drug company.

Chief operating officer Atul Sobti is the new CEO and managing director, while non-executive director Tsutomu Une has been elected as the chairman of the board, Ranbaxy said in a statement today.

The change in management was decided at the company’s board meeting today. The decision is likely to be approved at the company’s annual general meeting on Friday at Mohali.

Analysts see the change of guard as signs of increasing control being exerted by Daiichi Sankyo, the Japanese pharma major that holds a majority 64 per cent stake in Ranbaxy. Daiichi said the decision was an “agreement” between the two sides. In Ranbaxy’s 10-member board, six are from the Japanese company.

On his decision to exit, Singh said, “In business, you always look forward. You don’t drag along. I am carrying on and will go on a holiday.”

Gurgaon-based Ranbaxy was founded by Malvinder’s grandfather Bhai Mohan in 1961. Bhai Mohan was succeeded by his son Parvinder who transformed Ranbaxy into India’s first pharma multinational. Malvinder joined Ranbaxy about 10 years ago and became the CEO and MD in 2006.

In June last year, Singh and his brother Shivinder sold their entire 35 per cent stake to Daiichi for Rs 10,000 crore. The Japanese firm invested another Rs 10,000 crore to raise its stake to about 64 per cent.

“It was a difficult decision to separate from Ranbaxy,” said Singh, “But it was the right time for me to do so. I leave with complete confidence that the initial transition phase that followed Daiichi Sankyo’s acquisition of a majority shareholding interest in Ranbaxy has been completed successfully; and that the company’s excellent team of management colleagues are well-positioned to take full advantage of the company’s growth opportunities.”

According to Ranbaxy’s 2008 annual report, Singh is entitled to a severance package of 24 months of his salary, which works out to around Rs 45 crore. In normal circumstances, he would have retired in 2013.

Takashi Shoda, a director of Ranbaxy and the CEO of Daiichi Sankyo, said, “We appreciate the efforts of the Singh family, which helped grow Ranbaxy from a small, local Indian company to a large multinational it has become today. We especially acknowledge the contributions of Singh. His strategic vision and passion for the pharmaceutical industry will be missed in Ranbaxy’s operations.”

The analysts said Singh could now pursue aggressive growth plans in the financial services company (Religare Enterprises) and the healthcare company (Fortis Healthcare), which he owns with Shivinder.

The two brothers are also considering diversification. link...